Tucson Association of REALTORS® 2013 RESPA Roundtable Q&A

 

 

APPRAISER QUESTIONS

 

 1.      Can an appraisal company give vouchers to mortgage lenders for required continuing education classes for each appraisal that is ordered?

 

             No, the vouchers are things of value.

 

 2.      If a real estate licensee provides tickets to sporting events to appraisers who have done appraisals on the agent’s transactions, is this a RESPA violation?

 

Yes, the tickets constitute a thing of value and may be considered in exchange for business.

 

 3.      Can an appraiser and a real estate licensee share expenses for a booth at a trade show?

 

Yes, Appraisers and real estate agents may share these expenses so long as each pays their proportionate cost ~ must be 50/50.

 

 4.      An appraiser collects a $375.00 appraisal fee from the lender on behalf of the borrower.  The lender has not issued a good faith estimate.  Is this a RESPA violation?

 

Yes.  The regulations provide that the only charge a lender may impose on the borrower before issuing a GFE is limited to the cost of the credit report.

 

 5.      If an appraiser has performed over 60 appraisals for a mortgage lender, may the lender reimburse the appraiser for the appraiser’s continuing education costs?

 

No, this would defray a cost the appraiser would normally incur in the ordinary course of business and is prohibited by REPSA.

 

 
BROKER QUESTIONS

 

1.      You just came into your office to pick up your commission check on an escrow you just closed. Left in the office is a vase of flowers for you with a note from the escrow officer you used in the transaction. The note says, “Just a note to say thanks for the business and let’s do more!” You leave the flowers at the office for everyone to enjoy. Are you and the escrow officer in violation for Section 8 of RESPA?

 

Yes, your action is considered accepting the gift. To avoid being guilty of violating RESPA, you must dispose of the flowers in some manner and document doing so in writing or contact the escrow officer and tell him/her you appreciate the gesture but this action is in direct violation of RESPA Rules & how can you return the flowers or would he/she want to give them to the buyer in the escrow officer’s name, which would not be a violation for either of you.

 

 2.      If a listing agent sends a gift to the agent who represented the buyer in a purchase transaction has RESPA been violated by either agent?

 

No, gifts between real estate licensees are not covered by RESPA rules.

 

 3.      You held an Open House and a Mortgage Broker gave you a plate of cookies to give out at the Open House. The Broker stayed at the Open House as long as you did and talked to people as they came in and gave them their business card and marketing items.  Are either of you guilty of violating Section 8 of RESPA?

 

NO, as long as the Mortgage Broker stayed and marketed him/herself to people who came and went- neither of you is in violation of RESPA. But, you would be in violation of RESPA if the Mortgage Broker simply dropped off cookies/snacks and marketing materials for you to hand out.

 

 4.      On the back of your business cards you have a statement that says, “For every sale I make in 2013, I will donate $100.00 to the charity of your choice in your name.” Is this a violation of Section 8 RESPA?

 

NO, it is not a violation of Section 8 and since you have a definite expiration date, it is not a violation of Arizona Department of Real Estate Rules & Regulations either. If your offer had no expiration date, it would be a violation of the ADRE Rules and Regs.

 

 5.      To attract more traffic to your Open House, you sent out flyers to the entire neighborhood telling everyone you will be having a drawing for a free weekend in Rocky Point! All they have to do is come to your Open House, fill out a card and put it in the bucket for a chance to win. Are you in violation of Section 8 RESPA?

 

NO, this is not a RESPA violation. But since you’re offering a lottery, you are in violation of the ADRE Rules and Regulations and have placed your real estate license in jeopardy. ADRE Rules and Regulations prohibit any type of incentive offering that may be considered a lottery.

 

 

 

BUILDER QUESTIONS

 

 1.      If a custom home builder pays a referral fee to a real estate agent who represented a buyer, has RESPA been violated?

 

No. However, Arizona Commissioner’s Rules and the REALTOR® Code of Ethics require that the licensee obtain the client’s permission and disclose to the client any compensation received that was related to or resulted from the transaction.

 

 2.      A REALTOR® displays a billboard outside the Builders new home subdivision.  The REALTOR® puts the mortgage lender’s name and phone number on the billboard and does not ask the mortgage lender to pay any of the costs for the billboard.  Is this a RESPA violation?

 

Yes.  The mortgage lender should pay their prorated costs for their section of advertisement on the billboard.

 

 3.      Is it a RESPA violation if the builder/seller requires the buyer to use a specific title company when the builder/seller is paying for the buyer’s title insurance?

 

No. The Department of Housing and Urban Development (HUD) has indicated that it “will not enforce Section 9 of RESPA against a builder/seller who selects the title insurance company if the builder/ seller is paying for the owner’s title insurance policy, and does not require the buyer to use the title insurance company for the simultaneously issues lenders policy.”

 

 4.      If a real estate agent or builder gives cash back to a home purchaser after the close of escrow has RESPA been violated?

 

Yes. Any cash back to buyer paid after closing would be a violation. If cash or other concessions are given to the buyer, they must be disclosed on the HUD-1 closing statement. 

 

 5.      Is it a RESPA violation for Builders to give REALTORS® gift cards for visiting their home sites?

 

No. Builders are not settlement service providers and therefore are not held to RESPA Rules in this situation.

 

 

 

 HOME INSPECTION QUESTIONS

 

 1.      A home inspector offers a REALTOR® $15.00 for every lead the home inspector receives. Is this a violation of RESPA?

 

Yes, ANY “thing of value” received in the anticipation of business would be a violation.

 

 2.      Is it acceptable for your home inspection company to provide your office with pens and/or notes pads that reflect the inspection company’s name?

 

Yes, it is allowable if these are normal marketing tools and there is no mention or promise of referral fees or opportunities to receive compensation for referrals.

 

 3.      Is it a RESPA violation if a home inspector provides a template for a discount coupon on his/her company’s website to the public if an agent gives it to a buyer/seller client?

 

No, this is a public website available to everyone. The agent may want to direct the client directly to the website and have the client print off the coupon so as to not be part of “promoting” the inspectors business as a referral “kick back”.

 

 4.      Is it a RESPA violation for a home inspection company to offer the opportunity to win a prize in return for using their service?

 

Yes, this is considered a “thing of value” in exchange for referrals.

 

 5.      A home inspector offers a 25% discount to an Investor client who consistently uses only this home inspector.  Is this a RESPA violation?

 

No, the investor is not a settlement service provider and it is a client benefit.

 

 

 

HOME WARRANTY QUESTIONS

 

 1.      Is a home warranty company a settlement service provider and bound by the RESPA Rules and Regulations?

 

Yes, a settlement service provider is one who provides services in connection with the purchase or sale of a property that are paid for, directly or indirectly, out of the funds at settlement (COE). Home warranty companies have specifically been covered by RESPA since the 1992 RESPA Rule revision. Since most home warranties are sold in connection with a property sale ~ therefore the company selling the warranty would be a settlement service provider and bound by RESPA Rules & Regulations.

 

 2.      A golf charity tournament is planned by a local real estate company and they have requested that the home warranty company sponsor a hole and provide a “goodie” for the swag bags and $$ for the “giveaways.”  The home warranty representative is not able to attend the function but does provide the requested items for charity.  Is this a RESPA violation?

 

YES, unless the representative (or someone from the company) is present at the event it would be a RESPA violation because the real estate company is receiving dollars/gifts etc….but no marketing was done personally by the home warranty company.

 

 3.      Can a REALTOR® receive a commission from a home warranty company for encouraging a buyer or seller to purchase a home warranty?

 

NO, RESPA prohibits commissions as a condition of referring business.

 

 4.      A home warranty company is sponsoring a CE credit class providing refreshments and paying for the instructor at no cost to the REALTOR®. Is this a RESPA violation?

 

Yes, a CE class is an item of value and the REALTOR® should pay for the class. If it is simply a “lunch & learn” with no CE credit, it is not a RESPA violation.

 

 

MORTGAGE QUESTIONS

 

1.      Is it legal for a REALTOR® Association to solicit sponsorships from mortgage lenders for Association functions such as award ceremonies and fundraisers?

 

Yes.  While such events provide something of value to the association, the association is not in a position to refer business to the mortgage lender. Thus, it is legal.

 

 2.      If a mortgage company sponsors an educational seminar for brokers and agents (not providing continuing education credit) at Westin La Paloma, is it a violation of RESPA?

 

No. Since it is not for credit hours, it is not a violation of RESPA. If it had provided free continuing education credit then it would defray the expenses of the agent and that would be a RESPA violation.

 

 3.      After completing a successful transaction, a loan officer receives a card from the buyer’s agent with $100 in it and a note that says “thanks for all your hard work.” Can the loan officer donate the money to a charity to avoid being in violation of RESPA?

 

No. The correct way to avoid the violation would be to return the money directly to the agent.

 

 4.      A REALTOR® and a lender decide to advertise together to the general public by placing an ad in the newspaper. The lender will pay for 75% of the ad in exchange for 75% of the space.  Is this a RESPA violation?

 

No. But it would be a RESPA violation if the lender used less than 75%.

 

 5.      Can a real estate licensee be paid a portion of the origination fee if he or she completes the loan application for the borrower?

 

No. The person must not only be employed by a licensed mortgage broker, they must perform numerous other loan services aside from taking the loan application.

 

6.      Can a real estate licensee who is also a licensed mortgage broker earn a real estate commission and a loan fee in the same transaction?

 

Yes. The agent must be an employee of a licensed mortgage broker and perform actual work in originating the loan.  Since the person would probably be receiving fees from both the buyer (borrower) and seller, both parties’ written permission and written consent is needed. However, FHA does prohibit this.

 

 7.      A mortgage company collects a $375 appraisal fee from the borrower but has not issued the good faith estimate (GFE).  Is this a RESPA violation?

 

Yes. The regulations provide that the only charge a lender may impose on a borrower before issuing a GFE is limited to the cost of a credit report.

 

 8.      A lender gives a $50 Home Depot gift card to a homeowner upon the completion of a loan transaction. Is this a RESPA violation?

 

No. This is not a violation because the homeowner is not a settlement service provider.

 

 

 

TERMITE INSPECTOR QUESTIONS

 

1.      A termite company offers a REALTOR® a gift certificate for $7.50 at a local movie theater for every lead the company receives. Is this a RESPA violation?

 

Yes, any “thing of value” received in the anticipation of business would be a violation.

 

 2.      Is it a RESPA violation for a termite company to supply an agent with marketing materials with the agent’s name & real estate company the agent works for on them?

 

Yes, as this would benefit the agent in marketing their business at no cost to them, thus offering something of value in exchange for referrals.

 

 3.      If a real estate company has interest in a termite company and “directs” business to that termite company, are there any disclosures required under the RESPA rules?

 

Yes, RESPA requires disclosure of:

 

·         The relationship

 

·         The range of costs for the real estate company’s services

 

·         The fact that the consumer is not required to use the real estate company’s affiliate services

 

**Remember similar disclosures are required whenever there is an affiliated business relationship- AfBA- between any settlement service providers.

 

 4.      Should you allow a termite company to come to your weekly company meeting to teach agents the termite inspection process at no charge to the agents or Broker?

 

Yes, Settlement service providers may put on classes about their businesses since such informational programs are consistent with the marketing of the business.

 

 

TITLE/ ESCROW QUESTIONS

 

1.      Is it a RESPA violation if an escrow/title company hosts an educational event at their office that includes a paid instructor and food and drinks with REALTORS® receiving CE hours?

 

Yes. A CE class is an item of value and the REALTOR® should pay for the class.  If it is simply a “lunch and learn” with no CE credit, it is not a RESPA violation.

 

 2.      A real estate agent has referred a tremendous amount of business to a title/escrow agent far more than any other agent in town and the escrow agent sends over a gift certificate for a day at the spa with a note that says “thank you for all of your business and let’s do more together in the future.”  Is this considered a RESPA violation?

 

Yes.  The gift certificate constitutes a thing of value and may be considered in exchange for business. A simple thank you note is acceptable and not in violation.

 

 3.      A title/escrow agent and a REALTOR® agree to participate in a booth together at a local event for marketing purposes. The escrow agent gets a big discount for knowing the event coordinator and pays a nominal fee for the booth. Each agrees to bring their own marketing materials and pay for all other advertising and marketing costs 50/50. Is this a RESPA violation?

 

Yes.  The escrow agent and REALTOR® must split the entire event costs 50/50 in every way. The REALTOR® must pay for half the booth and split any and all costs equally.

 

 4.      If a title company provides lunch at an agent’s open house but they do not attend would this be considered a RESPA violation?

 

Yes. This payment of lunch would be a thing of value for, or in the hopes of, the referral of business.

 

 5.      When selling bank owned properties is it a RESPA violation for the bank to require the buyer to obtain title insurance from a particular title company?

 

No.  It is not a violation if the bank is paying the for the owner’s policy.  However, if the buyer is willing to pay the owner’s title policy then they are free to choose any title company.  If the bank were still requiring a certain title company then that would be a RESPA violation.

 

 6.      An LLC is the seller of a property.  The escrow officer handling the transaction is one of the owners of the LLC and this is not disclosed.  Is this a RESPA violation?

 

No this is not a RESPA violation, but does need to be disclosed.

 7.      Three real estate companies from a legally licensed title agency to which they all refer business with appropriate disclosures to clients. If the title agency refers out the title work to another title company and receives a referral fee solely for the referral is RESPA being violated?

 

Yes. RESPA requires that actual work be performed. If fees are paid when no work is performed the arrangement is considered to be a sham and RESPA is violated.

 

 8.      If a HUD-1 closing statement is used to close on an “all cash” real estate transaction does the RESPA rules and regulations apply?

 

No. The following transactions are not covered under RESPA: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.

The Real Estate Settlement and Procedures Act (RESPA) is the federal law which governs the relationships between settlement service providers in real estate transactions. The Act makes it illegal for settlement service providers to give or receive anything of value in exchange for the referral of business in a real estate transaction. The Act also makes it illegal for settlement service providers to require that a borrower use a particular provider in a real estate transaction and sets forth disclosure guidelines when there is a co-ownership of more than one settlement service provider in a real estate transaction.

The Tucson Association of REALTORS annually hosts a RESPA Roundtable organized by the RESPA Committee where licensees can explore these issues and get answers to the most commonly asked questions. In order to obtain a copy of the frequently asked questions all you need to do is click here or click on the stack of RESPA files to the right.

The questions are divided into categories based on settlement service providers. In order to obtain more information about RESPA and its enforcement you can visit the official RESPA pages at HUD.gov.

 

 

Course Creators was very fortunate to collaborate with professional photographer and real estate agent Greg McCown on the creation of a cutting edge and fun course called “Through the Lens”. The course will help you understand more about photographs, how to take better ones and what we all need to know about photography in protecting and promoting our clients interests. Here are some photos I took of my house before Greg’s class. They are pretty typical of what you might find in MLS, listing databases or posted by agents in social media.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I went to Greg’s class and the following photos were taken with the same camera of the same house by the same person, just using some concepts, ideas, settings and simple editing tools that Greg shared. We are all taking more photos than ever before on behalf of our clients. You owe it to them and to your clients to attend. Sign Up NOW to attend Greg’s class.

 

 

 

 

 

 

 

 

 

Ovation – How to Present Like a Pro
The Reinvention of Adult Education

By Len Elder & Theresa Barnabei

A couple of decades ago, Donald Levi, DREI and REEA member authored the book “How to Teach Adults.” The book has been a staple for REEA members and the principles of GAPE and teaching strategies for quite some time. The book was last printed over 15 years ago.

For the past several months, a collaborative team has been working on the creation of a new book, Ovation – How to Present like a Pro. The book provides the insight and commentary of 24 leaders in the adult real estate education field. It is the ONLY BOOK that:

• Communicates the Art & Science of Presenting from Course Creation to Delivery to Testing
• Contains Practical Teaching Tips Based on Solid Educational Theory
• Collaborates the Viewpoints of National Speakers, Trainers, Presenters and Industry Leaders

TO ORDER YOUR COPY TODAY JUST CLICK ON THE BOOK TO THE RIGHT:

Inside you can find out what:

• REEA Executive Director, Joe McClary, has to say to live instructors about competing with distance education;
• National Speaker, Doug Devitre, has to say about 27 ways to fill classroom seats at a REALTOR® event;
• National Author & Columnist, Julie Garton-Good, has to say about building a niche as a speaker and her system for identifying your best area of expertise;
• NCREEA President, Dana Rhodes, has to say about why he loves teaching pre-licensing
• DREI Management Committee Chair, George Bell, has to say about the importance of credentials in teaching;
• REEA President-Elect, Roseann Farrow, has to say about classroom preparation
• And many, many more

If you are wondering what else is in this book that would be helpful to you as an instructor, speaker, trainer or school owner here are some of the other topics covered in detail in this new and exciting addition to the profession of real estate education:
What’s In This Book for YOU?

• Clearly Explained and Applied Generally Accepted Principles of Education (GAPE)
• Opening Strategies You Can Use For Starting Any Presentation
• 10 Tips that will Immediately Improve Your Performance
• A Step by Step Guide to Presentation Development
• Do’s and Don’ts in the First Five Minutes
• How to Effectively Market & Promote Courses
• Pre-Class Tricks & Tools of the Trade
• Practical Ideas for Course Sponsors
• 10 Steps for Writing Effective Test & Quiz Questions
• Innovative Uses of Social Media and Technology in the Classroom
• Insights on Copyrights & Intellectual Property in Education
• Ideas on How to Create New Courses and Get More Business

A special thanks and a standing ovation to all of the following who contributed to this work and publication of the book. Most of these collaborating authors are members of REEA. All of the authors are outstanding at what they do:

Ryan Adair
Dan Adler
Tony Ray Baker
Mark Barker
Lucy Barraza
George Bell
Cindy Chandler
Amy Chorew
Doug Devitre
Roseann Farrow
Bill Gallagher
Julie Garton-Good
Rhonda Hamilton
Joe McClary
Beverly McCormick
Sharon Montague
Annalisa Moreno
Bruce Moyer
Karel Murray
Dana Rhodes
Marcie Roggow
Philip Schoewe
Sharleen Smith
Marie Spodek
Terry Wilson

The new book was unveiled at the North Carolina Real Estate Educators Association (NCREEA) Conference in Charlotte, North Carolina on September 22, 2011. You can find the book on Amazon.Com.

QR (Quick Response) Codes are rapidly becoming all the rage and we get asked questions about them all of the time. The use of QR codes by real estate agents is being discussed lots of places in articles like one entitled “More Real Estate Agents Using QR Codes to Share Information,” recently published in the Southwest Missourian. A QR Code is a type of matrix barcode or two dimensional code designed to be read by smartphones (such as a Droid or iPhone). The codes consist of black modules arranged in a square pattern on a white background. They are simply an easy way to direct an end user to a specific URL (website location) more easily. Previously, for example in the world of real estate, we would have just put our website (Go to www.BuyAHouse) on a FOR SALE sign. Today we have the ability to put a QR code on the sign and when smart phone users scan the image they can be directly to that site automatically. Because the QR code can take the user to any URL that exists on the internet, we could have chosen to redirect the user to just the listing, a virtual tour, a YouTube video or additional homes for sale (any specific page or URL). A video has even been created regarding how to creatively use QR codes. Here is what we need to know:

1. You can generate a QR code for FREE. Use Google’s URL Shortener. On this site for those with a FREE Google account, you simply cut and paste the URL that you would like the QR code to be linked to. The Google tool will generate a shortened URL and if you click on “Details” it wil provide you with a QR code to that site. Simply copy and paste the QR code into any printed material.

2.The other benefit of utilizing a QR code is that it can be tracked. For example, you can return to Google’s URL Shortener site where you created the code and bey clicking on “Details” you will know how many times and on what dates your QR code was scanned by someone. Free sites like Google’s URL Shortener will track the number of scans, but it will not capture the user’s contact information.

3. In order to have a QR code which when scanned captures the user’s information (such as their email or phone number you will have to choose a proprietary system that enables you to do that. Like most free QR codes, Google’s system does not include that feature. If you would like to know more about what those types of services are and how they work, one of the most successful ones is found at ReadMyRear.Com.

4. To use your smartphone to scan a QR code you will have to download an application for your phone that reads these codes. Which one will work for you will depend on the type of phone that you have. Search the code reader for your phone and download the application.

QR codes are being used in a lot of creative and interesting ways. It will benefit all of us to know more about them and the ways people are using them to create more busines.

 

Last week 24/7 Wall Street posted a blog denoting America’s Ten Sickest Housing Markets. Tucson was ranked #1. Before you buy into all of the negative hype and media information, we think that there are a few additional things that you need to know.

Turns out many of the cities mentioned are up in arms about their rankings and a simple Google search will lead you to a lot of protest comments by the folks in Atlanta, Oklahoma City and elsewhere that were singled out as the sickest markets.

 

In Tucson, we believe that the analysis, commentary and even the overall message of the post misses the point.

For a more accurate and useful presentation of information…check out the Sound Rebuttal on the link below. This blog post is for anyone who lives, works, plays or invests in Tucson, AZ.  If you agree with the opinions expressed here, please share this article!  Enjoy!

To READ the SOUND REBUTTAL just click here!

 

 

For students today who joined us at the Tucson Association of REALTORS for the course; “Commissioners’ Rules Applied to Ethical Practices Today”, here is the link to the advertising article at the Arizona Association of REALTORS written by Tom Adams and Michelle Lind.

Thanks for joining us in class.

What a great story. Bank of America attempted a foreclosure on a Florida couple who didn’t even have a lien on their home. They paid cash. After repeated attempts to get Bank of America to release the lien and the wrongful foreclosure proceeding they sued B of A in court and obtained a judgment which the bank ignored and did not pay.

The attorney for the homeowners did exactly what the bank would have done, he filed the judgment lien against the bank’s property and showed up at Bank of America with movers, sheriff’s deputy’s and an order to seize the desks, computer equipment and cash from the teller’s drawers to satisfy the judgment.

Click Here to See The Full CBS News Story!

Ah…there is justice in the court system.

Those of you who have been in our classes already know the importance of getting up to speed on new internet listing databases in real estate. Last week we had the opportunity to talk with Mark Lampe about his new listing database site MyHomeMatching.Com which has launched nationally.

This site is FREE to real estate professionals and opens a new marketing potential for you. This was site was built by former programmers from Microsoft and its operation is pretty flawless. It has some truly unique features and a much robust search capacity for homeowners than does Realtor.Com, Zillow or Trulia.

Click Here to Watch The YouTube Video About the Site’s Features

It is easy to put your listing information into the site, and unlike other listing databases where your information is canabalized and restructured from internet syndication services such as ListHub or Point2 Agent, this site allow you to remain in total control of your listing information. You can easily upload photos, videos and links. We encourage you to give it a try. We will be mentioning and discussing use of this site in many of our classes. In fact we will discuss it this week in our new class, Get on Board – Trends in Real Estate on the Tucson Association Cruise to Mexico. You got to love it when a new product goes above and beyond.

Our Arizona Association of REALTORS® General Counsel Michelle Lind sums up MARS in an easy to understand article on the AAR website. That article, titled Mortgage Assistance Relief Services (“MARS”) Rule Requirements for Short Sale Brokers, addresses 6 key guidelines which are:

– No Advance Fees
– Disclosures in Advertising
– Disclosure in Communications with Prospective Customers
– Disclosures when Presenting a Short Sale Offer from the Lender or Servicer
– Truth in Advertising Services
– Record Keeping and Monitoring Requirements

The article also contains valuable links to the FTC for even more information! And finally, a link to disclosure forms. We are grateful to Michelle and the Association to provide us with such valuable information!