Is My Business Covered by the Mortgage Assistance Relief Services (“MARS”) Rule?
If your business is a for-profit provider of mortgage assistance relief services, the Rule applies to you. Bona fide non-profit organizations aren't covered, but the Rule applies to companies that falsely claim non-profit status.
The Rule defines "mortgage assistance relief service" as a service, plan, or program that is represented, expressly or by implication, to help homeowners prevent or postpone foreclosure or help them get other kinds of relief, like loan modifications, forbearance agreements, short sales, deeds-in-lieu of foreclosure, or extensions of time to cure defaults or reinstate loans. The Rule applies whether you work directly with consumers' lenders or servicers to get mortgage relief or you offer services to help consumers do it on their own (for example, by conducting a "forensic audit" or other review of consumers' loan documents).
How does the Rule apply to businesses in the mortgage industry?
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Mortgage Brokers. The Rule covers mortgage brokers who promote loan origination or refinancing transactions as a way for homeowners to avoid foreclosure. Mortgage brokers who don't promote their services this way generally aren't covered by the Rule.
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Real Estate Agents. The Rule covers real estate agents who promote their services as a way to help consumers to avoid foreclosure, for example, by getting a lender's approval for a short sale. However, the Rule doesn't cover real estate agents who don't promote their services this way, and who only provide services to help people in buying or selling homes – like listing homes for sale, showing homes, or finding homes that meet buyers' needs.
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Lenders and servicers. The Rule doesn't cover lenders and servicers that offer mortgage assistance relief services in connection with loans they own or service. For example, the Rule wouldn't apply if a business that services a homeowner's loan helps the homeowner in modifying the loan to avoid foreclosure.
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Accountants and Financial Planners. The Rule doesn't cover professionals like accountants or financial planners as long as they don't claim expressly or by implication that using their services will help a homeowner get a loan modification or other mortgage relief.
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Attorneys. The Rule has special provisions for attorneys who provide mortgage assistance relief services. Having an attorney on your staff or using outside attorneys to perform some of your services doesn't exempt you from the Rule. Nor does having an attorney place fees in a client trust account, by itself, allow you to collect fees in advance.
Even if you don't provide mortgage assistance relief services, you still may have obligations under the Rule. It's illegal to provide "substantial assistance" to someone if you know – or consciously avoid knowing – that they're violating the Rule. What amounts to substantial assistance depends on the facts. Activities like procuring leads (the contact information of potential customers) for MARS providers, helping a MARS provider with its back-room operations, reviewing customer files, processing customers' payments, or contacting customers' servicers are just a few examples. If you work with MARS providers, review their policies, procedures, and operations to make sure they're complying with the Rule because willful ignorance on your part simply isn't a defense.
For more information, see here: https://www.ftc.gov/business-guidance/resources/mortgage-assistance-relief-services-rule-compliance-guide-business
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