Realtors® affected by new FTC short sale rules

Realtors® involved in short sales transactions may be affected by rules recently issued by the Federal Trade Commission (FTC).  

Although the new Mortgage Assistance Relief Services (MARS) rules are primarily directed at companies that offer loan modification services to consumers, they also affect Realtors® working with short sales if they negotiate short sale terms with a lender, advertise short sales experience or take upfront fees from short sale sellers.

The rules include two major provisions.  First, any providers of MARS services are prohibited from collecting any up-front fees for their work.  If a Realtor® negotiates with a lender about the terms of a short sale, he’s providing a MARS service, and cannot collect any up-front fees.

Second, service providers have to provide detailed disclosures at different steps of the process, depending on what services are provided and when.  For example, general advertising about short sale services will require one type of disclosure, actually providing MARS services to a specific client may require a different disclosure, and a third disclosure is required at the time an offer of mortgage relief is provided to a seller.

NAR has been tracking these rules since they were first proposed in 2009 and continued to discuss the issue with the FTC staff after the final rule was issued.  Detailed information about the impact of these rules on Realtors® has been posted on the NAR website. 

PAR is currently reviewing the rules and NAR’s guidance to determine how to implement the requirements of these rules in its short sale forms.