First, some key terms under the new rule.

• A “provider” includes any person who provides, offers to, or arranges for others to negotiate, obtain or arrange a short sale of a dwelling.
• A “dwelling” means a residential structure containing four or fewer units, whether or not that structure is attached to real property, that is primarily for personal, family, or household purposes and includes individual condominium units, cooperative units, mobile homes, manufactured homes and trailers.

Now, to be clear, the new MARS rule does not apply to real estate brokers who provide only real estate brokerage services to their clients (e.g. listing, showing, negotiating the transaction with the buyer) and who do not attempt to negotiate or otherwise provide services related to obtaining lender approval of a short sale. In addition, attorneys who satisfy certain conditions are exempt from the new MARS rule.

The MARS rule has three main elements.

FIRST ELEMENT – DISCLOSURE Short Sale Negotiators must now provide significant disclosures in any and all commercial communications issued to homeowners. For purposes of the rule, “commercial communications” means any written or oral statement, illustration, or depiction, that is designed to effect a sale or create interest in purchasing any short sale service, plan, or program. Promotional materials and items and Web pages are included in the term “commercial communication.”

With respect to general commercial communications that occur prior to the consumer agreeing to use a Short Sale Negotiator (and that is not directed at a specific consumer), Short Sale Negotiators must include the following:

(1) “(Name of company) is not associated with the government, and our service is not approved by the government or your lender.”

(2) “Even if you accept this offer and use our service, your lender may not agree to change your loan.”

And there’s more. When making any commercial communications directed at a specific consumer, the disclosures must also include the following:

“You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our services.”

For the purposes of this disclosure, the amount the consumer has to pay consists of the total amount the consumer must pay to purchase, receive and use all of the mortgage assistance relief services that are the subject of the sales offer, including, but not limited to; all fees and charges. Many Short Sale Negotiators attempt to get paid by the listing broker. Even if that is the case, a disclosure of that fee must be made.

SECOND ELEMENT – FEES Under the MARS rule, a Short Sale Negotiator:

(a)  may NOT request or receive payment of any upfront fees or other consideration until the consumer has executed a written agreement with their lender or servicer incorporating the offer of mortgage assistance relief the Short Sale Negotiator obtained;

(b) MUST disclose, at the time the Short Sale Negotiator furnishes the consumer with the proposed written agreement with their lender or servicer (e.g. the short sale approval letter), the following information:

“This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [same amount as previously disclosed] for our services.” “and,

(c) MUST provide, at the time the Short Sale Negotiator furnishes the consumer with the written agreement specified in paragraph (a) above, a notice from the consumer’s lender or servicer that describes all material differences between the terms, conditions, and limitations associated with the consumer’s current mortgage loan and the terms, conditions, and limitations associated with the consumer’s mortgage loan if he or she accepts the dwelling loan holder’s or servicer’s offer.

THIRD ELEMENT – PERFORMANCE REPRESENTATIONS The MARS rule makes it unlawful for any Short Sale Negotiator to engage in certain conduct including:

(a) Representing in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of the short sale negotiation service, that a consumer cannot or should NOT contact or communicate with his or her lender or servicer;