Mortgage concepts: what is the MARS rule?


Mortgage Concepts is a recurring video series covering best practices and compliance training for California mortgage originators. This video is about Mortgage Assistance Services (MARS) ruler. To obtain course credits for your NMLS license renewal, visit

Regulation O enact it Mortgage assistance services rule, or MARS rule, which is designed to protect consumers by prohibiting potentially deceptive mortgage repair practices. The MARS Rule and Regulation O came into effect in 2010 in response to widespread abuse by consumers in mortgage distress. The guidelines and restrictions are intended to promote transparency between service providers and consumers.

Originally, the Federal Trade Commission had the authority to regulate the MARS Rule, but that authority was transferred to the Consumer Financial Protection Bureau in July 2011. Let’s clarify a few key terms essential to understanding the MARS Rule. [12 CFR §1015]

A mortgage assistance service means any arrangement, offer or program provided to consumers purporting to help them solve problems related to mortgage loans.[12 CFR §1015.2]

Mortgage assistance services are designed to assist consumers and individuals who are obligated under any home-secured loan.

A lodging means a residential structure of four or less units that is widely used for personal, family or household purposes. The structure does not need to be attached to real property to be considered a dwelling. Residences considered to be dwellings include individual condominium units, cooperative units, mobile homes, manufactured homes and trailers.[12 CFR §1015.2]

A home loan means any loan that is based on a home and its deed of trust or mortgage as security. the home loan holder is the person or party who owns the home loan subject to mortgage relief. [12 CFR §1015.2]

Repairers are the persons or parties who are responsible for:

  • receive scheduled payments from a consumer under the terms of the home loan that is the subject of the offer to provide mortgage assistance services, including amounts for escrow accounts under the Settlement Procedures Act real estate ; and
  • make principal and interest payments and any other payments that the consumer is required to pay in accordance with the terms of the mortgage servicing loan documents or servicing agreement.[12 CFR §1015.2]

Any person or party who provides, makes an offer to provide, or causes others to provide mortgage assistance service is considered a mortgage assistance service provider. [12 CFR §1015.2]

Mortgage assistance service providers do not include:

  • the holder of the housing loan;
  • any agent or contractor of the mortgage holder;
  • the manager of a real estate loan; or
  • any agent or contractor of the administrator of a real estate loan. [12 CFR §1015.2]

Real estate professionals who negotiate or otherwise arrange short sales for their clients are considered mortgage assistance service providers. Note that in 2010, the FTC issued a stay of compliance for real estate professionals helping consumers negotiate short sales.


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