Confused About FTC MARS? Enough Rumors – I Called The FTC! **FLORIDA UPDATE February 2011

Real Estate Broker/Owner with Rulnick Realty, Inc.





It was pretty confusing when the news starting circulating online about FTC MARS (Mortgage Assistance Relief Services)  Final Rule. The rule, which came out in December 2010, affects “for profit” companies that help consumers modify loans to avoid foreclosure, including short sales.  It outlines prohibitions and disclosure requirements these companies must abide by. 

Uh oh! But what about us?  Real estate agents help people do short sales all the time.  My partner, Broker Bryant, just talked about the FTC ruling and its affect on short sale agents in his recent blog post.   He brings up the discussions that were vigorously flowing on courtesy Todd J. Sullivan and Richard Zaretsky on Activerain.

The question is– do real estate agents have to comply?  The answer seemed vague to many of us.  Some said their State’s board attorneys determined agents must comply. Still, others (including me) did not interpret that from the FTC footnote 126, page 12, that addresses real estate agents.  And worse, yet, as Bryant Tutas said, there was nothing specific from the National Association of Realtors about the rule after it came out.

So what did I do?  I had enough of the confusion.  I was going to call the Federal Trade Commission.  Why not?  I was tired of reading rumors about how some interpreted the law one way, others didn’t agree, and no one knew for sure. 

So I telephoned the FTC.  Of course, it wasn’t easy.  First I got a clerk who told me he couldn’t answer specific questions about the rule and I had to hire a lawyer. After he saw my persistance, he transferred me to another person, who listened, then transferred me to an FTC attorney.  Voice mail! I left a message saying I represented a national real estate forum,, and was looking for clarification about whether real estate agents must comply with the MARS ruling. FTC MARS

One day later?  Guess who called me? The FTC attorney.  She was quite nice and told me she was a “public servant”.  She said real estate agents do need to comply with the ruling. She emphasized that our claims to consumers should not overstate or guarantee the outcome of a short sale. The attorney welcomed further inquiries and said anyone is free to call the FTC and she would also answer questions via email.

So what did I do next?  I called the Florida Association of Realtors legal hotline.  I had inquired about the ruling a few days earlier.  The staff attorneys had not heard of it, so were going to research and get back to me.  I told the FAR attorney that I had called the FTC (“YOU Called the FTC?” she gasped) and what I was told about Realtor compliance.  The FAR attorney said she wanted to verify the jurisdictional reach of the law, and whether it applied to Florida agents.  SEE UPDATE BELOW REGARDING FLORIDA REAL ESTATE AGENTS *****.

My main point, though, is not to be afraid of your government.  You are a citizen. You elect, hire and pay the employees of the government, who work for you to better our country.  They are not deities.  They are not in ivory towers. They are people, and as the kind FTC attorney told me, they are your “public servants”.

***UPDATE:   I spoke again with Florida Association of Realtors legal department this morning UPDATE**** They directed me to Chapter 494 Opinion Letter regarding Florida's codification of the SAFE ACT.  Florida real estate agents, also see below from the Florida Bureau of Financial Regulation

***UPDATE NUMBER 2 FEBRUARY 25 2011:  Florida Association of Realtors legal department has send out a mass email alert and I also received a phone call from the Legal Department Supervisor.  Florida Realtors are now required to use MARS FORMS - See MARS Link- Here is the bulletin:

Florida Realtors® Legal Alert


New FTC rules require short sale disclosures

Be advised that the Federal Trade Commission (FTC) has issued new rules that might impact real estate practitioners who represent clients involved in short sale transactions. Depending on certain factors, the so-called MARS rules (Mortgage Assistance Relief Services) could require members to make certain disclosures to consumers if they negotiate a short sale with a lender or advertise their short sales experience.

The MARS rules took effect on Jan. 31, 2011.

Florida Realtors has created a MARS Information Center on where you'll find four disclosure forms. Florida Realtors attorneys advise you to begin using these immediately if you are involved in short sale transactions.

You'll also find a primer on the new disclosures (document titled Roadmap to the new FTC disclosures for Short Sale transactions), a link to the actual FTC rules and an interpretation of the rules by the National Association of Realtor's legal team.

Please keep checking the MARS Information Center for updates.

Wendy Rulnick

, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy:

Destin Florida Short Sales


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"It's Wendy... It's Sold!"

Wendy Rulnick, Broker/Owner Rulnick Realty, Inc.

Call Wendy Rulnick 1-850-650-7883 ext 204

email property searches and community info


Wendy Rulnick is the marketing choice for sellers on the Emerald Coast who want to list and get their homes and condos sold in Destin, Sandestin, Bluewater Bay, Santa Rosa Beach, 30-A, Watercolor, Seaside, Rosemary Beach, Seacrest Beach, Kelly Plantation, Regatta Bay, Destiny and more.

Rulnick Realty



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Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Nice clarification Wendy.

I so agree where is NAR? Since the state associations get their marching orders mostly from NAR, I'll give them a pass as just like your FAR didn't know.


Feb 06, 2011 12:33 AM #26
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Also goes to show you, Wendy, that your own state Association might not be up on all the latest information.

Feb 06, 2011 01:40 AM #27
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Wendy, I'm surprised the associations aren't up to speed on this since it does look like it applies to real estate agents. Keep us posted.

Feb 06, 2011 01:41 AM #28
Terry Bishop
Terry Bishop Realty LLC - Tucson, AZ
Earning Your Trust and Confidence...

I like your gutsy position Wendy.  I wonder, however, if this is like asking the Internal Revenue Service to do you taxes, and every person comes out with a different number.  I totally agree when we don't know the answer we seek someone who does.  There is always the adage "don't be the source, be the source of the source".

Feb 06, 2011 01:50 AM #29
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hi Wendy: I read through the MARS link you provided, and actually, I believe that as a real estate agent we are already prohibited from doing those things because those things constitute practicing law. We are not licensed, as an agent, to practice law. We can't "guarantee" any short sale outcome, nor can we advise clients to stop making their payments, etc. So we don't need MARS to apply to us because we are, like it or not, already governed under those guidelines.

But good for you for calling the FTC and not taking no when you got the runaround. No wonder you're a great short sale agent! Go Wendy!!!

Feb 06, 2011 02:02 AM #30
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Hi Everyone - I want to point out more details from the FTC MARS requirements so you don't have to follow the link - here is it from the FTC site:

Advance fee ban

The most significant consumer protection under the FTC’s new rule is the advance fee ban. Under this provision, mortgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. The companies also must remind consumers of their right to reject the offer without any charge.


The Rule requires mortgage relief companies to disclose key information to consumers to protect them from being misled and to help them make better informed purchasing decisions. In their advertising and in communications directed at individual consumers (such as telemarketing calls), the companies must disclose that:

  • they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
  • the lender may not agree to change the consumer’s loan; and
  • if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

Companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. The companies also must disclose the amount of the fee.

Prohibited claims

The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:

  • the likelihood of consumers getting the results they seek;
  • the company’s affiliation with government or private entities;
  • the consumer’s payment and other mortgage obligations;
  • the company’s refund and cancellation policies;
  • whether the company has performed the services it promised;
  • whether the company will provide legal representation to consumers;
  • the availability or cost of any alternative to for-profit mortgage assistance relief services;
  • the amount of money a consumer will save by using their services; or
  • the cost of the services.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Feb 06, 2011 02:09 AM #31
Aaron Vaughn | Builder | Investor
Conifer Homes - Buda, TX
If the deal makes sense, the cash will follow.


Here is the problem I see with what the FTC attorney says — it's an opinion from the FTC attorney! Actually, the best information you got was from the first clerk you talked to at the FTC, who said you'd need to hire an attorney.

Really, in essence, each individual state's real estate commissions make the rules we follow in our states. They are the ones who need to make the interpretation of the FTC rules and, ultimately, they are ones who need to hire they attorneys to get this settled.

But, that being said ... what is the harm in following those rules/guidelines now — even if ultimately it is decided that real estate agents don't need to follow them? Savvy agents who handle short sales should already have a set of disclosures that are very similar to these rules, anyway. It might take a little tinkering with those disclosures, but it's not that big of a deal.

Feb 06, 2011 02:25 AM #32
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Jurisdictional reach of the law -- hmmm...I will be curious to see how this plays out, as the law can be very complex indeed, oftentimes because the lawyers who write them aren't specific enough.

Feb 06, 2011 03:24 AM #33
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Way to go Wendy! I think this ruling is going to steer even more agents away from handling short sales. 

Feb 06, 2011 03:33 AM #34
Tony and Suzanne Marriott, Associate Brokers
BVO Luxury Group @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ


From the info recently published by the Arizona Department of Real Estate MARS will impact those that are "negotiators" only far more than listing agents who negotiate for their Seller clients.  Here is the link to the ADRE info:

Also - agents claiming to have closed "hundreds" with astoundingly high list to close ratios need to make sure their claims match the data in the MLS.


Feb 06, 2011 03:38 AM #35
Linda Humphrey
Humphrey Home Connections Realty, Reno, Nevada - Reno, NV
CRS, Broker/Owner HHC Realty

Wendy - Good for you to refuse to be deterred from your mission to discover the truth! I will respectfully disagree with Aaron (#32); being told to "hire a lawyer" in order to understand government rules that are being imposed on us and that you just want to follow in good faith is outrageous. I have seen people with barely two dimes to rub together robbed by advance fee scam artists, so I understand the need for regulation, but this is typical govenment let's kill a mosquito with a cannon. Hopefully some clarity will emerge and we can get on with doing our jobs and helping people.

Feb 06, 2011 03:53 AM #36
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Aaron #32- We do make many disclosures to our potential sellers before they sign a listing agreement. That is not the issue. The issue is that this rule is still very vague and where they require those disclosures to be. 

Also, it only benefits the banks and lenders who want to get into the real estate business. They of course are exempt. 

What really bothers me is that the servicers  have a fiduciary relationship with their investors, the note owners. The homeonwer who pays their mortgage payment to the servicer is a customer not a client. But no where in this ruling do servicers have to disclose this so that the homeowner really thinks the bank is there to help them! This is an outrage. They punish all of us, but don't even make banks disclose anything in regards to short sales. 

The other thing that is really awful about this is where you have to put the 10 sentences. That means they just took away your ability to get good SEO rankings, your ability to advertise and your ability to compete with the banks in advertising. Your keywords need to be above the fold on your website and in your blog posts. If this huge disclosure has to be there first and it does say it has to be above the fold, there goes  28% of your on page ranking factors down the tubes. Katerina

Feb 06, 2011 04:12 AM #37
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Wendy- So that means no more postcards:) Or the post card would only be the disclosure! Hah! Great marketing that is, scare the begeezies out of the homeowner first! 

Feb 06, 2011 04:15 AM #38
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Wendy, our government forgets that they work for us! Congrats on the feature!

Feb 06, 2011 04:26 AM #39
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

It will be interesting to see how this works out in the coming months.  I haven't heard anything from my state board, or NAR, on this.

Feb 06, 2011 04:38 AM #40
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

"She emphasized that our claims to consumers should not overstate or guarantee the outcome of a short sale."

I think that's what everybody really needs to know about the whole thing.. Some of the things I hear from sellers who have talked to whoever amazes me.

Second -- I think the FTC ruling applies to services that take an advance fee. No shortage of stories of sellers that paid some advance fees for a loan modification and nothing happened for them. I've heard of short sale agents requiring advanced fees to take short sale listings and I've looked into doing this myself but too much uncertainty from the powers to be.

I've come across some agents disguising it as a Broker Administration Commission (AKA transaction fee) paid up front but I hardly think the risk is worth the reward if by chance somebody with "do what we tell you" power really looks closer at why they are requiring this fee up front.




Feb 06, 2011 08:52 AM #41
Craig Hatcher
Georgia Residential Realty, LLC - Atlanta, GA

Great post. If you need information go to the source!

Feb 06, 2011 01:23 PM #42
Tamara Inzunza
RE/MAX Executives - Alexandria, VA
Close-In Alexandria and Arlington Living

I, too am surprised when I hear about the people who have paid large fees for loan mods or upfront fees for short sales.  These bad apples give us all a bad name.

Feb 06, 2011 01:41 PM #43
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Hello All - I have an important update .  I spoke with the Florida Association of Realtors attorneys again this morning.  They asked me to reference the following Florida specific information that already governs real estate agent's allowed short sale acitivies.  Read through.  (Others - find out how your state deals with Federal laws.)

Chapter 494 Opinion Letter regarding Florida's codification of the SAFE ACT.  Florida real estate agents, also see below from the Florida Bureau of Financial Regulation

If a real estate licensee, who has been asked by a client to list a house for sale, enters into dialogue with the client's lender to see if a short sale would be acceptable, would the licensee need to comply with the loan modification provisions under Section 494.00296, F.S., if the only compensation for the real estate licensee would be the commission on the sale?

Answer: The conversations between the real estate licensee and the lender appear to be ancillary to the services being provided by the real estate licensee in the sale of his client's property. As long as the only remuneration sought is the standard commission for the area on the sale of the property and no other fees are collected for the dialogue with the lender, the activity mentioned above does not appear to fall under the provisions of Section 494.00296, F.S.

Feb 07, 2011 04:50 AM #44
Chandler Real Estate Liz Harris, MBA
Liz Harris Realty - Chandler, AZ

Good job, Wendy... I am so proud of you for doing this!  Proactive to say the least!

Feb 07, 2011 04:01 PM #45
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