BRE Mandate on Retention of Electronic Communications

Dear Associates,

Please read the attachment from the BRE’s most recent bulletin on "Retention of Electronic Communications". Based on BRE requirements, we have added responsibilities to both our Broker – Salesperson Contract and our Policy Manual, which includes (but is not limited to), duties to:

• Print, copy, collect, and place into Broker’s transaction file, copies of all correspondence, letters, electronic communications, emails, memos, notes, or other communications with principals in any transaction
• Memorialize in writing, all agreements and disclosures between principals or between any principal or client and Broker
• Immediately provide every client a copy of every document executed. and send all to the client.
• Send all client electronic correspondence only via London’s email exchange system in order to comply with all BRE regulations by providing for a secure back-up and retention of all client correspondence

For those Associates who elect to use our new paperless file / transaction platform, SkySlope, please know in advance that you will have some added responsibilities to make sure that all transactional documents and correspondence are uploaded appropriately and as per our policies.

P.S. Remember, for your convenience, your London Policy Manual is available to you 24/7 from the "Main Switchboard" of Real Trak.

 

Thanks for your help and please see Sherry or your Manager with any questions.

 

 

Disclosure for Veterans Blvd (NW Fresno Sales)

• Fresno City Council has approved the agreements to develop Veterans Blvd.
• The Boulevard will cross over Highway 99 and meet up with Bullard Avenue on the east side of the Freeway, between Shaw and Herndon .
• See attached map.
• Homeowners in the area(s) will be notified of the boundaries and construction.
• This is a disclosure item for sales in the area.

Mandatory Disclosure of Dangerous Conditions

Dear Associates,

As discussed in our sales meeting this week, a recent California Court has ruled that a listing broker has a duty to disclose both dangerous and "concealed dangerous conditions" on a property to other Associates and their clients (invitees to the property). As written in an industry legal brief:

"Based on the aforementioned scenario, the Court of Appeal held that the Owner who has actual or constructive knowledge of a dangerous condition, or who could reasonably discover the unreasonable risk which the condition poses to invitees, is liable for injuries to the invitee for failing to warn of the condition or make the condition safe. Regarding the Listing Agent, the Court of Appeal held that a real estate agent has a duty to notify visitors to the real property of concealed dangerous conditions of which the real estate agent has actual or constructive knowledge."

Based on the above, we are therefore required to make such disclosure(s) and shall at a minimum put it in your "Marketing Remarks" section in the MLS.

Please be vigilant, attentive and thorough.

Thank you!

Patrick

Fraudulent Short Sales August 26, 2013

Please take the time to read this entire email and all attachments.

Attached are three items that we have discussed in Sales Meetings and have sent out in various emails.

The first is a must read article from a past issue of our CAR Magazine. The article is titled "Fraudulent Short Sales" and covers very specific aspects of fraud that we have discussed several times. Let your manager, Sherry or myself know if you have any questions.

The second is an example of a typical affidavit that a title company and or lender might ask that you and your clients sign to make sure that the transaction is "Arms Length" – meaning that the "Transaction has been negotiated by unrelated parties, either of whom is acting in his or her own self interest and or upon the advice of independent professionals…" Several other terms apply such as (but not limited to) the Seller will retain no further interest in the property (as a tenant or otherwise) and that there are no funds or proceeds of any kind being exchanged which are not reflected on the Closing Statement. Please, READ THE ENTIRE ATTACHMENT.

The third attachment is a Short Sellers Questionnaire which could be very helpful in interviewing a seller who needs to do a Short Sale with their lender.

Please review these!

Thanks for your attention and time to read this material, it’s a reminder of our motto, "Quality, Integrity and Productivity".

Patrick

Registering Clients at Subdivisions

Here are some quick reminders…

 

Anytime you are taking your clients to a new home subdivision/builder remember that:

1.       Before they purchase, they must sign our Subdivision – Confirmation of Non-Real Estate Agent Relationship Disclosure, which is found in London Forms and attached hereto

2.       Simply register your buyer with the builder

3.       If the builder provides you any builder/broker agreement to sign, please do not sign but rather bring back for your manager’s review

4.       Many builder/broker agreements call for or imply an agency relationship between us and the buyer and this is not the case – we are acting in the capacity of a Referring Broker only and will not have any agency relationship with the buyer

5.       Be certain to know the period of time that the “registration” for your buyer is valid.  Most builders are now putting a 30 day limit on the registration of your buyer.  This means that if they don’t buy in the first 30 days, but continue to look at other properties with you and then go back to the builder at some later date, you will not get your referral fee.  Either get an extension on this limited time frame from the builder (in writing) at the time of registration, or schedule your calendar to contact the builder and re-register your buyer prior to the expiration date.

 

Please stay up on all of our subdivisions and what builders are offering.  We need to consider them as part of our “inventory” and make sure that you’re registering your buyers whenever possible – even when they assure you that they don’t want to buy new construction.

 
Good luck!!

Mortgage Forgiveness Debt Relief Act-Update August 1, 2013

See below, which pertains to all marketing for short sales and subsequent short sale listings and sales.

Important Facts:

1. California homeowners are not yet exempt from the possibility of having to pay state income tax on foreign debt as the result of a short-sale or foreclosure.
2. Remember, as we’ve discussed, although the Federal Government (IRS) extended the Debt Forgiveness Relief Act through December 31^st 2013, the California State Legislature has not officially followed suit. Senate Bill 30 (SB30) was thought to have an easy path for passing earlier this year to allow for the extension of provisions of state law protecting homeowners from having to pay income tax on the "forgiven debt" on a short sale. Unfortunately, the bill was "hi-jacked" and linked to another Bill, SB391, (which C.A.R. opposes (please see attachment)
3. As Realtors, we are not qualified to give any tax advice to clients. You must inform clients to get any and all tax advice from their tax adviser.
4. Sellers must be informed that a short-sale may have credit or legal consequences and may result in taxable income to the seller. Seller is advised to seek advice from an attorney, certified public accountant or other expert regarding such potential consequences of a short sale.
5. Be certain to represent and disclose this information to every seller that this could affect.
6. Again, please read the attached, which also includes a "Short Sale Proficiencies Fact Sheet" by C.A.R.

Thank you and please see your manager with any questions.

Patrick

Agent as Purchase July 31, 2013

As discussed, you now have a revised “Agent As Purchaser Listing Termination and Non-Agency Agreement” which shall be used whenever a London Associate buys any London listing. To be clear:

 

1.            The “Agreement” is used regardless as to whether the London listing is that of the purchasing agent or one of any other London Associate.

2.            If the purchasing agent is the sole owner of an LLC (or other such entity), the agent shall still complete and follow the terms of this agreement with their personal name as the “Buyer”. On the Purchase Agreement, the   agent shall disclose on page 1, that “Buyer” ABC Investment Group LLC, is owned by Joe Smith (agent name). Our Agency election and confirmation shall be that selling Broker represents Buyer Exclusively.

3.            In the event purchasing agent is a principal/owner in an LLC or other such entity, agent does not need to use the “Agent as Purchaser Agreement,” but will disclose on the purchase contract (other terms) that “Joe Smith” is a Licensed Associate with London Properties and is also a principal in (or “one of the owners of”) ABC Investment Group LLC. Regarding Agency on page 1 of the purchase agreement, the Associate will check “Dual Agency” for both Listing Broker and Selling Broker.

4.            In all of the above, the purchasing agent shall sign an Indemnification to the office.

 

Please let me know if anything is not clear herein; if you have a question, I’m sure somebody else does too!

 

Thank you!

Loan Status Links; Freddie Mac & Fannie Mae June 13, 2013

Don’t forget, a short-sale negotiator cannot, by law, ask us to reduce our commission as a condition of sale approval if the loan is underwritten by Fannie Mae or Freddie Mac. Most loans will be underwritten by one or the other. To verify any loan status, simply visit the following websites:

 

This is the one for Fannie Mae

 

https://www.knowyouroptions.com/loanlookup

 

This is the one for Freddie Mac

 

https://ww3.freddiemac.com/corporate/

 

Thank you,

Patrick

P.S. These sites also now have links from Londonforms.

Important Information - New Form June 13, 2013

When you have Seller Cary Back Financing in any amount, you must add to the contract the standard CAR-SFA Addendum. Note: CAR has added language to the SFA (in paragraph 2) requiring that the Buyer also provide to the Seller a completed FNMA “Uniform Residential Loan Application”. This form must also be filled out in order for the Seller to be informed as to the Buyers ability to pay. The form is now available on London Forms. It is always your duty to provide for delivery of documents required in the contracts. Please do not forget this one.

 

Thank you,

Patrick

Respa Law Excerpts

Where is the Inventory??

WHERE IS THE INVENTORY? That’s the most common question asked in our real estate market today. Although current home buyers and investors know that local inventory is at historic lows, much of the public only remembers hearing of the surplus of inventory caused by the market meltdown that began in 2006.  For the record, local housing inventory peaked in the summer of 2007 where monthly averages were over 5,500 available properties.  Coupled with anemic sales, that market had over 15 months supply of inventory. But that was then and this is now.

According to the Fresno Multiple Listing Service (MLS), as of this May there were only 1,630 active residential listings. This is down 33% from May of 2012 (2,440 properties) and down 55% from May of 2011 (3,580 properties.)  If you see or hear of national statistics, always remember that those numbers can offer a comparison, but real estate markets are local and our numbers can vary significantly. For example, according to the National Association of Realtors (NAR), nationally the number of homes listed rose in May for the fourth straight month. In our local market, however, May brought us the second lowest monthly total of listings since December 2012.

            Historically, real estate markets ramp up their inventory and sales in the spring and summer months, but this is not what we’re experiencing.  May listings were down 5.5% from March and 8.5% from April.  Home sales in May were also down from March and April levels.  In contrast again, on a national level May sales were up 4.2% from April and our market was flat.  Locally, we’re at a point where the inventory is so low that it is starting to affect the number of sales; there just isn’t enough product on the market.

            Our monthly supply of inventory is also down to historic lows.  Of the 1,630 active listings in May, 949 went into contract (“pended”).  This gives us an “absorption rate” of 58.2% and in turn a 1.7 month supply of inventory.  Therefore, it stands that if no more homes were listed, we would be completely out of inventory in 1.7 months.  Further supporting our tight market is that the average number of days on market before a home sells has gone from 66 days 2 years ago, down to 45 days (for April and May.)  This is a drop of 32%!

            According to NAR, a “balanced” market would have about 5-6 months supply of inventory. Any more than that and we start to get downward pressure on prices and when the number falls to 4 months or lower, we begin to have noticeable price increases.  Some relief is coming from builders who are adding to the inventory with increasing in housing starts. According to the California Homebuilding Foundation, there were 782 permits pulled for residential housing starts in Fresno County for the first quarter 2013.  This compares to 483 for the first quarter of 2012 and to 239 for 2011.  Builders, however, are likely to remain cautious and these increases aren’t enough to meet market demand.

So, is this a good market for buyers or sellers?  The answer is both.  Buyers should not expect inventory to significantly change any time soon.  The second large wave of foreclosure inventory never came in 2011 nor 2012, nor does it appear to be anywhere on the horizon.  Some foreclosed properties will continue to move through the market, as well as short sales, but the overwhelming majority of transactions are currently “traditional” sales with sellers who have equity!  In fact, of the approximate 1,600 available properties today fewer than 14% are represented in the MLS as foreclosures or short sales.

            Buyers have an opportunity right now to still lock in a 30 year loan at historically low interest rates, but this window is closing.  But that’s not the only reason for buyers to get off the fence. While Economists argue about the sustainability of current price increases, most do at least agree that prices will continue to inch up.  Standard and Poors recently upgraded their 2013 forecast for the S&P/Case Shiller Home Price Index to an 11% year-over-year increase from their original 8% prediction earlier this year. Now is the best time to buy. Anyone who delays will most likely face higher prices and higher interest.

Here’s a few suggestions for buyers: be patient, if the home you’re looking for is not yet on the market, we’ll find it for you.  Use a great mobile site like londonproperties.com, save it to your phone’s home-screen, and anytime you want to know the specifics on an available property listed with any broker, go to London’s site.  Get qualified with Royal Charter Mortgage so that you strengthen the position of your offer by providing the seller up front with your financial verification.  Be prepared to act fast and make your first offer your best offer. Most Sellers today are receiving multiple offers, so you’ll have only one chance to make yours stand out above the rest. Offer a large deposit and a short escrow. Know what’s important to the seller and make your terms as favorable as possible. 

 As a seller you have what you didn’t expect a year or two ago; a market with double digit price increases.  Low inventory is helping to make this possible but this won’t last.  And if you’re a seller that will require a short sale from your lender; remember that the Mortgage Forgiveness Debt Relief Act is set to expire December 31, 2013.  The Act benefits underwater homeowners who owe more than their home is worth and who qualify to receive mortgage debt forgiveness as a result of a reduction in principal, foreclosure, short sale, or deed in lieu of foreclosure.  Sellers who sell become buyers themselves. As a Seller, the longer you wait to make a move, the more you are likely to pay in both price and interest for your next home. In other words, the sooner you sell, the better off you’ll be in the long run. 

            Whether you are a buyer or a seller now is the time to make your move!

If you’re not convinced yet, read our next article in this same section tomorrow!

Housing Prices are on a Tear, Thanks to the Fed

Here's a good article from the Wall Street Journal yesterday that we can use with our buyers, sellers and our sphere. It offers a broad perspective of our current real estate market. Essentially, with prices up at least 10% from a year ago, many sellers should consider taking advantage of the bump and for buyers who don't want to get priced out of the market by either escalating prices or a raise in interest rates, now is a good time to lock in a low 30 year mortgage!!!!!

WALL STREET JOURNAL April 8, 2013

The U.S. housing market has broken out of a deep slump, and prices are shooting up faster than anyone thought possible a year ago. For many homeowners, that is a cause for celebration.

Nick Timiraos explains how the Federal Reserve keeping interest rates low is causing home prices to grow faster than they normally would during a recovery, and that has some experts worried. Photo: Getty Images.

But the speed at which prices are rising is prompting murmurs of concern that the Federal Reserve's campaign to reduce interest rates could be giving the housing market a sugar high.

Prices of existing homes rose 10% in February nationally from a year ago. They have been rising during the seasonally slow winter months—and they show signs of jumping further as the spring buying season gets under way. What's going on?

Prices of existing homes rose 10% in February nationally from a year ago. Above, a home in Mariemont, Ohio.

First, inventories of homes available to buy have fallen to 20-year lows. Home builders have added little in the way of new construction since 2008. Banks are selling fewer foreclosures. Investors have scooped up more homes, converting them to rentals.

Many borrowers, meanwhile, aren't willing or able to sell at prices that are down sharply from their 2006 highs, despite a greater inclination among banks to approve short sales. Tight lending standards mean some owners will hold back from selling because they aren't sure they would qualify for a mortgage on their next home.

Demand has also revved up, first from investors buying homes below their replacement costs, and later as rising rents and falling interest rates encouraged more first-time buyers to purchase homes that have monthly payments that are less than what it costs to rent.
Improving home-price expectations have also unleashed pent up demand. The U.S. added around 1.3 million households a year for the 10-year period ending in 2007, after which household formation fell to more than half that level. Household formation was lower in the five years following the housing bust than any period since the 1960s, according to Altos Research, an analytics firm in Mountain View, Calif.
But the population never stopped growing. Households simply doubled up. Between 2008 and 2010, the country had around two million households that "couldn't wait to launch on their own," says Mike Simonsen, chief executive of Altos Research. Many of those new households have been renters, but more are opting to buy.

The upshot is that, in a reversal from just two years ago, demand is outstripping the available supply. Even though sales volumes could be constrained this year by low inventories, some economists say prices are set to soar. "A lot of folks are realizing, 'Wow, there is no second wave of foreclosures. Interest rates if anything could head up. Prices are rising. If I'm going to get in I better get in now,'" says Christopher Thornberg, a housing economist with Beacon Economics in Los Angeles.

The impact of low mortgage rates is profound. Before the Fed began buying mortgage-backed securities in late 2008, rates for 30-year fixed mortgages stood at around 6.1%, and a borrower who could qualify for a $1,000 monthly payment could get a $165,000 mortgage. Today, that same borrower, at a 3.5% rate, can borrow as much as $222,000. In other words, the Fed's low-rate campaign has increased purchasing power by a third.

So is this the beginning of another bubble? Not really. For now, home prices on a national basis are still below their long-run average relative to incomes. "The recovery is solid. There are pure fundamentals you can point to," says John Burns, chief executive of a real-estate consulting firm in Irvine, Calif.

But he says the housing market is turning up sharply, "hockey-sticking faster than it otherwise would," because of investors, low inventories and low mortgage rates. The worry is that if prices keep rising at their current pace, "we're going to have a real affordability problem" once rates move above 6%, says Mr. Burns.

Buyers face a dilemma: paying more for a home today, compared with a year ago, or paying even more tomorrow at a time when interest rates might also be higher.

"It's been a lot slower process than we had hoped it would be, and things were getting a lot more expensive," says David Fritsche, a retired architect who lost bids on six properties in the past six months before closing last week on a home in Rancho Santa Margarita, Calif. He and his wife, Darlene, want to be closer to their daughter's family but plan to hang onto their old home in Phoenix for a few years.

While prices may be rising on the back of the Fed's easy money, tighter credit standards are acting as a brake on the recovery. High unemployment, low savings, and high debt loads among those who would like to buy their first homes will also remain a drag.

The housing sector is finally healing. But the sector may be in for more volatility until there is more demand from—and credit for—people who want to buy homes that they plan to live in.

By Nick Timiraos - The Wall Street Journal

New Law Commencing July 1st on Non-Residential Buildings

Energy Use Disclosure Requirements

More than five years following the enactment of the governing legislation, the first phase of the Energy Use Disclosure Requirements will commence July 1, 2013. Assembly Bills 1103 and 531 require owners of nonresidential buildings located in California to disclose energy usage of such buildings in advance of any sale, lease, or financing of the entire building. In December 2012, the California Energy Commission adopted regulations implementing Assembly Bills 1103 and 531, and requiring compliance on the following schedule:

• On and after July 1, 2013, for buildings with a total gross floor area of more than 50,000 square feet;
• On and after January 1, 2014, for buildings with a total gross floor area between 10,000 square feet and 50,000 square feet; and
• On and after July 1, 2014, for buildings with a total gross floor area between 5,000 square feet 10,000 square feet.

'New Policy' Offers Relief to Underwater Borrowers & CA Homeowner Bill of Rights

2 of 3 Deficiency Judgements and California Law

This second email unpacks deficiency judgments and California law and does a very thorough job explaining purchase money ("non-recourse debt") and non-purchase money such as cash-out refinancing ("recourse debt") as they pertain to both owner occupied borrowers and investors.

Again, please print and review.

Thanks!


Patrick

Taxation of Foreclosures and Short Sales

Dear Associates,

This email on Taxation of Foreclosures and Short Sales, is one in a series of three that I am sending you (with attachments) that pertain to this topic as well as an overview of the new 3.8% tax.

Please print each of these, read them and ask your manager any questions that you might have.  As these will also be subjects (some of them for a second time) in upcoming sales meetings it will also help to have read them.

One very important reminder (and the thought that encouraged us to send these emails/attachments out) is that we have to be exceptionally careful to never give our clients inaccurate or misleading (ignorance will not be an excuse) information.  For example, although the Federal decision to extend the Mortgage Debt Relief Act has been announced, California (to date) has not yet agreed to do the same - and may not!  Therefore, if a client asks if they are liable for taxes on their short sale (if the forgiven debt was purchase money or "non-course debt"), the correct answer is although they may not have a federal tax liability, unless California decides to follow suit with the Federal guidelines, they currently will have a state liability for ordinary income tax on the forgiven amount.  Part two of our response is that "We are not tax or legal advisors and I must advise you to seek appropriate guidance from a tax professional such as an accountant or attorney to discuss potential tax liability and any other consequences".

This attachment also covers the fact that sellers are still responsible for paying capital gains even in the event of a deed-in-lieu, short sale, or foreclosure of their property!!

Again, please take the time to read the enclosed and the other emails to follow.  Doing a great job for our clients means happier clients and more business!

Good luck!



Patrick