Agents Want To Know

CAR LEGAL BUYER INCENTIVE TOOL

2010-04-02T17:15:00.000-07:00

CAR LEGAL put out a Summary Chart that details all of the current Buyer Rebate Programs awailable to California Home Buyers. This Chart is several pages long. We've condensed this into a 1 page tool for you! The PDF version is here. There's also a Publisher Version which you can edit. Publisher version is here.

Short Pay Settlements Outside Escrow

2010-03-16T14:05:00.000-07:00

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UNDISCLOSED SHORT SALE PAYMENTS MAY BE ILLEGAL

Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws. Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller's senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow. Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014). Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500). Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent's participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

Attorney General's Office

California Department of Justice

800-952-5225 Phone

http://ag.ca.gov/consumers/mailform.htm

Department of Housing and Urban Development (HUD)

HUD Office of Inspector General Hotline (GFI)

800-347-3735 Phone

http://www.hud.gov/offices/oig/hotline

Federal Bureau of Investigation (FBI)

202-324-3000 Phone

https://tips.fbi.gov

NEW CALIFORNIA LAWS

2009-10-20T14:54:00.000-07:00

The conclusion of the first half of the 2009-10 legislative session has brought many new laws that may affect California REALTORS® and their clients. Not surprisingly in the subprime aftermath, prominently featured among the new laws is stricter regulation of the mortgage lending industry. To view the full text and legislative summary of any of the following new bills, go to http://www.leginfo.ca.gov/.

REO Buyer Can Select Escrow and Title: Effective October 11, 2009, the Buyer's Choice Act prohibits an REO lender selling residential property up to four units from directly or indirectly requiring the buyer to purchase escrow services or title insurance from any particular company. A buyer, however, who has received written notice of the right to make an independent selection, may agree to the REO lender's escrow or title recommendations. An REO lender that violates this law can be held liable for three times the charges the buyer incurred, whereas a violation by the seller's agent may be subject to license disciplinary action. This law expires on January 1, 2015. Assembly Bill 957.

No Advance Fee Loan Modifications: Starting October 11, 2009, a new law prohibits anyone from claiming any compensation for negotiating or arranging a loan modification until after that person fully performs each and every service as promised. Aimed at combating loan modification scams, this ban applies to upfront fees collected by real estate agents and attorneys. The ban expires on January 1, 2013. Also effective immediately, anyone who negotiates or arranges a loan modification must give the borrower a specified notice that paying a third-party for loan modification services is unnecessary. These new requirements apply to mortgage loans secured by residential property up to four units, with certain exceptions for lenders and loan servicers acting on their own behalf. Violations can be penalized by, among other things, a $10,000 fine plus one-year imprisonment for individuals, or a $50,000 fine for businesses. Real estate brokers with existing Advance Fee Loan Modification Agreements reviewed by the Department of Real Estate (DRE) can no longer, as of October 11, 2009, enter into these agreements or collect advance fees. Agreements entered into and advance fees collected before October 11, 2009 are not affected. For the DRE announcement, go to http://www.dre.ca.gov/pdf_docs/SB94WebAnnouncement(brokers).pdf. Senate Bill 94.
Advance Fee Redefined: Aside from loan modifications discussed above, Senate Bill 94 also broadens the definition of an advance fee which must be specially handled by real estate agents, such as by submitting an advance fee agreement for DRE review and placing funds received into a broker's trust account. Under the new definition that took effect on October 11, 2009, agents cannot separate advance fees or services into components to avoid the advance fee requirements. More specifically, an advance fee is now defined as "a fee, regardless of the form, claimed, demanded, charged, received, or collected by a licensee from a principal before fully completing each and every service the licensee contracted to perform, or represented would be performed." Exceptions include advertisements in newspapers of general circulation, tenant prescreening fees, and tenant security deposits. Senate Bill 94.

Mortgage Loan Originators Regulated: Beginning in December 2010, a real estate licensee acting as mortgage loan originator must obtain a license endorsement, which entails education, written testing, and reporting requirements. A mortgage loan originator is anyone who, for compensation or gain, takes a mortgage loan application or offers or negotiates terms of a mortgage loan for residential property containing one-to-four units. Exemptions include real estate agents who only engage in selling, buying, or leasing activities, unless compensated by a lender or mortgage loan originator. This license endorsement requirement comports with the creation of a Nationwide Mortgage Licensing System and Registry under recent federal law. Finance lenders and residential mortgage lenders under the Department of Corporation must also register in the nationwide system. Additionally, if a real estate broker or the broker's salesperson makes, arranges, or services loans secured by residential property containing one-to-four units, the broker must notify the DRE by January 31, 2010 or within 30 days of commencing such loan activity, whichever is later. Senate Bill 36.
Mortgage Broker Activities Restricted: Commencing January 1, 2010, a mortgage broker will be deemed a fiduciary with a duty to place the borrower's economic interest above his or her own. This fiduciary duty pertains to a mortgage broker who makes loans secured by residential property of one-to-four units. Also starting January 1, 2010, the law will strictly regulate higher-priced mortgage loans as defined, including requiring upfront disclosure if a mortgage broker only arranges higher-priced mortgage loans, restricting prepayment penalties and yield spread premiums, prohibiting negative amortization, and prohibiting mortgage brokers from steering borrowers to higher-cost loans. Assembly Bill 260.

Appraisal Industry Oversight: The Office of Real Estate Appraisers (OREA) will have regulatory oversight of appraisal management companies, which gained prominence after Fannie Mae and Freddie Mac adopted the Home Valuation Code of Conduct (HVCC). Starting January 1, 2010, the OREA must implement a registration system for appraisal management companies, including fingerprinting and background checks for persons with operational authority as defined. On a separate note, this law clarifies what conduct constitutes improperly influencing the appraisal process by anyone with an interest in a real estate transaction. Such prohibited conduct includes withholding or threatening to withhold an appraisal fee, withholding or threatening to withhold future appraisal business, and promising future business, promotions, or compensation. Senate Bill 237.

Mortgage Fraud Becomes a State Crime: As of January 1, 2010, anyone who deliberately makes any misrepresentation or omission during the mortgage lending process with the intent of influencing that process will be guilty of mortgage fraud under California law. A violation of this law is a crime punishable by one-year imprisonment. Under existing federal law, loan fraud against a federally-insured lender is a crime punishable by a $1 million fine, plus one-year imprisonment (18 U.S.C. section 1014). Senate Bill 239.

Increase in Homestead Exemptions: Coming into effect on January 1, 2010, the homestead exemption protecting a homeowner's equity from judgment creditors has been increased by $25,000 across the board to $75,000 for individuals, $100,000 for married couples or family units as specified, and $175,000 for persons over 65 years, disabled, or over 55 years with limited income as specified. Assembly Bill 1046.

60-Day Notice to Terminate Tenants Extended: Existing law generally requiring a 60-day notice to terminate a month-to-month residential tenant, which was originally slated to sunset on January 1, 2010, has been extended indefinitely. A 30-day notice to terminate is sufficient if the tenant has lived in the property for less than one year, or if the landlord has sold the property and certain requirements are met as specified in our standard-form Notice of Termination of Tenancy (C.A.R. Form NTT). The 60-day notice requirement does not apply to fixed-term leases, such as a one-year lease. Other laws address tenants in properties foreclosed upon. Senate Bill 290.

Other Significant Laws: Other new laws that may interest REALTORS® include, without limitation, the following:
Landlord Utilities: Requires certain utility companies to notify residential tenants of landlord's past due accounts and upcoming shutoffs, and allows tenants to begin service in their own names and deduct payment from rent (Senate Bill 120).

Mobilehome Parks: Prohibits management from requiring a homeowner to use a specific broker or dealer when replacing a mobilehome or manufactured home on a space in a mobilehome park (Senate Bill 804).
Swimming Pools: Requires anti-entrapment devices for owners of apartment buildings, condominium complexes, and others, including the filing of compliance statements (Assembly Bill 1020).

Mechanic's Liens: Provides new procedures, including service of a Notice of Mechanic's Lien to the owner and mandatory recording of a lis pendens when enforcing a mechanic's lien (Assembly Bill 457).

Low Water-Using Plants: Renders unenforceable any HOA provision prohibiting landscaping with water-efficient plants in common interest developments (Assembly Bill 1061).

Reverse Mortgages: Provides new disclosure and other requirements under the Reverse Mortgage Elder Protection Act (Assembly Bill 329).

Disposal of Records: Shields from liability businesses that dispose of abandoned records containing personal information by shredding or erasing, and gives a legal presumption that a tenant owns records remaining on the premises after tenancy termination (Assembly Bill 1094).
Plumbing Fixtures: Provides new disclosure and other requirements for water-conserving plumbing fixtures effective on or after January 1, 2014 (Senate Bill 407).

WEBSITE POLICY

2009-08-28T18:57:00.000-07:00

http://www.cvar.net/News/LatestNews/tabid/250/ItemID/681/View/Details/Default.aspx
Everyone, CAR has posted an article on Website Privacy Policies that we must follow if we collect any data (including name) as a result of our website. Please follow the rules.

The rwALLSTARS Story

2009-08-24T14:32:00.000-07:00

We're working on a video that is designed to tell the story of Realty World ALL STARS, from our beginnings to where we are today, and not be too long or slow paced. Here is the current version of the video:

What do you like about ALL STARS? Would you like to be in a video testimonial? Just let us know!

LOAN DISCLOSURE RULES June 30 2009

2009-07-18T07:45:00.000-07:00

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

NEW LOAN DISCLOSURE RULES MAY POTENTIALLY AFFECT CLOSE OF ESCROW Starting July 30, 2009, if the APR on an initial Good Faith Estimate is no longer accurate (within a 0.125% range) at close of escrow, a lender must generally provide a residential borrower with a new disclosure and a three-day right to rescind before consummating the loan. REALTORS® are forewarned that, because of this new three-day waiting period, a lender's failure to timely provide corrected disclosures has the potential of delaying funding of the loan and close of escrow.This new requirement is part of the Mortgage Disclosure Improvement Act (MDIA) implementing new loan procedures to protect borrowers and foster greater transparency in mortgage lending. For loan applications submitted on or after July 30, 2009, the new MDIA changes to the Truth In Lending Act are generally as follows:Applicability: The new MDIA rules pertain to federally-related mortgage loans covered under RESPA and secured by a consumer's dwelling. The rules apply to both purchase and refinance loans.Early Disclosures: A lender must provide a borrower with an initial Good Faith Estimate within three business days of receiving the borrower's written loan application as specified. For this provision, a "business day" is generally defined as a day on which the lender's offices are open for business.Upfront Fees Restriction: Neither a lender nor any other person may impose an upfront fee on the borrower (except for credit report) until the borrower has received the early disclosures in person or, if mailed, three business days after the early disclosures are mailed. For this rule, a "business day" is defined as all calendar days except Sundays and legal public holidays as specified.Seven-Day Waiting Period: A lender must wait seven business days after providing the early disclosures before consummating the loan. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified. A borrower may waive the waiting period in writing in case of personal financial emergency, such as an imminent foreclosure sale.Re-disclosure Requirement: If the final Annual Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8 of one percent) from the initial APR on the early disclosures of a regular transaction, the lender must provide the borrower with a corrected disclosure at least three business days before the loan is consummated. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified.Three-Day Waiting Period: For corrected disclosures, a lender cannot consummate a loan until three business days after the the borrower receives the corrected disclosure in person. If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail. A borrower may waive this waiting period in writing in case of a bona fide personal financial emergency, such as an imminent foreclosure sale.

DRE LICENSE NUMBER MUST BE ON SOLICITATION MATERIALS

2009-07-09T16:06:00.000-07:00

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS

The California Department of Real Estate (DRE) has recently adopted a new regulation clarifying the law that requires DRE license numbers on business cards and all other solicitation materials intended to be the first point of contact with consumers. The licensing law came into effect on July 1, 2009 as we previously reported.Under the new section 2773 regulation adopted by the DRE, the solicitation materials that must contain the license identification number include the following items: Business cards;Stationery;Websites owned, controlled, and/or maintained by the soliciting real estate license; andPromotional and advertising flyers, brochures, email and regular mail, leaflets, and any other marketing or promotional materials designed to solicit the creation of a professional relationship between the licensee and a consumer, or intended to induce a consumer to contact the licensee about any licensed services.
DRE's new regulation also states that the following items are not solicitation materials under the license number requirement:Advertisements in electronic media, including radio, cinema, and television ads, and the opening section of streaming video and audio;Print advertising in any newspaper or periodical; and"For Sale" signs placed on or around a property intended to alert the public the property is available for purchase or lease.The eight-digit DRE license number must be in a type size no smaller than the smallest type size used in the solicitation material. If the name of more than one licensee appears in the solicitation, then each person's license number must be disclosed. However, the license number of employing brokers or corporate brokers whose names, logos, or trademarks appear on solicitation materials along with the names and license numbers of licensed employees or broker-associates, need not appear on those materials.In addition to solicitation materials, a licensee's DRE license number must also be disclosed on real property purchase agreements when the licensee is acting as an agent in those transactions. C.A.R.'s standard form purchase agreements already conform to this new requirement.Sources: California Business & Professions Code section 10140.6 (filed September 25, 2008); Section 2773 of Title 10 of the California Code of Regulation (filing with the Secretary of State still pending).

HAPPY 4th of JULY

2009-07-04T09:41:00.000-07:00

FHA and CONDOS

2009-06-29T14:24:00.000-07:00

Investor Report: Condo Loan Rules
by Kenneth R. Harney
FHA has come out with its long-awaited rules on condominium loans, and they're a mixed bag for investors, second home and other buyers and sellers.
On the one hand, the rules allow lenders a lot of more flexibility in reviewing condo project eligibility and documentation. That's good -- it should allow more lenders to increase their condo activity in the red-hot FHA segment of the market.
On the other hand, the agency is imposing a number of important restrictions. Here's a quick overview of the rules:
Units in condo hotels are prohibited. Ditto for units in time share or "segmented ownership" projects, houseboat condo developments, and projects where there are multiple dwellings inside single condominium units.
FHA said it won't insure units in condominiums where more than 25 percent of the total space is allotted to commercial uses, such as retail stores or offices. In fact, the agency made a point of emphasizing that it will reject loan applications from any property that it deems not "to be primarily residential" in character.
FHA also won't insure condo loans if more than 10 percent of the units are owned by investors. That's a much stricter standard than Fannie Mae's, which permits up to 49 percent of units to be investor owned. The 10 percent rule applies as well to situations where a builder or developer is left with unsold units and rents them out.
The agency won't endorse loans from projects where less than 50 percent of the total units already have been sold, or where less than 50 percent of the units are owner-occupied or sold to buyers "who intend to occupy them."
FHA doesn't even want to insure loans on units located in buildings with heavy concentrations of units that are FHA-financed. If more than 30 percent of the unit owners in a project took out FHA-backed loans, the agency doesn't want to do any more business in that condominium.
In a concession to rental apartment project investors who convert their buildings to condo, FHA is abandoning its current one-year mandatory waiting period before considering loan applications on condo units.
Finally, FHA said it doesn't want to have anything to do with condo projects that might be affected by negative environmental factors. For example, it won't insure units in buildings located within a thousand feet of a major highway - it wants to avoid adverse noise pollution impacts on property values - or within three thousand feet of a dump, landfill or EPA Superfund site.
Published: June 29, 2009

READ THE FINE PRINT (we made it bold and red for you!)

2009-05-29T09:19:00.000-07:00

Gov't allows short-term loans for tax credit

MAY 29, 2009
By ALAN ZIBEL,
WASHINGTON – Thousands of first-time homebuyers will be able to get short-term loans so they can quickly make use of a new $8,000 tax credit that was designed to boost the battered U.S. housing market.
The Federal Housing Administration on Friday released details of a plan in which borrowers who use FHA loans can get advances from lenders that effectively let them receive the credit before they complete their taxes.
The FHA had no estimate of how many borrowers would qualify. But the agency, which backs about a quarter of new home loans, is projected to guarantee about 2.2 million loans in the next budget year.
Borrowers can claim the credit by filing an amended 2008 tax return or can wait for their 2009 return.
The change "will present an enormous benefit for communities struggling to deal with an oversupply of housing," Housing Secretary Shaun Donovan said in a statement.
Borrowers will still have to come up with the FHA's required 3.5 percent down payment, unless they work through a state or local housing program. But officials say the money can still be used for closing costs or a larger down payment.
The tax credit was included in the economic stimulus package signed by President Barack Obama in February.

NO DOWN PAYMENT MAGIC FROM HUD

2009-05-23T13:43:00.000-07:00

As you know HUD made an announcement on May 12 that they were going to allow homeowners to use the $8000 tax credit as down payment monies by empowering state agencies, non profits and HUD approved Mortgagees to lend the monies to home buyers. HUD drafted HUD Mortgage Letter (2009-15), however, the letter was never officially released.

HUD has since reversed their position on allowing the monetization of the tax credit over concerns that the proposal too closely resembles the now illegal practice of seller funded down payment assistance programs. IRS officials were also concerned that the proposal could create income tax issues.

WHEN TO UPDATE LISTING STATUS IN MLS

2009-05-06T10:29:00.000-07:00

When Should I Report Status Changes?
Listing status violations are the most reported violations to MRMLS, however the rules are relatively simple. In section 10.2 of the CARETS Rules and Policies, listings with an accepted offer shall be reported or input into the MLS database as “PENDING” or “BACK-UP” within 48 hours by the listing agent or listing broker.

It is the listing agent’s responsibility to report status changes within 48 hours of an accepted offer, regardless of contingencies. Furthermore, when a listing’s status is changed to SOLD, HOLD, WITHDRAWN, CANCELLED or LEASED, the listing’s change in status must be reflected in the MLS system within 48 hours.

Questions and Answers:

Q. If I have an accepted offer, do I have to change my listings status?
A. Yes, you have up to 48 hours to change the listing status from ACITVE to BACK-UP or PENDING

Q. If I have an accepted offer, can I keep the listing status as active if the bank has instructed me to keep it on the market?
A. No, if an offer has been accepted, the listing is no longer ACTIVE. To meet the bank’s request in this case one could chose to set the listing status as BACK-UP. BACK-UP is an ON MARKET Status.

Q. What do I put in the Estimated COE/End Date, if I know date will change?
A. The Estimated COE/End Date is a calculation that is stated on the Purchase agreement. For example, if you expect a 30 day escrow, enter the date 30 days from the acceptance of the offer. The listing agent or broker may change the Estimated Selling Date prior to the COE/End date.

Q. What are On Market and Off Market Status’ and how are they defined?
When Should I Report Status Changes?
Listing status violations are the most reported violations to MRMLS, however the rules are relatively simple. In section 10.2 of the CARETS Rules and Policies, listings with an accepted offer shall be reported or input into the MLS database as “PENDING” or “BACK-UP” within 48 hours by the listing agent or listing broker.

Off-Market Statuses:
PENDING (P): The Seller has accepted an offer and is not soliciting offers through the MLS.
HOLD (H): A valid listing contract is in effect, however, because of various reasons such as repairs, illness, guests, etc., the Seller has requested that temporarily there be no showings. WITHDRAWN (W): A valid listing contract is in effect, however the property is no longer being marketed.
CANCELLED (C): The listing agreement has been canceled..
EXPIRED (X): The listing agreement has expired. The time frame of the existing listing contract has run out. This is an Off-Market status.
SOLD (S): Escrow has closed.
LEASED (L): The property has been leased.

For questions or support, please call (800) 925-1525 or visit http://www.imrmls.com/support. On-Market Statuses:

Buying your own homes...

2009-04-01T16:28:00.001-07:00

AGENTS
BUYING AND SELLING PROPERTY

When buying or selling an Agent’s own property, Sales Associates must indicate on the contract that they are a licensed real estate agent. Sales Associates who have closed a minimum of 3 sales within the 12 months prior to opening escrow on the sale or purchase of their primary residence may buy or sell their primary residence without paying a listing/sales fee to the company. (The standard administration fee and e&o insurance fees will be assessed.) Agents who are selling their own homes may not represent the Buyer. If an Agent wishes to purchase a Company listing, that purchase must be discussed with management prior to a Purchase Agreement being written. Our e&o policy dictates that Agents not represent themselves. To satisfy this policy, the Broker must represent the Agent when the Agent purchases a home. The Broker will not assess a fee for representing an Agent in a purchase as long as the Agent follows proper procedures.

About Referral Fees

2009-04-01T13:10:00.000-07:00

About Referral (Finder’s) Fees

In residential sales involving 1-4 units, it is a R.E.S.P.A. violation to pay a referral fee (or finder’s fee) to an UNLICENSED individual. Realty World ALL STARS absolutely
forbids the paying of referral fees to unlicensed individuals. However, Agents who wish to send a Thank You Gift outside of escrow are certainly free to do so as long as they don’t
violate R.E.S.P.A. (See 20 and 21 below).(It is important that these gifts are not made for an activity that legally requires a real estate license. Please keep in mind that there may be tax consequences for gifts and that you are responsible for the accounting and reporting of these gifts. You should consult your accountant.)
Yes, it is ok to rebate commission to buyers for closing costs as long as lender
underwriting guidelines are not violated. (see 22 & 23).