[EDIT July 15, 2011] CLICK HERE to hear about the changes to the MARS disclosure requirements and how it affects Real Estate Agents!
As of December 29th 2010 the FTC requires new disclosures to be made by anyone providing mortgage assistance services (which includes loan mods, short sales, or other foreclosure prevention services).
Section 322.2 DEFINITIONS (i) ‘‘Mortgage Assistance Relief Service’’ means any service, plan, or program, offered or provided to the consumer in exchange for consideration that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following: and followed by subsection (6) Negotiating, obtaining or arranging:
(i) A short sale of a dwelling,
(ii) A deed-in-lieu of foreclosure, or
(iii) Any other disposition of a dwelling other than a sale to a third party who is not the dwelling loan holder.
Many people believe that this only applies to ‘third party negotiators’ however, I prefer to error on the side of caution and have upped my disclosures as that is really the only part of the FTC rule that would effect your day to day business. Until attorney’s get a good crack at some litigation about whether agents are exempt, it’s best to ‘over disclose’ and be safe.
Are you in compliance? I’m personally blown away that we are near the end of January 2011 and NAR, my local association of realtors have yet to provide recommended disclosures to keep me in compliance with this new FTC ruling… instead they say “this doesn’t apply to agents”. I’ve read it in detail and came away with the understanding that this does apply to short sales.
I’ve been using my own rough disclosure in the mean time and I recommend you use it as a starting point to protect yourself until you receive some official wording from NAR or another organization that is paid to keep us safe from unnecessary liability.
Basically, the FTC with Mortgage Assistance Relief Services(MARS) dictates:
- You must give clear disclosure (guided by MARS) on your marketing that you are not affiliated with the lender or a government organization.
- You must give clear expectations of fees & results.
- You may not charge fees in advance.
If you’d like to have the disclosure I’m using please complete the form below. The reason I’m asking you to request the disclosures with the form below is so I can send out an update should one be necessary.