Mortgage Assistance Relief Services (MARS) Rule is a key consumer protection implemented by the Federal Trade Commission (FTC) to protect homeowners facing financial distress from fraudulent foreclosure rescue and mortgage relief scams.
Background and Purpose
Following the 2008 financial crisis, numerous companies exploited homeowners’ vulnerability by charging large upfront fees promising to stop foreclosure or negotiate loan modifications, often providing little or no actual assistance. To combat this, the FTC introduced the MARS Rule in 2010, setting strict regulations that curb these predatory practices.
Key Provisions of the MARS Rule
- No Upfront Fees: Mortgage relief companies cannot collect any fees until they provide a written offer from the homeowner’s lender or servicer that the homeowner has accepted. This prevents companies from taking money without delivering results.
- Mandatory Disclosures: Service providers must clearly disclose the total costs, their lack of affiliation with government agencies or lenders, that the lender may not agree to modify the loan, and that the homeowner can cancel the service at any time.
- Prohibition on False Claims: The rule forbids guaranteeing specific outcomes or promising to stop foreclosure, as mortgage negotiations outcomes may vary.
- Communication With Lender: Companies cannot advise homeowners to stop communication with their lender or cease mortgage payments, as this can worsen their situation.
Who is Covered by the MARS Rule?
The rule applies primarily to for-profit third-party companies offering mortgage assistance for fees. It does not cover mortgage lenders or servicers, non-profit HUD-approved housing counselors, or licensed attorneys meeting certain criteria. These groups are governed by other regulations or provide services at low or no cost.
Identifying Scams Despite the MARS Rule
Watch for red flags such as requests for upfront fees, guaranteed foreclosure prevention, recommendations to stop payments or communication with the lender, requests to transfer home ownership documents, or pressure to sign unclear paperwork.
Safe Steps for Mortgage Assistance
- Contact your lender immediately to discuss hardship options like forbearance or loan modifications.
- Consult HUD-approved housing counselors for free or low-cost expert guidance. Find more about HUD counseling at HUD Counseling Certificate.
Additional Resources
Learn more about related terms like Mortgage Loan Modification and Foreclosure to understand your options better.
Reporting Violations
If you suspect a company is violating the MARS Rule, file complaints with the FTC at ReportFraud.ftc.gov and the Consumer Financial Protection Bureau at consumerfinance.gov/complaint.
For authoritative information, visit the FTC’s official MARS Rule page: Mortgage Assistance Relief Services Rule – FTC.