FTC’s Mortgage Assistance Relief Services: MARS Rule & Short Sales

by | BiggerPockets.com

In the mid 90’s there was a lot of talk about a popular book called “Men are from Mars, Women are from Venus”, and it was the topic of many talk shows and conversations. Today, we’re talking about MARS again bit in a different context. Regardless of what planet you’re from, when it comes to negotiating short sales, referring your seller to a negotiator, or utilizing a negotiator for your short sale investment, you better be sure you are MARS compliant.

MARS stands for Mortgage Assistance Relief Services, and is a new FTC (Federal Trade Commission) ruling to protect distressed homeowners from mortgage relief scams. Explaining the ruling, FTC Chairman Jon Leibowitz said, “At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results. By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”

This ruling not only applies to loan modifications, but also to short sales. Fines of $11,000 per occurrence and $11,000 per day may be incurred for violations, so it is important that you understand the new regulations and are compliant. If you provide, or arrange for someone else to provide, short sale services, you need to be sure that all documents, correspondence and advertising are in compliance.

Highlights of the Mortgage Assistance Relief Services ruling include:

  • Advance fees are outlawed. You may not collect a fee until the homeowner has an offer in writing that they agree to accept.
  • Homeowner has the right to reject an offer, and no fees would be charged
  • Various disclosures must be included in the initial contact and throughout the process. They need to be in writing. These disclosures are designed to protect the homeowner from being mislead, and help them make better informed decisions. These disclosures include stating you are not associated with the government, and your service has not been approved by the government or their lender.
  • Homeowner has the right to stop doing business with the provider at any time, and no fee is involved.
  • False or misleading claims are prohibited in advertising or communication about services or performance.
  • If you tell the homeowner to stop paying their mortgage, you must also make them aware that they may damage their credit rating, and could lose their home.

As always, the best advice is to have a qualified Real Estate attorney review your documents and marketing, and make sure it complies with the new MARS regulations.

To read the entire ruling go to: http://www.ftc.gov/os/fedreg/2010/december/R911003mars.pdf or view the FTC’s November MARS press release: FTC Issues Final Rule to Protect Struggling Homeowners from Mortgage Relief Scams

About Author

Bill and Jackie Patterson are Nationwide Short Sale Investors. Both licensed Realtors, they have an eclectic background including development, construction, apartments, and restaurants since 1980.


  1. What does this mean for real estate brokerages? We have agents who are Certified Distressed Property Experts and it is our policy that we cannot tell anyone to stop paying they mortgage. We advertise that we can assess a homeowner’s situation and that often times we can help them avoid foreclosure. Each agent does his/her own negotiating. Will we need a disclosure form to comply?

    Thanks for a great article in an ever changing industry.

    Best regards,

    • Bill Patterson on

      Hi Ellen,
      Yes, your brokerage and the individual agents would most likely fall under the MARS ruling. Your marketing and the fact that your agents are Certified Distressed Property Experts add to the assumption by the public that you are able to help them avoid foreclosure. If you log into REALTOR.ORG and go to this link, you can get more information that will help with your disclosures.
      We have been following the intent of this ruling long before it came out, but now have adapted our disclosures and agreements to include the specified language. The world of distressed property sales is ever changing and it is great to see you staying informed and adjusting to these changes!

  2. As someone who handles a lot of short sales and works with Realtors on a daily basis it amazes me how few of them are aware of the MARS ruling, let alone those who are in compliance. I recently posted an article detailing the FTC’s mistake in not exempting Realtors when they had the chance and pointing out why all Realtors are indeed subject to MARS.

    It will be interesting to see if and how the FTC will enforce the rule. It seems to me their intention was to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis but they may have case their net too wide by not exempting Realtors as MARS providers. Perhaps they are like most people and just don’t understand the short sale process.

  3. Bill Patterson on

    I think that anyone that is advertizing or purporting to be a short sale expert, including Realtors should be subject to the ruling. Many Realtors as well as other distressed property relief firms over state their abilities and what they can accomplish. Most home owners don’t know a lot about short sales, foreclosures, etc. and the disclosures are a big help to them. With or without the ruling, anyone working with the home owners should be making the same points as in the disclosures clear to them.

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