Important MARS Rule Update

The following message, by AAR, is an update about the MARS Rule. Please direct all questions back to AAR.

“The Federal Trade Commission has announced that it will not enforce most MARS Rule provisions against Short Sale Brokers and will transfer MARS rule making authority to the Consumer Financial Protection Bureau on July 21, 2011.

Today the Federal Trade Commission (“FTC”) announced that it will not enforce most of the provisions of the Mortgage Assistance Relief Services (“MARS”) Rule against Short Sale Brokers. (See, FTC Press Release: 07/15/2011 at

The FTC MARS Enforcement Policy states:

Until further notice, the Commission will forbear from taking any enforcement action for violation of the MARS Rule with the exception of the Rule’s prohibition against misrepresentations in Section 322.3(b) against a real estate professional who provides “any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer [in] . . . [n]egotiating, [o]btaining or [a]rranging . . . [a] short sale of a dwelling.”(footnote omitted)

Notably, the FTC Enforcement Policy also states:
Additionally, on July 21, 2011, the Commission’s rulemaking authority with respect to the MARS Rule will transfer to the (CFPB) (footnote omitted). Thus, the CFPB will have the authority to determine whether any modification of the MARS Rule is warranted with respect to real estate professionals who assist a consumer in negotiating or obtaining a short sale.

To read the entire Enforcement Policy, go to

What does this mean?  It means that the MARS Rule has not yet been revised or repealed.  The FTC is stating that it will not enforce the MARS Rule disclosure and advance fee provisions against brokers assisting a seller in a short sale transaction at this time.

Short sale brokers still must comply with Arizona state law, which prohibits a real estate licensee from receiving additional compensation for negotiating a short sale, unless the real estate licensee is also licensed as a loan originator by the Arizona Department of Financial Institutions (“DFI”).

There may be more changes to come, so agents should be advised to check with their brokers about their firm’s short sale policy.”


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  1. jamesmoyer

    I’m happy that the FTC figured this out. Talking to many brokers and attorneys no one was on the same page. I think you are still going to see a lot of brokers require a MARS disclosure when you take a short sale listing. Better to disclose in my opinion..

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