What is MARS?

As a homeowner, you may have never heard about MARS, which is an acronym for Mortgage Assistance Relief Services, but you NEED to know about it if you are going to embark on a short sale.

MARS, a set of rules, was created by the Federal Trade Commission (FTC) in 2010, largely because there were so many mortgage relief scams that would basically charge large upfront fees to assist homeowners to modify their loans and then never achieve results and pocketing the money. Some of the worst took the upfront fees and never did any work!

So if you are trying to pick a Realtor to list your short sale, make sure that any and all people that they work with to get you through the process are MARS compliant.

The FTC states that Realtors are not covered by the MARS rules, but there is some cloudiness with regard to this.

Some of the basic rules are:

If a mortgage relief company advertises or makes promises, they must disclose that:

• They are not associated with the government, nor are their services been approved by the government or the consumer’s lender;
• The lender may not agree to modify the homeowner’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.

There are many rules for these mortgage relief companies, largely to prevent false and misleading claims in the areas of promising results, amount of money you might save using their services, the cost of their services, etc.

Attorneys, on the other hand are exempt from these rules, as long as they meet certain conditions, including: they are engaged in the practice of law, they are licensed in the state where the consumer or the dwelling is located, and they are complying with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must meet a fourth requirement – they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.

My belief is that although MARS compliant non attorneys can be successful for you to employ, it is always good (and safer) to consider the use of an attorney/negotiator team. With the complexity of multiple loans, HELOCs which have been used for non-house expenditures, the role of deficiency and anti-deficiency laws depending on the state, and completion of the short sale without fear that a lender may come back to you later because of a court judgment, it may be better to be safe than sorry.