What Short Sale Agents Need to Know About New FTC Rule

The National Association of Realtors is cautioning real estate agents about a new rule from the Federal Trade Commission (FTC). The rule is designed to protect homeowners from mortgage relief scams, but it could potentially affect Realtors doing short sales. The rule bans all upfront fees for renegotiating mortgage terms and requires certain disclosures be made to consumers if a short sale is negotiated with a lender on their behalf or when advertising short sales services or expertise. It could also affect communicating with a consumer about a possible short sale prior to the listing agreement being executed or arranging the negotiation of a short sale for a consumer. Realtors not only have to comply with the new FTC rule by not taking upfront fees, but by using specific disclosure language. A clear and legible disclosure must be included in all commercial messages advertising short sale services. Second and third disclosures are also now required by real estate agents before they start mortgage assistance services on behalf of their clients as well as at the time the lender’s short sale approval letter is presented to the client. For more specifics on this as well as disclosure verbiage, check with your local board or on the NAR website.