Download Mortgage Assistance Relief Services (MARS) Rules

Mortgage Assistance Relief Services (MARS) Rules
By: Hank Lerner, Director, Professional Practice
Who is Covered?
The rules prohibit misrepresentations by “any person.” This is a very broad term that applies
both to individuals and corporate entities, so real estate brokers and mortgage brokers are
subject to potential liability just as are individual agents or loan officers. And it really does mean
any person – the commentary to the rule makes it clear that rule applies not just to those
providing the original information about a loan (a mortgage broker, for example), but to the real
estate salesperson or builder who passes on the information in a brochure, and even to the
advertising agency who helps design and produce the brochure.
Prohibited Misrepresentations
The rule forbids any “material representation…regarding any term of any mortgage credit
product.” While there is no precise definition of that term, the rule lists over 20 specific
misrepresentations that are prohibited, including items such as the rate or amount of interest,
the variability of interest rates, payment amounts and the terms under which a consumer can
purchase any additional products such as credit insurance. Basically, if you provide information
that turns out to be false or misleading, it’s covered.
Mortgage Credit Product
The MAP rules only apply to certain communications regarding a “mortgage credit product.” The
definition this term has two parts. First, it is “any form of credit that is secured by real property
or a dwelling.” A “dwelling” includes any building with 1-4 residential units, and includes
condominiums, cooperatives and manufactured homes (mobile homes). Second, the secured
credit must be “offered or extended to a consumer primarily for personal, family or household
purposes.” To be covered by the rules, a loan must meet both criteria. A commercial loan
secured by a residential property isn’t covered, nor is a personal loan secured by a commercial
property.
Commercial Communication
The rule only applies to potential misrepresentations in a “commercial communication,” defined
as a written or oral statement “that is designed to effect a sale or create interest in purchasing
goods or services.” Basically, there’s a line between providing helpful information about the
mortgage process, and providing information about particular products that a buyer might
choose.
For example, a brochure that explains the difference between preapproval and prequalification
would not be a commercial communication because the purpose of the brochure is to educate
consumers about the process, not to get them to actually buy a product. But you’re covered if
you give them a prequalification form and explain how to fill it out. Similarly, an article that
discusses the national average for mortgage rates is probably not a commercial communication,
but rate sheet showing current rates on specific loans would be, since the presumed intent is to
have the consumer start the process of selecting a particular loan product.
It is also worth noting that there are virtually no limitations on what constitutes a
“communication.” The rule lists over 30 examples of types of communications, including letters
and mailers, telemarketing or on-hold scripts, training materials provided to marketing partners,
TV or radio ads, and website content, but also makes clear that a communication “in any other
medium” is also included. In short, any time you engage in any type of communication
generally intended to spur interest in a specific mortgage product covered by the rule – including
things like emails, texts or social media posts - you’re engaging in a commercial communication.
Keeping Records
Finally, there is a requirement that any person covered by the rule keep copies of all commercial
communications for at least two years after the communications are made. And they mean all
communications. This would include rate sheets, copies of radio or print advertisements, screen
shots of websites with covered information, PDF copies of emails, etc.
The rules also require that documents be kept “describing or evidencing all mortgage credit
products available to consumers during the time period in which the person made or
disseminated each commercial communication….” Generally, this means that in addition to the
specific communications that are made, you should be keeping whatever descriptive documents
you have regarding the products being discussed. For example, if you got a list of 20 loan rates
from your local bank and you provided your client with a rate sheet showing the 5 most popular
loans, you need to keep the original from the lender to show the source of your information.