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


CONTENTS
1. What’s Ahead for 2010?
2. New FHA Guidelines = Higher Costs, Tougher Standards
3. IRS Announces 2010 Mileage Rates
4. HOT LINE: Agents Paid Directly at Closing?
5. HOT LINE: Seller Requesting FICO Scores, Etc.?
6. Upcoming Courses & Events
7. LOW Rates Set New Record!

To ask a TAR Legal & Ethics Hot Line question, go HERE.

For other questions about this newsletter, please use the “CONTACT” form HERE.


1. What’s Ahead for 2010?

What’s ahead for 2010? Recently, we had the pleasure of interviewing our 2010 TAR President, B. J. Swinehart (a Knoxville REALTOR), about TAR, the real estate industry, and the year ahead.

A brief excerpt:

*** BEGIN QUOTE ***
TAR: What are the biggest challenges facing TAR’s members and member firms today?

BJ: The economy – It’s defiantly taken a toll on our members. Firms are having trouble with agent retention, and suffering from “company-hopping” agents trying to find new work. It’s hard to recruit new agents because it’s costly to train, and not many people are coming into the business.

TAR: What do you think are the biggest challenges facing TAR as an association next year?

BJ: TAR is faced with the same problem that other large associations are facing – retention of members, which is another side-effect of the economy. Services cost more today to provide for members, but there are fewer funds to pull from to provide those services.
*** END QUOTE ***

To read the entire candid interview online, go HERE.


2. New FHA Guidelines = Higher Costs, Tougher Standards

Last week, we reported on FHA guidelines on condominium financing that may make it more difficult to buy or sell condos. Other changes, coming down the pike from FHA, may make it more difficult — and costly — for anyone applying for a FHA-insured mortgage for ANY residential property. Upcoming changes are summarized in a new column by Kenneth Harney (“Washington Report: Higher Costs, Tougher Standards”), just published by Realty Times:

*** BEGIN QUOTE ***
In congressional testimony, [HUD Secretary] Donovan said some of the changes are likely to include the following:

Number one: Higher downpayments. The current minimum is 3.5 percent. Donovan didn’t say how much higher the agency might push it, but congressional critics want to see at least a five percent minimum.

Number two: Look for FHA’s generous “seller concessions” to be cut in half — from the current six percent to three percent of the loan amount — and maybe even lower.

Under present FHA rules, home sellers can contribute to their buyers’ closing costs up to a maximum of six percent of the initial mortgage amount. Critics say that encourages sellers to inflate the prices they want from buyers, and allows marginal purchasers to buy houses they can’t really afford.
*** END QUOTE ***

It gets even tougher! To read the entire column, go HERE.

[SOURCE: Realty Times]


3. IRS Announces 2010 Mileage Rates

Last week, the Internal Revenue Service (IRS) today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 50 cents per mile for business miles driven
  • 16.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

[SOURCE: IRS]


4. HOT LINE: Agents Paid Directly at Closing?

QUESTION: Is it possible to authorize a closing attorney to make compensation directly to my affiliate agents? Would the cooperating broker have to approve this?

ANSWER: TREC will not permit an agent to receive their commission directly from a closing attorney.  This used to be allowed under circumstances, but it is no longer permitted.

Pursuant to Tenn. Code Ann. 62-13-312(b)(11), an agent can be penalized by TREC for “Accepting a commission or any valuable consideration by an affiliate broker for the performance of any acts specified in this chapter, from any person, except the licensed real estate broker with whom the licensee is affiliated.” Therefore, an agent is ONLY allowed to receive compensation from his/her principal broker.

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


5. HOT LINE: Seller Requesting FICO Scores, Etc.?

QUESTION: I represent a buyer who is interested in a particular property in the MLS.  In the REALTOR Notes for that listing, it states, “All offers require a pre-qualification letter, FICO scores, copy of earnest money and must use closing company of seller’s choice.”  Is it legal/ethical to ask for FICO scores and also to demand that the buyer use the seller’s choice for a closing company?

ANSWER: The only thing we have concerns about is the dictation of who orders the title insurance (and from whom), and the closing company.  Both parties are permitted to have their own closing representation, but they may have to pay for it. Under RESPA, if the buyer is paying for the title insurance, then they have the right to select its provider.  However, if the seller is paying for the title insurance then it can be negotiated.  Look first to the contract to determine if it indicates from which agency the title insurance will be purchased.

Another thing to keep in mind is who is issuing the policy.  Often, the lender will dictate who is to issue the lender’s policy. However, if that title company is going to charge a high rate for the owner’s policy, then see if the two title companies will agree to have one company issue the policies and then split the premiums. If not, then you can indicate that the seller will bring their own owner’s policy.  Often this will encourage cooperation so as to avoid paying the higher rates for the lender’s policy.  Please keep in mind that this would only apply if the property were residential.

Although we do not know of anything which would prohibit requesting the FICO scores, we would hesitate to recommend it from a liability standpoint. By receiving the information which often accompanies the FICO score (such as Social Security number, account numbers, etc.), the agents involved could be opening themselves up to liability and taking on a great responsibility for safekeeping that information.  We would not recommend assuming this added responsibility!

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


6. Upcoming Courses & Events

Local Assn President/President-elect Leadership Session — Dec. 9 (TAR Office, Nashville). [This session is for local association Presidents and Presidents-elect only.]

Joint Governmental Affairs/RPAC Training Workshop — Dec. 10 (TAR Office, Nashville). [This session is for local association Governmental Affairs and RPAC chairs and vice-chairs, local AEs and Governmental Affairs Directors, and TAR RPAC and Governmental Affairs Committee members.]

2010 Schedule of Classroom and E-Class GRI Courses is now online HERE.

How do E-Classes work? These are NOT your typical online courses! To understand how they work, go HERE.

Watch each week’s TAR DIGEST for schedule changes and additions!


7. LOW Rates Set New Record!

Mortgage interest has fallen to the lowest level since Freddie Mac began compiling its weekly survey in 1971, as the average 30-year fixed rate declined to 4.71 percent last week from 4.78 percent a week earlier.

Rates also were more attractive for 15-year fixed loans, which fell from 4.29 percent to 4.27 percent, but many consumers may not have qualified for them because they now face higher credit standards from lenders.

Still, the Mortgage Bankers Association’s index of application demand, which rose 2.1 percent on a seasonally adjusted basis during Thanksgiving week from the previous week, shows that consumers were looking to take advantage of mortgage rates at a historic low.

[SOURCES: Freddie Mac; Information, Inc.]


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

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