Most of us would agree that it is flawed moral reasoning to argue that "everyone else does it (where "it" is some prohibited behavior), so it is ok for me to do it too." What do we think about the converse? "No one else does it (where "it" is something we're supposed to do), so I don't have to." Apparently, the latter resonates within the real estate community these days – at least when it comes to certain disclosures related to short sales.

The Mortgage Assistance Relief Services (MARS) Rule is a set of disclosure rules that apply to those who negotiate "a short sale of a dwelling on behalf of a consumer" and to those who arrange for a third party to engage in such negotiations. "Negotiate" is understood broadly to include "communications with a lender about the possibility of a short sale transaction involving a consumer's loan." The MARS Rule was published by the Federal Trade Commission (FTC) in late 2010 and became effective in January of 2011. NAR has published a number of articles about it in newsletters and on the Realtor.org web site.

The first set of disclosures under the Rule has to do with "general commercial communications", which, according to the FTC is "advertising meant for a general audience, like ads on TV, radio, or the Internet." Newspaper and magazine ads would be included.

The Rule will not apply to all general commercial real estate advertising. Rather, it applies to those ads that feature or emphasize short sale services or expertise, or any other kind of foreclosure avoidance service. An ad that says, "We sell more houses than anyone else!" would not trigger the disclosure requirement. Nor would an ad that merely mentioned short sales. My dear friend, CJ, abhors short sales. Were she to advertise "Short sale listings not accepted," the ad would not trigger the MARS disclosure.

But, as we all know, print and electronic media currently abound with ads proclaiming short sale expertise and seeking to provide short sale services. According to the FTC compliance guide, "In those ads, you must clearly and prominently disclose two key facts, in these words:

1. [Name of your company] is not associated with the government, and our service is not approved by the government or your lender;" and

2. "Even if you accept this offer and use our service, your lender may not agree to change your loan."

Moreover, the Rule requires that the disclosure be clear and prominent. Among the attributes required for a text ad is that the disclosure be in a format and type style different from the other text.

Nobody does this. Well, not really nobody; but hardly anyone. I have never seen the disclosure in a print ad for short sale services in my own market area. When I googled "short sale specialists" recently, I sampled ads from around the country. Of the 30 I looked at, only 3 contained the disclosures (two of them from Florida. Go Florida!). Certainly 30 is not a statistically significant sample out of the hundreds of thousands of entries I might have looked at; but, still, I have this hunch it was representative. Anyone disagree?

There are other disclosure contexts covered by the MARS Rule as well. Another, different, disclosure is required at the time of listing a short sale; and a third one is required at the time (should it ever come) when the seller receives an approval letter from the bank.

I can only speculate that – based on the dearth of ad disclosures – there probably aren't many going on within transactions either.

Why, we might ask, aren't the MARS disclosures being made regularly? Ignorance, though no excuse, is probably the primary reason. Inertia may well be another. Whatever the reason(s) that agents don't pay attention to this, it's interesting that brokers – the ultimately responsible ones – don't seem to be paying much attention either.

Published: June 7, 2011

Use of this article without permission is a violation of federal copyright laws.

Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .