MARS Update

The Latest on MARS from NAR

(March 29, 2011) Please see the information we recently received from NAR regarding the FTC’s position on the enforcement of MARS rules and how it pertains to real estate brokers who might be negotiating short sales within their practice of real estate brokerage. The information below is quoted from an internal email from NAR’s legal department:

The FTC realizes that its current disclosure language does not make sense when a real estate broker is representing a consumer in a short sale transaction.  Therefore, the FTC has told us [NAR] brokers listing a property that they believe is/will be a short sale need not make the consumer specific disclosure nor do real estate professionals need to make the disclosure called for at the time the lender approves the short sale. However, no broker should charge an upfront fee if the broker’s services include short sale negotiations.  Additionally, any broker advertising himself/herself as a short sales [sic] specialist should make the advertising disclosure.

So, to summarize, here is what we know to date:

• If you are practicing real estate brokerage and on an incidental basis you become involved in negotiating a short sale with seller’s lender, you do not need to make the MARS disclosures.

• If you hold yourself out as a MARS expert/specialist, you do need to make the MARS disclosures including the general commercial disclosures and follow the MARS record-keeping requirements.

• You must still be very careful when and if you refer a consumer to a MARS provider because the rules do provide that you could be held responsible if you know or “consciously avoid” knowing that the MARS provider is violating the rules.

• NAR is seeking further clarification from FTC as to situations in which a real estate brokerage company is charging an up-front retainer fee to cover out-of-pocket costs on deals that might not close.  Stay tuned for developments/clarification on these questions.