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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.