Big news for Santa Cruz County real estate agents who assist financially distressed borrowers in obtaining short sales from mortgage servicers or lenders. The Federal Trade Commission (FTC) issued a statement today stating that it will forbear from enforcing most of the provisions of the Mortgage assistance Relief Services (MARS) rule against real estate agents or brokers working with distressed borrowers on short sales.
The MARS rule formerly required a series of disclosures, which many complained were misleading and confusing to distressed borrowers working on short sales. Now, however, there is a stay on many of these disclosures.
According to a press release from the FTC:
The stay applies only to real estate professionals who: 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing the practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. These professionals, however, remain subject to the Rule's ban on misrepresentations.
The Commission stated that the stay does not apply to real estate professionals who provide other types of mortgage assistance relief, such as loan modifications. In addition, the FTC will continue to enforce the Rule and Section 5 of the FTC Act, which prohibits unfair and deceptive practices, against all other providers of mortgage assistance relief services.
So, for those agents in the state of California (and likely throughout the U.S.), there may be two less forms that sellers have to sign. and, we also may get the added benefit of a lot less confusion.