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FTC decides not to enforce parts of MARS

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The Federal Trade Commission is no longer enforcing several provisions outlined in the Mortgage Assistance Relief Services rule, known as MARS, to ensure distressed homeowners have clear and easy access to foreclosure prevention services, including short sales. "As a result of the stay on enforcement, these real estate professionals will not have to make several disclosures required by the rule that, in the context of assisting with short sales, could be misleading or confuse consumers," the FTC said in a statement. The FTC said it is backing away from enforcement of the MARS provisions to ensure the guidelines do not "inadvertently discourage real estate professionals from helping consumers with these types of transactions." The MARS rule was issued in 2009 after the FTC brought law enforcement actions against foreclosure and mortgage relief companies. The rule outlined several disclosures that have to be made by a company offering foreclosure relief services, including short sales. The MARS rule specifically required participants to disclose more information about their services and banned advanced fee collection. In a press release issued Friday, the FTC said the rule caused a number of real estate professionals to report back, saying the disclosures were "confusing customers and inaccurate in some contexts." The stay on enforcement applies only to real estate professionals who are licensed, in good standing under state requirements and in compliance with all laws. Anyone who meets these requirements is now exempt from "the obligation to make disclosures and from the ban on collecting advance fees," FTC said. However,  any misrepresentations made to distressed homeowners pursuing a short sale are still subject to enforcement action by the FTC. The commission's exemptions do not apply to professionals who provide other types of mortgage debt relief or loan modifications. Section 5 of the Federal Trade Commission Act, which bans unfair or deceptive practices, remains in full effect and is not impacted by the MARS changes, according to the FTC. Write to Kerri Panchuk.

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