The Weekly Membership Newsletter of the Tennessee Assn. of REALTORS
Editor: Pug Scoville


CONTENTS
1. TREC Auditors Report Common Problems!
2. Rise of Foreclosure Scams in Tennessee
3. HOT LINE: Confidentiality of Information Learned?
4. HOT LINE: Agent Paid Directly for Services
5.
Feds Warn of New Fraud Scheme!
6. Rates Fall Again, Now VERY Low
7. UPCOMING EVENTS & COURSES


1. TREC Auditors Report Common Problems!

At the December meeting of the Tennessee Real Estate Commission, the Commission’s auditors (who visit and inspect real estate offices across the state for compliance with the law), gave their annual report of issues and findings:

  • Illegal contracts and illegal contract language (builder contracts, company contracts) are being used. [NOTE: Adopting the TAR Purchase and Sale Agreement would help brokers avoid problems of this type!]
  • There is a general lack of agent oversight; agents almost never come into their actual offices. A suggestion was made that brokers issue a biannual report to TREC on the legal/staffing activity of the office so the auditors can have a better plan for the audit.
  • Property management issues are increasingly common; more traditional real estate firms are becoming property managers without having proper escrow accounts. They are just not prepared for the transition.
  • More residential firms are failing audits than commercial firms are, because the commercial firms usually have a systematic process in place.
  • Development companies have employees selling real estate without a license, especially in the eastern part of the state. Some of these companies would prefer to pay a fine rather then be properly licensed.

[SOURCE: 12/08 TREC Meeting]


2. Rise of Foreclosure Scams in Tennessee

A the 2008 Governor’s Housing Summit in Nashville last week, the state’s Attorney General warned of an increase in foreclosure scams:

*** BEGIN QUOTE ***
Scams built around false promises to help borrowers facing foreclosure hold onto their homes — perhaps perpetrated by some of the same people who issued predatory loans to begin with — appear to be on the rise, the state’s attorney general told housing officials Monday.

The state has filed lawsuits against two “foreclosure rescue” companies that it says promised to help borrowers restructure mortgages but instead pocketed fees without following through, Attorney General Robert E. Cooper Jr. said in an introductory address to the 2008 Governor’s Housing Summit in Nashville.

A group of Tennessee agencies, including the Office of the Attorney General and the Division of Consumer Affairs, believes the rise in foreclosures statewide has touched off a wave of deception aimed at capitalizing on struggling borrowers’ desperation.
*** END QUOTE ***

To read the news report (from the TENNESSEAN) on the Attorney General’s remarks, go HERE.

[SOURCE: THE TENNESSEAN]


3. HOT LINE: Confidentiality of Information Learned?

QUESTION: I listed a property with a seller and the listing expired. During the listing period, I learned certain confidential information about the seller. After it expired, they listed it with someone else. Now I have a buyer that wants to put an offer on the same property. Am I free to share any of the information I learned about the seller with the buyer?

ANSWER: NO. You still have a fiduciary duty to the seller in this transaction to keep the information confidential that you learned about him during your representation of him. HOWEVER, if that information was an adverse fact about the property (or other information that must be disclosed by law), then you must share it with the buyer. Otherwise, you should keep that information confidential. We WOULD recommend that you disclose that you formerly represented the seller.

The duty of confidentiality extends beyond any agency relationship you have or enter into. If you are bound to keep information confidential that you gain at any point in time, your duty to keep that information confidential remains in effect even if/when your agency relationship changes.

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


4. HOT LINE: Agent Paid Directly for Services

QUESTION: I know that all compensation to an agent must come through the principal broker. I just received a check for real estate services made payable to me personally. Would it be proper for me to endorse the check over to my firm/principal broker and have the check deposited into the firm’s checking account or must I have the customer make out another check payable to the firm?

ANSWER: Either is fine. The important thing is that either way, you give the check to your broker to deposit into the company account. Then the company can pay you any commissions you may be owed.

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


5. Feds Warn of New Fraud Scheme!

If a buyer tries to use a “personal promissory note” or “private offset bond” to buy a home, the matter might be an attempt at fraud and you should let the U.S. Treasury Department know, an alert from the Treasury’s Office of Inspector General says:

*** BEGIN QUOTE ***
The U.S. Department of Treasury, Office of Inspector General (OIG), is investigating incidences whereby individuals are using fraudulent promissory notes and bonds to attempt to purchase vehicles and real estate. The OIG has been notified of numerous occurrences throughout the United States where fraudulent documents were used to attempt to purchase vehicles.

…If you have any information regarding this type of fraudulent activity, we request that you contact the U.S. Department of Treasury, Office of Inspector General (OIG), Office of Investigations Hotline, at 800/359-3898 or e-mail:
*** END QUOTE ***

To read the full fraud alert, go HERE.

[SOURCES: U. S. Treasury Dept.; NAR; REALTOR Magazine Online]


6. Rates Fall Again, Now VERY Low

Freddie Mac’s Primary Mortgage Market Survey showed that the 30-year fixed-rate mortgage (FRM) averaged 5.53 percent with an average 0.7 point for the week ending December 3, 2008, down from the prior week when it averaged 5.97 percent. Last year at this time, the 30-year FRM averaged 5.96 percent. The 30-year FRM has not been lower since January 24, 2008, when it was 5.48 percent!

One-year Treasury-indexed ARMs averaged 5.02 percent last week with an average 0.5 point, down from the previous week when it averaged 5.18 percent. At this time last year, the 1-year ARM averaged 5.46 percent.

“After Federal Reserve actions to increase liquidity in the mortgage market, interest rates for fixed-rate mortgages (FRMs) took a dive,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This week’s decline was the largest since the week of November 27th, 1981, and 30-year FRM rates are now almost a full percentage point lower since the last week in October.”

[SOURCE: Freddie Mac]


7. UPCOMING EVENTS & COURSES

Dec. 9: 2009 TAR Executive Committee Planning Session & Meeting (TAR Office)

Dec. 10: Leadership Session for Local Association Presidents & Presidents-elect for 2009 (TAR Office)

Dec. 11: Governmental Affairs Training Session (TAR Office)


TAR’s Home Page: http://tnrealtors.com

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