MARS is circling YOU, if you perform Short Sale Services.
On January 31, 2011, the Mortgage Assistance Relief Services (MARS) final rule went into effect. The rule is primarily focused on companies who offer loan modifications to consumers, however the rule also impacts real estate licensees who represent clients involved in a short sale transaction. You may have experienced some unscrupulous people in your area taking advantage of consumers in distress sale situations, this rule was designed to protect the consumer.
The rule requires three disclosures at various stages of the short sale process. A disclosure is required if a real estate licensee is advertising as a short sale specialist or expert. This disclosure is required for advertisement in any media--print, social, video, audio, signage, billboards, any media. Another disclosure is required to the consumer before mortgage assistant services begin, for instance before a listing agent begins to assist a seller work with the seller's lender for a short sale, this disclosure would be given as soon as you are aware of the need for a short sale transaction. A third disclosure is required at the time the licensee presents the client with the lender's short sale approval letter. All disclosures have specific language required, font size is also dictated in the rule. The notices generally inform consumers, licensees are not associated with the government or the lender, no upfront fees can be charged, the consumer does not have to use your services and we have to be honest in our dealings with the consumer, AND consumers should not stop paying their mortgage.
If you are referring business to a "short sale expert", you should make sure they are aware of the rule and the disclosures. Referral arrangements may cause liability for non disclosure to pass also to the referring licensee. Last but certainly not least in the rule there are recordkeeping and other compliance requirements.
The National Association of REALTORS has and continues to work with the Federal Trade Commission to have our industry exempt from the disclosure requirement, however, at this writing our industry is still a part of the rule.
The rule requires three disclosures at various stages of the short sale process. A disclosure is required if a real estate licensee is advertising as a short sale specialist or expert. This disclosure is required for advertisement in any media--print, social, video, audio, signage, billboards, any media. Another disclosure is required to the consumer before mortgage assistant services begin, for instance before a listing agent begins to assist a seller work with the seller's lender for a short sale, this disclosure would be given as soon as you are aware of the need for a short sale transaction. A third disclosure is required at the time the licensee presents the client with the lender's short sale approval letter. All disclosures have specific language required, font size is also dictated in the rule. The notices generally inform consumers, licensees are not associated with the government or the lender, no upfront fees can be charged, the consumer does not have to use your services and we have to be honest in our dealings with the consumer, AND consumers should not stop paying their mortgage.
If you are referring business to a "short sale expert", you should make sure they are aware of the rule and the disclosures. Referral arrangements may cause liability for non disclosure to pass also to the referring licensee. Last but certainly not least in the rule there are recordkeeping and other compliance requirements.
The National Association of REALTORS has and continues to work with the Federal Trade Commission to have our industry exempt from the disclosure requirement, however, at this writing our industry is still a part of the rule.
If you, or your agents are offering short sale services, download the rule and read it. You can find the rule on the Federal Trade Commission's website (http://www.ftc.gov) 16 CFR Part 322 Mortgage Assistance Relief Services; Final Rule. You might also want to check with your state trade association, some states have created forms for their member's use, and certainly NAR has tools available. As always, consult your attorney for advice in this matter.
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I read the article and my take is the problem is when you advertise yourself as a short sale specialist. If you do one because of the circumstances then no problem.
I'm glad there are specialists and experts. This is an area I've avoided because I am neither. I understand the need for expertise in this area is growing but for now, I'm leaving this part of the business to others.