In the latest issue of Commonwealth magazine (hitting members’ mailboxes soon if it hasn’t already), guest author Rob Hahn addresses the Franchise IDX issue from the ground up. The controversy at NAR over the Franchise IDX policy may well determine the future of the real estate business in America.
And that’s not an exaggeration. In one sense, the debate is about who should be allowed access to property listings. But the bigger issue is about the very way real estate will be listed and sold in the United States in the 21st century.
The California Association of Realtors’ vision of a statewide MLS is a big step closer, now that two MLSs there have agreed to merge, forming the largest in the country.
On one side, the California Regional Multiple Listing Service (35,000 participants), which was formed in 2010 in a merger between CAR’s own calREDD MLS and nearby Multi-Regional Multiple Listing Service (MRMLS).
On the other side, and just down the road, the Anaheim-based SoCalMLS (33,000+ participants).
The new, combined MLS will use the CRMLS name, and will be 70% larger than MRIS — currently the largest in the country.
Real estate professionals need to be aware of a new FTC rule — “Mortgage Acts and Practices – Advertising,” aka, MAP.
Among other things, it prohibits misrepresentations and imposes recordkeeping requirements on anyone who provides information about mortgage products to consumers.
This affects real estate professionals, because “providing information” can mean something as simple as giving a client a lender’s rate sheet.
The FTC originally proposed the MAP rule in 2009; the goal was to regulate unfair or deceptive practices in the advertising of mortgage products, whether by mortgage brokers, lenders, home builders, and anyone else involved in the process. And, despite NAR’s efforts to get an exemption for real estate professionals, that includes real estate professionals when they provide information about a mortgage product to a consumer.
The rule’s requirements
The MAP rule prohibits misrepresentations in a commercial communication about any term of a mortgage credit product. And “commercial communication” is broadly defined: It covers any oral and written statement designed to “create an interest in purchasing goods or services” — in this case a mortgage credit product. That means any form of credit that is offered to a consumer and secured by the consumer’s dwelling.
And what kind of statement is considered to be creating such an interest? The definition is broad — any information about mortgage terms is covered, and under “mortgage terms,” the FTC includes interest rates, amount of taxes, variability of interest rates, prepayment penalties, and products sold in conjunction with a mortgage such as credit insurance.
The rule applies to real estate professionals when they provide any information about the terms of a specific mortgage product to a consumer. For example, by giving a client a rate sheet for a particular lender, or providing an application for a specific mortgage product.
So what kinds of mortgage-related communications aren’t covered? General information about market rates or types of mortgage products will likely not be subject to the rule (unless it’s related to a specific lender’s product).
Similarly, explaining to a client how a mortgage prequalification works doesn’t fall under the rule, but providing that client with a particular lender’s documentation for preapproval is covered.
General information? Probably not covered. Information about a specific product or lender? Probably covered.
Disclaimers and recordkeeping
So a Realtor® gives a client information that falls under the rule. What does that mean? What does she have to do to be in compliance?
For starters, provide a disclaimer on whatever documents you give out or written statements you make; a properly crafted one can protect against later misrepresentation claims.
Nothing against the big-screen TV or McMansion, but it seems Americans are starting to get the picture: Borrowing above your means is a bad idea. How do we know that?
First, the Federal Reserve Bank of Cleveland reports that consumers are using much less of their income for paying debts — in fact, the debt-service ratio is the lowest it’s been since the 1990s.
But wait, there’s more.
Does MERS (Mortgage Electronic Registration Systems) — the company that turned mortgages into securities for lenders — have the right to foreclose? The decision may be up to the Supreme Court.
There have been a lot of court cases against MERS from homeowners who were being foreclosed upon by the company. The general argument is that MERS lacks the authority to take action.
There are serious issues in Washington that are weighing on homeowners — and that’s just the kind of thing you need to keep up on for your clients’ benefit.
VAR CEO Scott Brunner was on NewsRadio 1070′s “Real Estate Matters” show, where he explained the details of the regulation and legislation being considered, and how it might affect Virginia’s homeowners.
You can listen to the show by clicking here (it’s the episode entitled “8-13-11 Homeowner Issues”).
Or click here to download an MP3 you can listen to at your leisure. For your clients’ sake, be prepared.
The board of the Arizona Association of Realtors voted to acquire the state’s largest MLS, the Arizona Regional Multiple Listing Service Inc. (ARMLS), for $4.75 million. The plan is to work with the state’s 13 other MLSs to create a single entity covering the entire state: the Arizona Multiple MLS. (Yes, that’s “Arizona Multiple Multiple Listing Service.”)
Much of the work is already done, at least from an information point of view, thanks to an earlier data-sharing agreement between ARMLS and the MLS’s run by the Santa Cruz and Tucson associations. Together, the three systems cover about 80 percent of properties in Arizona.
We’ve said it over and over, but the questions and comments keep coming up like a bad urban legend: There is no new 3.8% real estate tax. For whatever reason, someone started the rumor and we’ve been debunking it since then.
Back in April 2010 we wrote, “There is no new real estate tax, nor transfer tax, nor anything of the sort. Got it?”
Clearly not everyone got it, and now NAR has published an 11-page brochure explaining exactly what is taxed 3.8%:
Understand that this tax WILL NOT be imposed on all real estate transactions,
a common misconception.
Our friends at the Mortgage Bankers Association found that for the week ending July 29, mortgage applications were up about 7.0% from the week before, likely because of falling interest rates.
The MBA’s Refinance Index was also up — 7.8% (refinances make up about 70% of the mortgage market).
Last stat: Adjustable-rate mortgages made up about 6.6% of the total, up slightly from the week before.
According to the Census Bureau, homeownership in the US has dropped to just under 66% in the second quarter of 2011 — the lowest level since 1998.
That’s down 1% since the same quarter last year, and half a percent lower than Q1.
It’s highest level? About 69.2% in 2004, according to BankRate.com, which also notes: