RealEstateAgentsAndM.A.R.S.–NeverMind

19. Jul, 2011

FTC Rules That Real Estate Agents No Longer Have To Comply with the Mars Advertising Rules

Just a few short months ago, the Federal Trade Commission (FTC) issued the new M.A.R.S. rules and specifically determined that these new rules would be applicable to real estate agents who list short sale properties. This would require that all the mandatory advertising disclosures be included in all short sale marketing materials. On July 15 the FTC commissioners voted 5 – 0 to stop enforcing most provisions of the new rules against real estate brokers and their agents who assist financially distressed consumers in obtaining short sales from their lenders or servicers.

As a result of the stay on enforcement, real estate professionals will no longer have to make the disclosures required by the rule if they are assisting with the listing or purchase of short sales. It had become evident that the new disclosures were in the context of short cells misleading and confusing consumers and was having the inadvertent effect of discouraging real estate professionals from helping consumers with these types of transactions when more and more American homeowners are seeking assistance with short sales.

Commission stated that the stay of enforcement apply only to real estate professionals who are 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. Agents however, will remain subject to the rules ban on misrepresentations. The commission further stated that the stay does not apply to real estate agents who provide other types of mortgage assistance relief such as loan modifications.

I guess that this is another example of the government hurriedly writing and passing rules to protect consumers from foreclosure scammers without really considering their impact or even asking for input on how the new rules would work in the real world. Because of this lack of foresight, tens of thousands of short sale agents around this country with almost no advance notice were forced to change all their advertising and marketing at great expense or risk violating federal law. Now the rules are as they were before M.A.R.S. was implemented. To read a copy of the FTC’s news release go to http://www.ftc.gov/opa/2011/07/mars.shtm

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