The 10-30-12 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville


UPCOMING TAR EVENTS:
Nov. 21 – Knoxville: Tips, Tools, & Technologies for Your Business (GRI 406, 8 hrs. CE). For more info, CLICK HERE.

Nov. 29-30 – Nashville: The Learning-Centered Instructor Workshop (16 hrs. CE) – a two day instructor-development workshop at the TAR Office, Nashville. For more info, CLICK HERE.

To see a complete calendar of CE classroom courses around the state, go to: http://tnrealtors.com/education/realtor-courses/

To access online CE courses, go to: http://tnrealtors.com/education/online-courses/

HOT LINES IN THIS ISSUE:
1. HOT LINE: Short Sales and Liens?
2. HOT LINE: Who Pays for Termite Treatment?

IN OTHER NEWS:
3. Tighter Credit May Pose Big Problems
4. An Important Benefit of Homeownership!
5. Justifying Your Commission
6. The Latest Mortgage Fraud Scheme
7. Instructor Training Has Been Rescheduled
8. An Easy Way To Meet Your Ethics Requirement!
9. Rates Move a Bit Higher …to 3.41
10. To Ask a Hot Line Question
11. NO DIGEST Next Week

NOTE: If you are reading a hard-copy of this DIGEST, and want to access some of the links cited, simply go to http://www.tardigest.com to access the current issue with “live” links!


1. HOT LINE: Short Sales and Liens?

QUESTION: If buyers purchase a short sale property, is there any language the buyers’ agent can insert into the contract to protect the buyers from future liability if another lien or encumbrance, besides the one addressed in the short sale, were to show up at a later date?

ANSWER: If your buyer is purchasing a short sale property, it is critically important that they speak with their own title company to do an extensive title search to determine whether there are additional liens or encumberances.

This is a contingency set forth in the TAR Purchase and Sale Agreement (lines 179-201) which states:

*** BEGIN QUOTE ***
5. Title and Conveyance.
A. Seller warrants that at the time of Closing, Seller will convey or cause to be conveyed to Buyer or Buyer’s assign(s)good and marketable title to said Property by general warranty deed, subject only to:

(1) zoning;

(2) setback requirements and general utility, sewer, and drainage easements of record on the BindingAgreement Date upon which the improvements do not encroach;

(3) subdivision and/or condominium declarations, covenants, restrictions, and easements of record on theBinding Agreement Date; and

(4) leases and other encumbrances specified in this Agreement.

If title examination, closing or loan survey pursuant to Tenn. Code Ann. 62-18-126, boundary line survey, or otherinformation discloses material defects, Buyer may, at Buyer’s discretion:

(1) accept the Property with the defects OR

(2) require Seller to remedy such defects prior to the Closing Date. Buyer shall provide Seller with writtennotice of such defects via the Notification form or equivalent written notice. If defects are not remediedprior to Closing Date, Buyer and Seller may elect to extend the Closing Date by mutual written agreementevidenced by the Closing Date/Possession Amendment form or other written equivalent. If defects are notremedied by the Closing Date or any mutually agreed upon extension thereof, this Agreement shallterminate, and Buyer shall be entitled to refund of Earnest Money.

Good and marketable title as used herein shall mean title which a title insurance company licensed to do business inTennessee will insure at its regular rates, subject only to standard exceptions. The title search or abstract used forthe purpose of evidencing good and marketable title must be acceptable to the title insurance agent and the issuingtitle insurance company. Seller agrees to execute such appropriate affidavits and instruments as may be required bythe issuing title insurance company.
*** END QUOTE ***

If there were something that the title company did not find, then it will likely be covered by the title insurance. If you are using a short sale form from a lender, we would recommend that the buyer have an attorney review the addendum or amendment to ensure that the buyer will be receiving good and marketable title via general warranty deed. We would also make sure that the buyer ask an attorney about the title insurance they are receiving on the property to make sure that this is covered.

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


2. HOT LINE: Who Pays for Termite Treatment?

QUESTION: Buyer had the termite inspection done, and they found termites. The seller agreed to pay for the treatment. The buyer wanted to have their company do the treatment, but the seller felt like they should be able to choose the company since they are paying the bill. Should the seller be able to choose which company they use to do the treatment since they are paying the bill?

ANSWER: We can only provide the Forms Committee’s intent concerning termite treatment. The committee intended for the seller to pay for treatment at his expense. However, if the buyer has a company that they want used, they can try to negotiate this. If there is a difference in cost, then the buyer could negotiate to pay the difference.

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


3. Tighter Credit May Pose Big Problems

National Association of Realtors President Moe Veissi says the industry will face a “perfect storm” of regulation in 2013 as new rules take effect requiring lenders to retain a piece of risky mortgages on their books and increase capital. Experts are worried that the new rules will further restrict borrowers’ access to credit, with Ellie Mae reporting that loans closed in September involved borrowers with an average credit score of 750 and an average down payment of 22 percent.

Lenders indicate that they will make only the safest loans defined by the Consumer Financial Protection Bureau’s qualified mortgage rule. Meanwhile, they will have to contend with the qualified residential mortgage rule to be issued by the Federal Deposit Insurance Corp. and the Securities and Exchange Commission requiring that lenders hold a stake in risky mortgages packaged into securities as well as the Basel III rules increasing capital requirements for risky mortgages. In a letter to regulators expressing concerns about the Basel III rules, Veissi said, “The sheer volume of regulations surrounding the mortgage-finance business has resulted in consolidating and constraining the number of institutions offering mortgage credit to consumers.”

To read more, CLICK HERE.

[SOURCE: Bloomberg News]


4. An Important Benefit of Homeownership!

Children who live in owner-occupied homes tend to have babies and drop out of high school at a lower rate than those who reside in rental housing, say the results of a new study by three California professors. The research — sponsored by the Research Institute for Housing America, an independent arm of the Mortgage Bankers Association — also finds that the size of the down payment has little impact on outcomes for children. The exception is for zero-down purchases — in which case outcomes are the same as those for children living in rented property.

“Does buying a home make you a better person?” asks Richard K. Green, director of the University of Southern California’s Lusk Center for Real Estate and one of the three professors behind the study. “No, but the discipline associated with saving for even a small downpayment and subsequently managing a house is, on average, associated with the discipline needed to promote better outcomes for children.”

To read more, CLICK HERE.

[SOURCE: National Mortgage Professional]


5. Justifying Your Commission

A recent survey of consumers found a significant number do not feel that the real estate agent’s commission is typically justified.

*** BEGIN QUOTE ***
About 74 percent of the general public says real estate agents do not do enough to justify their commission, according to a new study conducted by the University of Central Florida’s Department of Psychology and Merge [a private company].

Real estate professionals report they are increasingly facing questions over their paycheck in a transaction. About 73 percent of sellers raised questions about real estate professionals’ commission after a listing is sold, and 64 percent of sellers often complained about the commission agents charge, according to the study.
*** END QUOTE ***

To access the survey itself, go to: http://next.inman.com/wp-content/uploads/2012/10/UCFResearchStudy.pdf

[SOURCES: REALTOR Magazine Online; Inman News]


6. The Latest Mortgage Fraud Scheme

The latest mortgage fraud scheme is flopping, in which underwater homeowners seeking a short sale resort to such antics as pulling out appliances, using paint to create the appearance of water damage on the ceiling, or presenting fraudulent repair estimates to appraisers to secure the lowest price as possible! “They convince banks that the value of the property has deflated,” says Tim Coyle of LexisNexis Risk Solutions. The home then is sold to an accomplice at the low price, only to be quickly cleaned and flipped for a profit.

CoreLogic estimates that slightly less than 2 percent of short sales in 2011 were flipped on the same day for an average 34 percent gain and an average profit of $55,000. Banks are overwhelmed with short sale requests these days, making it easier for fraudsters to perpetrate such schemes.

To read more: http://money.cnn.com/2012/10/23/real_estate/mortgage-fraud-flopping/

[SOURCE: CNN Money]


7. Instructor Training Has Been Rescheduled

Our popular two-day instructor-training program — The Learning-Centered Instructor Workshop (originally scheduled for Nov. 1-2) had to be rescheduled, due to unavoidable circumstances.

The Learning-Centered Instructor Workshop will now be held Nov. 29-30 at the TAR Office in Nashville. For more information or to register, CLICK HERE.


8. An Easy Way To Meet Your Ethics Requirement!

We’ve been reminding everyone of the NATIONAL requirement that all Realtors (other than Realtors Emeritus) take an approved 3-hour Ethics course at least once every four years, with the current 4-year cycle ending in just two months, on Dec. 31, 2012! [This requirement even covers all appraisers who are Realtor members of their local associations!] There is no grandfathering under this requirement, and all brokers as well as affiliate brokers are subject to it.

An EASY and affordable way to meet this requirement — and get 3 hours of CE in the process — is to take the online course “Cracking the Code of Ethics” through The CE Shop, a partner of TAR and TREEF. You can sign up for that course at: http://tarnet.theceshop.com

A full range of affordable online CE courses can also be found at: http://tnrealtors.com/education/online-courses/


9. Rates Move a Bit Higher …to 3.41

Last week, average interest on 30-year fixed mortgages according to Freddie Mac moved slightly higher to 3.41 percent, still near record lows, with an average 0.7 point.

And 15-year rates also moved slightly upward to 2.72 percent, with an average 0.6 point.

To see current mortgage rates, go to: http://www.mortgagenewsdaily.com/mortgage_rates/

To see THDA rates and programs, go to: http://tn-tennesseehda.civicplus.com/index.aspx?NID=8


10. To Ask a Hot Line Question…

To ask a TAR Legal and Ethics Hot Line question, go to: http://tnrealtors.com/services-support/legal-ethics-hotline/


11. NO DIGEST Next Week

The TAR DIGEST will not be published next week, but will return with the Nov. 13 issue, after the NAR Annual Convention!