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


CONTENTS
1. Fannie Mae’s Loan Quality Initiative
2. Enforcement of New Lead Paint Rule Delayed
3. Giving Credit Where It’s NOT Due…
4. HOT LINE: Can the Buyer’s Agent Pay?
5. HOT LINE: Responsibility for Earnest Money?
6. 2011 TAR Committee Requests
7. GRI and Other Courses
8. Rates Hit a New All-Time Low
9. The TAR DIGEST Takes a Break!

NOTE: No DIGEST next week or the week after that!

To ask a TAR Legal and Ethics Hot Line question, CLICK HERE.

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

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1. Fannie Mae’s Loan Quality Initiative

As pointed out in a recent Realty Times article by Bob Hunt: “Buyers and their agents need to be aware that it is a very bad idea for buyers to increase their credit balances or to open new lines of credit shortly before they close escrow on their new home. More specifically, they should avoid such activity during the period of time between loan application and closing. This is because policies under Fannie Mae’s Loan Quality Initiative, effective June 1, 2010, requires lenders to ‘refresh’ a borrower’s credit report just prior to closing.

This is already causing problems, frustrating closings, etc., so counseling your buyers properly is a must!

To access Bob Hunt’s complete article, CLICK HERE.

To access the actual Fannie Mae guidelines (as a PDF download), CLICK HERE.

[SOURCES: Realty Times; Fannie Mae]


2. Enforcement of New Lead Paint Rule Delayed

On June 21, the U.S. Environmental Protection Agency (EPA) announced that it will delay enforcement of the new lead paint rule until Oct. 1. The rule requires home-improvement contractors to employ “lead-safe” practices in houses, day care centers, and schools built prior to the lead paint ban in 1978.

The agency made the decision amid complaints from lawmakers and industry groups that contractors could not meet an April deadline for training due to a lack of trainers. To give firms plenty of time to file paperwork indicating that they have implemented lead-safe practices and allow contractors to finish the training courses, the EPA requires contractors to sign up for training by Sept. 30 and complete training by Dec. 31.

To access complete information about the new rule itself, CLICK HERE.

[SOURCES: Associated Press; Information, Inc.; EPA]


3. Giving Credit Where It’s NOT Due …

Thousands of tax filers – including some serving time behind bars — have bilked the federal government out of billions of dollars in home buyer tax credits, according to Treasury Inspector General for Tax Administration J. Russell George. His report determined that 1,295 prisoners – including 241 lifers – received $9.1 million in credits despite being locked up during the time that they reported purchasing a home. Additionally, $17.6 million went to 2,555 people who bought their homes outside of the target dates; and 10,282 taxpayers received credits for properties that were also listed by other individuals to claim the tax break. “This is very troubling,” George stated.

“Troubling” is an understatement…

[SOURCES: USA Today; Information, Inc.]


4. HOT LINE: Can the Buyer’s Agent Pay?

QUESTION: I have an agent who represents the seller. The buyer’s lender has an FHA requirement that the water heater pipes be lowered by three inches. It will cost $75 to complete this per the buyer’s lender FHA guidelines. Can my listing agent ask for the buyer’s agent to pay for half of that cost?

ANSWER: The Tennessee Real Estate Commission (TREC) will not allow agents to pay closing costs on behalf of either the buyer and the seller. Therefore, if this cost is NOT a closing cost and it is permissible to the lender for the agents to pay for the costs, then it is OK.

The agents, however, would have to pay the third party contractor directly. They CANNOT pay either the buyer or seller and have them then pay to have the pipes fixed.

Pursuant to T.C.A. 62-13-302(b), “A real estate licensee shall not give or pay cash rebates, cash gifts or cash prizes in conjunction with any real estate transaction.” Therefore, a licensee cannot give a buyer or seller cash or anything which can be converted into cash in conjunction with a transaction.

[SOURCE: TAR Legal and Ethics Hot Line Attorneys]


5. HOT LINE: Responsibility for Earnest Money?

QUESTION: Is the listing broker responsible for the earnest money in a transaction no matter who holds the earnest money?

ANSWER: The Tennessee Real Estate Commission (TREC) enacted some revisions which went into effect on June 14, 2010. One of these rules deals with escrow accounts and your question specifically. Pursuant to the relevant portions of TREC Rule 1260-2-.09:

*** BEGIN QUOTE ***
(1)  Each broker shall maintain a separate escrow account for the purpose of holding any funds which may be received in his fiduciary capacity as deposits, earnest money, or the like.  Rental deposits must be held in a separate account.

(2)  An affiliate broker shall pay over to the broker with whom he is under contract all deposits and earnest money immediately upon receipt.

(3)  Brokers are responsible at all times for deposits and earnest money accepted by them or their affiliate brokers, in accordance with the terms of the contract.

(4)  Where a contract authorizes a broker to place funds in an escrow or trustee account, the broker shall clearly specify in the contract:
(a)  the terms and conditions for disbursement of such funds; and
(b)  the name and address of the person who will actually hold such funds.

(5)  Where a contract authorizes an individual or entity other than either broker to hold such funds in an escrow or trustee account, the broker will be relieved of responsibility for the funds upon receipt of the funds by the specified escrow agent.
*** END QUOTE ***

Based on the above, the Broker/agent is only responsible for the funds until they have given it to the entity who is stated in the contract to be holding the escrow funds. Therefore, if the Broker is not holding the funds, the Broker’s liability ends as soon as the funds are given to the entity holding the funds as stated in the contract.

[SOURCE: TAR Legal and Ethics Hot Line Attorneys]


6. 2011 TAR Committee Requests

2011 TAR Committee Request Forms Are Now Online: In the Members Only section of the TAR website, there is a new page titled “Officer & Committee Forms” at: http://tnrealtors.com/members/officerforms.php

If you are interested in serving on a TAR Committee, you can access the application online. The DEADLINE for receipt of the Committee Request form is August 13, 2010!

On the same page, you can also access the online application form to be considered for nomination as a TREEF Trustee. The DEADLINE for receipt of the TREEF Trustee Application form is July 8, 2010!


7. GRI and Other Courses

July 15 – Aug. 18: E-Class GRI 1, Professionalism in Real Estate (16 hrs. CE) – a distance learning course. For more information or to register, CLICK HERE.

July 22: Homeownership Options for TN Workforce (6 hrs. CE) – Jackson. For more information contact the Central West TN Association of REALTORS at:

July 22: TransactionDesk Basic Course (3 hrs. CE) – Chattanooga. For more information or to register, call 423-698-8001.

July 29: Agency In Tennessee Course (4 hrs. CE) – Chattanooga. For more information or to register, call 423-698-8001.

The complete 2010 schedule of Classroom and E-Class GRI Courses is online at: http://tnrealtors.com/main/education/gri_courses

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


8. Rates Hit a New All-Time Low

Average interest on a 30-year fixed mortgage fell to an all-time low of 4.69 percent this past week, down from 4.75 percent a week earlier, reports Freddie Mac. Although rates have held below 5 percent since early May, Michael Fratantoni of the Mortgage Bankers Association notes that demand for purchase loans has fallen in six of the past seven weeks and now is at a 13-year low. Consumers have grown used to low rates, he explains, adding that they balk at buying because they are more concerned about stagnant wages and high unemployment.

[SOURCES: Freddie Mac; Information, Inc.]


9. The TAR DIGEST Takes a Break!

This is the last TAR DIGEST for three weeks. There will be no TAR DIGEST again until the July 20 Edition …so please celebrate our nation’s birthday on July 4th, be safe, be prosperous, and we’ll be back in three weeks!


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