MARS, which stands for Mortgage Assistance Relief Services, is a new rule enacted by the Federal Trade Commission which went into effect on February 1st of this year. It applies to any real estate broker, realtor, or investor who assists distressed homeowners with loan modifications or short sales. The rule was designed to protect struggling homeowners from mortgage relief scams that misrepresented themselves as being part of the government, and fraudulently charged upfront fees for services they never rendered. In typical government fashion, the "powers that be" at the FTC felt it was better to over-regulate everyone in the entire country rather than just prosecuting the few scammers who were actually defrauding consumers.
The main provision of the rule is the Advance fee ban, which prevents companies from collecting any fees until they have provided consumers with a written offer from their lender or servicer that the homeowner decides is acceptable. Companies that provide mortgage assistance must also remind consumers of their right to reject the offer without any charge.
The 2nd major provision of the rule requires certain disclosures to be made in all advertisements that specifically target homeowners in distress. The ads must disclose that the mortgage assistance company is not associated with OR approved by the government, and that even if the consumer decides to use their service, their lender still may not agree to change the terms of their loan.
The government has always been a little guilty of overkill, and they don't just bring a gun to a knife fight...they bring a whole weapons cache full of missiles and AK-47's...and that's certainly the case when it comes to the fines associated with MARS as well. In fact, if you're found to be in violation of MARS, it will cost you $11,000 on EACH violation, and for EACH day you are found to be out of compliance. So, if you work with distressed homeowners in your real estate investing business or brokerage, take time to study up on MAR and make sure your company is in compliance.
What do you think about these new regulations? A necessary evil, a waste of time, or the most brilliant idea the government has ever had? We'd love to hear your thoughts...so take a few seconds & comment in the box down below.
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