Talk to 3 attorneys on the subject and you'll get 3 different opinions. Talk to 3 short sale 'experts' on the topic and you'll get 3 different opinions.
...so, I'll attempt to explain why I believe it is better to be SAFE than SORRY.
Many agents 'argue' that based on footnote 126 from page 35 of the FTC MARS Rule that ALL Agents are 'exempt' from the disclosure requirements. My emphasis is in bold and underlined below and my commentary is only the portion that is italicized:
“As a general matter, the Final Rule is not intended to apply to the marketing of services to assist consumers in selling their properties to third parties. The Final Rule, however, does specifically cover the marketing of services involving the sale of properties to third parties if those services are designed or intended to assist consumers in averting foreclosure, e.g., through a short sale or deed-in-lieu of foreclosure. One commenter urged the Commission to exempt licensed real estate professionals from the Final Rule. NAR at 1-2. The commenter argued the Rule would restrict real estate agents in helping consumers with the process of selling their homes through short sales. Id. The Commission concludes that an exemption for real estate agents is not necessary [MY NOTE: This does not say agents are excluded, but that agents, if performing their normal services of listing and showing homes are not performing Mortgage Assistance Relief Services, and are excluded as long as they only perform those services. Regular real estate services don't NEED an exemption... but this does not say an agent doing short sale negotiations is exempt]. Real estate agents customarily assist consumers in selling or buying homes and perform functions such as listing homes for sale, showing homes, and finding desirable homes for consumers. The Commission is aware that real estate agents may perform these functions [MY NOTE: These functions refers to the previous sections where it clearly defines 'normal' real estate services, but does not say anything of short sale negotiations.] when properties are bought or sold through a short sale transaction, but does not consider these services to be MARS.”
This pretty clearly states that you can do a short sale (as an agent), without talking to the banks about negotiating a payoff or postponing a sale (and be exempt from MARS). The seller can perform this service on their own or hire another company or individual to perform this service. If you choose to do this service for free or as part of your listing commission, you are providing a Mortgage Assistance Relief Service and 'should' error on the side of over disclosing vs. ignoring this altogether.
Will the FTC regulate this? Probably not too well, but does that mean we should ignore it? Again, better safe than sorry.
For more info on what this FTC ruling requires of those performing MARS (Mortgage Assistance Relief Services), watch the video below on my blog and you can also get a complimnetary MARS disclosure that I use when listing a short sale and at the time the short sale is approved and presented to the seller... until NAR comes up with a disclosure to cover our butts.
Trent Chapman
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