The Weekly Membership Newsletter of the Tennessee Assn. of REALTORS


CONTENTS
1. FBI Director Notes Mortgage Fraud Increase!
2. Leadership TAR Class of ’08 Announced
3. HOT LINE: Attaching a MLS Sheet to Contract
4. HOT LINE: Being Paid Through Your Corporation
5. HOT LINE: Accepting Only Offers on TAR’s Form?
6. REMINDER: Upcoming “Intro to E-Pro” Workshops
7. Spring Ed. Conference Registration DEADLINES
8. Rates Move Upward


1. FBI Director Notes Mortgage Fraud Increase!

U.S. Federal Bureau of Investigation Director Robert Mueller says the agency is aggressively investigating allegations of mortgage and accounting fraud, insider trading and other unscrupulous practices at 14 as-of-yet unnamed companies that underwrite subprime mortgages or securitize them for sale to investors.

Mueller believes the investigations and the resulting prosecutions will be similar to those undertaken during the savings and loan crisis and recent corporate accounting fraud cases. “There is not a state that does not have some investigation,” he told reporters at the FBI office in Honolulu. It is a substantial problem but we’ve been through problems like this in the past,” he said. An agency spokesman reports an increase in the number of open mortgage fraud cases to 1,210 today from 800 last year.

“Greed is definitely not good for our economy right now,” said FBI’s top criminal investigative exec Ken Kaiser following the briefing. “It’s hurting homeowners. It’s hurting honest businesses. And it’s hurting investors and markets around the world.”

[SOURCES: Information, Inc.; Associated Press]


2. Leadership TAR Class of ’08 Announced

Ten REALTORS from across Tennessee were selected to be members of the 2008 Class of Leadership TAR. In March, they will begin several months of study and work together, as they prepare themselves for greater personal and career leadership. If you know any of the following, PLEASE extend your congratulations to them!

Richard Barbee (Knoxville)
Jennie Daniel (Dayton)
Melissa Hayes (Memphis)
Jeremy Helton (Ripley)
Tara McKnight (Nashville)
Jerry Modesto (Memphis)
Harold Reed (Oak Ridge)
Maria Shircel (Clarksville)
Jamie Skeen (Greeneville)
Trasbin Stoner (Nashville)

And we congratulate them as well!


3. HOT LINE: Attaching a MLS Sheet to Contract

QUESTION: Can agents “attach” a MLS sheet to a contract when making an offer? Agents will write in, “All items listed in MLS # — to remain” and then they attach it to a contract. I understand that the MLS sheets are deemed “reliable but not guaranteed”, so how can something that is not guaranteed be part of an actual contract?

ANSWER: This practice is permissible, but HIGHLY discouraged. By doing this, the agent is making that MLS sheet part of the contract and indicating that everything on there is now guaranteed. Therefore, at the VERY least if an agent receives an offer like this, have the seller review that MLS sheet VERY carefully to make sure that everything on it is accurate!

The better practice would be to do a counter offer and rewrite those items on the MLS sheet such as things that will be included with the home. We strongly recommend against attaching the MLS sheet because it contains much more than what is included with the home.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


4. HOT LINE: Being Paid Through Your Corporation

QUESTION: My accountant told me for tax purposes I should incorporate and have all of my commissions run through the corporation. However, when I spoke to my company’s accounting department, they informed me it was against the law to do this. Is this correct?

ANSWER: Commissions can ONLY be paid to licensees (be they individual licensees or real estate companies). Therefore, an individual licensee that has “incorporated” or “LLC’ed” himself CANNOT be paid a commission through the company. The individual holds the license, not the company. The only time that a company can hold a license is if it is a firm license. A company cannot be issued an individual license.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


5. HOT LINE: Accepting Only Offers on TAR’s Form?

QUESTION: If a managing broker requires that the brokerage firm’s affiliate licensees accept offers only on the TAR form contract, is there any potential problem for the affiliate broker and/or for the brokerage firm?

ANSWER: Yes, there ARE several problems with this practice. FIRST, the brokerage firm and the licensee must remember that the contract is the CLIENT’S contract! Neither the firm nor the licensee is a party to the contract. As a result, the firm and the licensee have no basis for dictating the acceptable form for an offer being made to the firm’s client.

NEXT, the licensee may attempt to inform the client of the reasons the form contract is preferable, but, in doing so, the licensee may actually be giving legal advice. The Tennessee Real Estate Broker License Act prohibits a licensee from engaging in the unauthorized practice of law. See T.C.A. 62-13-112(b)(19).

THIRD, a licensee’s refusal to accept an offer because it is not on a particular form may cause a delay in presenting an offer to purchase to the seller. It may also mean that an offer is never presented to the seller. If this occurs, the licensee has violated the TREC Rules and the Tennessee Real Estate Broker License Act! The Act provides the following: “Unless the following duties are specifically and individually waived, in writing by a client, a licensee shall assist the client by receiving all offers and counter-offers and forwarding them promptly to the client.” T.C.A. 62-13-404(3)(A)(ii). And the TREC Rule states: “A broker or affiliate broker promptly shall tender every written offer to purchase or sell obtained on a property until a contract is signed by all parties.”

The licensee is obligated to take any written offer promptly to the client regardless of the form of the offer. If a licensee delays in presenting an offer, he may be subject to disciplinary action by the TREC. Furthermore, the firm’s client may sue the licensee and the firm for violation of the statutory duties owed by the licensee to the client. The seller-client is the ONLY one who could dictate that he/she not receive any offers of a particular nature!

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


6. REMINDER: Upcoming “Intro to E-Pro” Workshops

Attend the upcoming FREE e-PRO Workshop to learn invaluable tech tips and how e-PRO will benefit you, plus receive a $25 discount for your e-PRO course enrollment!

Date: Friday, February 08, 2008
****Select One Session****
Time: 9:00 AM to 10:30 AM OR 1:00pm to 2:30pm
Location: Tennessee Association of REALTORS
Address: 901 19th Avenue S., Nashville, TN 37212

Register Now! Seating is Limited!
To register, simply visit:
http://ePROworkshop.InternetCrusade.com
…or call toll free 1-866-ePRONAR (1-866-377-6627).


7. Spring Ed. Conference Registration DEADLINES

The Early Registration DEADLINE for the TAR Spring Education Conference and Trade Show — to be held on MARCH 19TH AND 20TH — is approaching quickly! To register at the price of $75, registrations must be received on or before FEBRUARY 15. [After that date, the fee for members jumps to $125!] There will be NO “ON-SITE” registrations for the TAR Spring Education Conference and Trade Show, and SPACE IS LIMITED, so register early!

ALSO, the cutoff date for hotel reservations, while rooms are available, is FEBRUARY 25.

To register, or get more information, go to:
http://tnrealtors.com/main/conferences_and_conventions/
…and click on “TAR Spring Business Mtgs & Educ”


8. Rates Move Upward

Following four consecutive weekly declines, Freddie Mac reports a jump in the 30-year fixed mortgage rate to 5.68 percent during the week ended Jan. 31 from 5.48 percent the prior week. The 15-year fixed mortgage rate rose to 5.17 percent from 4.95 percent over the same time span. Meanwhile, the five-year adjustable mortgage rate edged up to 5.32 percent from 5.13 percent; and the one-year ARM climbed to 5.05 percent from 4.99 percent. Freddie Mac chief economist Frank Nothaft attributes the recent gains to an uptick in 10-year Treasury bonds.

[SOURCES: Information, Inc.: Freddie Mac]


TAR’s Home Page for Tennessee REALTORS is at:
http://tnrealtors.com