Legal Alert Regardin FTC Mars Rule and Short Sales

With no sign of short sales going away any time soon and the ongoing need of legal representation to distressed homeowners, Arizona’s legal market is being saturated with more and more attorneys who now “dabble in” real estate law and want to jump on the short sale band wagon.

Some of these attorneys are offering their services on a “flat fee basis.”  What these attorneys presumably do not know, however, is that flat fee earned upon receipt billing arrangements are strictly precluded pursuant to the new FTC Mortgage Assistance Relief Services Rule (the “MARS Rule”).  16 CFR Part 332. Moreover, anyone who knowingly assists an attorney, including REALTORS®, who violates the MARS Rule, may also be subject to violation and penalties under the new MARS Rule.  Therefore, if you know or have reason to know that an attorney is offering short sale services on a “flat fee” basis, you may be in violation of the MARS Rule for any referrals to the non-compliant attorney.

For more information about the MARS Rule, you may visit the following links:

https://www.ftc.gov/tips-advice/business-center/guidance/mortgage-assistance-relief-services-rule-compliance-guide

https://www.aaronline.com/azr/2011/march/mars-rule-requirements-for-short-sale-brokers.aspx

https://www.ftc.gov/tips-advice/business-center/guidance/mortgage-assistance-relief-services-rule-compliance-guide

https://www.ftc.gov/news-events/press-releases/2011/02/ftcs-mortgage-assistance-relief-services-advance-fee-ban-takes

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