If you do business in Maryland — or know someone who does — read up. Maryland has a different rule regarding short sales, and it’s one you need to know about.
Quick background: Back in 2011, the Federal Trade Commission said that anyone who gave advice on short sales was providing “mortgage assistance relief services” or MARS, and thus had to make certain disclosures. (They’re to protect consumers from fraudulent loan-modification companies.)
That seemed to apply to Realtors as well, and it meant extra forms for clients and yet more laws to worry about, which wasn’t the FTC’s intent. So after some chatting with the folks there, we got a clarification: The FTC wouldn’t require Realtors who offered short-sale advice to follow all its MARS rules under most circumstances. Yay.
But Maryland has a different twist.
In July, Maryland’s own version of the MARS rules went into effect. And the state’s Commissioner of Financial Regulations has said that its rules for Realtors are a bit tighter than the FTC’s.
Real estate agents in Maryland will have to comply with the state’s MARS Act — which means at least some additional disclosures — if they.
- collect any money beyond the customary commission;
- assist a seller in negotiating with the lender to obtain approval of a short sale;
- represent to the public that they are “experts” in short sales;
- make representations that they can obtain a short sale;
- provide advice regarding the benefits of a strategic default; or
- make predictions with regard to the likelihood of a deficiency or the payment of relocation costs involved in a short sale.
I bolded two of those bullets for a reason. If you’re a typical Virginia Realtor, you probably aren’t getting paid as a foreclosure counselor or short-sale negotiator. But what if your website touts your short-sale expertise? Or what if you say, “I think you can work with your bank and get a short sale”?
In either case — were you in Maryland — you might be subject to its MARS Act. In that case, its Real Estate Commission might be interested in what you’re up to.
Our advice: If you’re working with a short-sale in Maryland, check out the Maryland Department of Labor, Licensing, and Regulation’s site, “Guidelines for Licensees in Short-Sale Transactions,” talk to your broker, and — if necessary (and you’re a MAR member) — contact the MAR Legal Hotline.