The Texas Real Estate Answer Man

FREE REAL ESTATE SCHOOL

2009-09-02T13:10:00.001-05:00

That's right. If you know someone who is looking to get their Texas real estate license and meets the criteria as a spouse of someone who is serving on active duty in the military there is a new program we have just been approved by the Department of Defense to offer. Check it out: http://www.freerealestateschool.com

Dead Broker Learnin'

2009-08-07T09:52:00.009-05:00

Another great story coming straight for the enforcement files (crypts) at the Texas Real Estate Commission. It is a repeat of a previous posting but it is so good it deserves a retelling.
This could be a movie.

“Night of the Living Broker”

“Dawn of the Broker”

It seems that a person that needed a sponsoring broker was not going to let a little thing like the death of the broker get in the way of their real estate business. This salesperson started working on their own broker’s license but needed some time to meet the Broker requirements. In this case most folks would go and find a new broker. But, not this salesperson. Why not keep renewing their DEAD sponsoring broker’s license? This salesperson even went as far as taking MCE classes for the DEAD broker. This puts a whole new spin on those who say they were bored to death during their last MCE class.

How did this agent get caught? Simple! Someone contacted TREC and I’ll paraphrase here. Did you hear about So & So dying? Well looking at the TREC record it seems that old So & So had been renewing their license from “The Other Side” for about 2 years.

To make a long story short the salesperson had by this time received their broker’s license. However, that was not going to last that long. Broker’s license REVOKED plus an $8,000 fine. There was no reference on any disciplinary action against the Dead Broker for allowing someone else to take their MCE. :)

It just goes to show you. No matter how clever you think you are, breaking the rules is going to catch up with you. Maybe, even from that great Real Estate office in the sky.

This ALERT Was Posted On The TREC Web Site June 1, 2009

2009-06-02T08:41:00.002-05:00

Fraud Alert! - TREC has recently learned about a scam in which a person pretending to be an agency employee may call a licensee with a story about a problem with the licensee's license status. The caller then offers to resolve the problem by asking for the licensee's credit card number to make a payment by phone. DO NOT RESPOND to requests from TREC asking you to provide personal information, including credit card numbers, social security numbers, or any other identifying information. TREC does not accept any payments by phone and will never make such a request. Please remember to always carefully guard your personal data. If you receive a suspicious call from someone purporting to be from TREC, we recommend that you ask the caller for his or her name, then hang up, call TREC at the number on the website, and ask to be transferred to that person.

If you have received a suspicious call involving TREC and gave out personal information or otherwise feel your security may have been compromised, please first file a report with your local police department and then notify TREC of the situation.

Check the TREC web site at: http://www.trec.state.tx.us

The Texas Real Estate Teachers Association had their annual meeting in San Antonio April 16-18.

2009-04-18T17:46:00.010-05:00

During the meeting there were several speakers but the topics seemed to concentrate on Mortgage Fraud including the new Federal S.A.F.E. Act and the corresponding Texas statutes currently being considered in this session of the Legislature. HB 10, HB 2774 & HB 2779.

Here are some of the highlights:

The term Mortgage Broker and Loan officer will be replaced in the new Federal Law with "Loan Originator".
The "license" may be issued by the State but only after they receive a "unique identifier" through the Federal Program.
Those who do mortgage loans with Depository Institutions will have to register and those with private mortgage companies will need to be licensed.
Real estate agents will no longer be able to use their TREC MCE courses to satisfy their Loan Originator continuing education. The only way this continuing education will work for both licenses is to have both TREC and SML accept the course.
All mortgage licenses will expire on December 31 of each year.
Certain attorneys who deal with loss mitigation and foreclosures will need a license.
Everyone will have to have a new criminal background check including NEW fingerprints.
Everyone will have to take and pass a new license exam. This includes those who obtained their license before license exams were required.
The Texas SML is asking for an extension for the July 30, 2009 Federal deadline.

These changes will cause some problems. For more information check http://www.sml.state.tx.us/.

Here is the point that caught all of the attendees by surprise.
If the seller finances their homestead they do not need to be licensed. If the seller finances an investment home the seller must be licensed. This includes a seller second.

Fannie Mae spoke about several loan programs. Check out http://www.homepath.com/ to see available Fannie Mae foreclosed properties.

One interesting Mortgage Fraud case was where the listing broker was sentenced to 2 months for witnessing suspected mortgage fraud at the closing. That's right, if you suspect mortgage fraud and don't report your suspicions you can go to jail along with the real crooks.

This year's meeting was held at the Menger Hotel. No reports of seeing the Menger Ghost so I guess she was tired after attending the Tea Parties held the day before at the Alamo across the street. Tentative plans for next year's meeting is early April at the San Marcos Convention Center. Make your plans to attend. http://www.treta.org/.

New Energy Audit Inspection Coming To Austin, Texas In June, 2009.

2009-02-10T10:36:00.023-06:00

In June, 2009 certain properties will require an energy audit inspection prior to the sale being closed. There are exceptions for the inspection as out lined in the City of Austin Ordinance No. 20081106-047

Beware of people offering to certify you as someone who can perform the required Energy Audits because, at the time of this posting, the Austin Energy Department has not finalized and published all the requirements. You may find that you have paid for certifications that do NOT meet all the requirements by the City of Austin. There may be additional requirements up and above a person holding the "BPI" or "RATER" certifications. The city will post the applicable rules when they are completed.

This is the basic requirement for an acceptable inspector as per the draft copy of the ordinance.

§ 6-7-5 ENERGY AUDIT REQUIREMENTS.
(A) A residential or multi-family energy audit required under this chapter must:
(1) be conducted by a person certified as a building performance analyst or equivalent by an agency approved by the director; and
(2) use the audit and disclosure forms prescribed by rule under Section 6-7-3.

If you have questions contact the City of Austin Energy Department. http://www.austinenergy.com/

For information on distance learning resources for the "RATER" or "BPI" certification contact:
Green Collar
Saturn Resource Management.

How Do Agents Rate On Professional Ethics?

2009-02-03T09:45:00.001-06:00

For the past few years Real Estate Agents were not listed on the Gallop Ethics Poll. Well we are back. Check out the poll and see where Agents rank.

We Now Have The Highest Rating Possible.

2009-02-03T09:37:00.003-06:00

In February the Better Business Bureau has given Capital Real Estate Training their highest rating of A+. This stands in great contrast with one of our competitors who has the lowest letter grade of F.

Check out our rating.
Check out the other guy.

Don’t Let Your Real Estate License Go!

2008-12-22T14:07:00.002-06:00

In the almost 20 years I have been in real estate education there is one story that never changes. People come to my office looking to get “BACK” into real estate. They let their license go several years ago and then they have an opportunity in real estate but they have to take more classes, retake the license exam etc. If you have a Salesperson's license remember it is an inexpensive license to keep. Just put it into inactive status, pay the small renewal fee as it comes due. Then when you have an opportunity to get back into real estate your old license is waiting for you, like an old friend, at the Real Estate Commission.

So, if you are thinking about leaving real estate don't leave something as valuable as your real estate license as well.

Did You Know TREC Had An Education Advisory Committee?

2008-10-30T14:37:00.004-05:00

Well they do. During the last legislature the Sunset Commission recommended that TREC establish advisory committees to help the Commission in their regulatory duties. While these committees are not able to force change they can recommend changes to the Commission. I am proud to say I was selected to serve. The first meeting, on 10/03/2008, went very well and those on the advisory committee were very open with their comments. You can download a copy of the agenda from the TREC site.

So, if you have stories of a high quality experience please let me know. Also if you have a nightmare story I'd like to hear from you as well. (rick@cretc.com) My personal goal on the committee is to improve the quality of the education all licensees must complete. To preserve what is good and find solutions for what is not so good.

You Would Think A School Owner Wouldn't Let This Happen?

2008-10-29T11:25:00.014-05:00

It seems that a local real estate school owner (not me) failed to take care of one very important business necessity. RENEWING THEIR REAL ESTATE BROKER’S LICENSE!!! It seems the broker took their MCE, had their fingerprints taken but for some reason didn't file a timely renewal. No big deal. Right. Well in most cases this is not a big deal. File the late renewal form, pay the extra fees and in a few days you are back in business. For some reason when the late renewal was filed something caught the Real Estate Commission’s eye. An enforcement case file was opened and it has been several months and the broker’s license, as of the date of this posting, still has NOT been renewed to active status . It’s in some kind of perpetual “expired” status. Only time will tell why this late renewal was not processed quickly and without problems. Maybe it was just a simple paper-work snafu or something more interesting. However, it cannot be a good sign when a broker can't renew their license. Without a license a person does not have access to services such as the MLS or the privilege to be called a REALTOR. Without a license you are no longer on the "INSIDE" so to speak. Not having an active real estate license does not bar a person from teaching in or owning a real estate school.

You make the call:
This is one of the "Laundry List" violations listed under the Texas Deceptive Trade Practices Act (DTPA).
Representing goods or services that claim to have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities but do not or a person claiming to have a sponsorship, approval, status, affiliation or connection but does not.
Do you think a school has violated this portion if they claim only experienced active agents or brokers teach at their school when they know at least one instructor does not have an active real estate license?

I'm sure this school is having a fit that this is being talked about. They just need to remember when they posted an attack web site with several damaging false claims about other real estate schools in town. It seems "KARMA" is coming back to haunt them for their past actions.

Hurricane IKE

2008-09-18T10:34:00.005-05:00

Important Notice For Licensees Affected By Hurricane IKE

The Commission is planning to meet on an emergency basis on Tuesday, September 23, 2008, to consider emergency rules that may alleviate some of the burdens for licensees directly affected by the hurricane. Check the web site for more information.

At this meeting Emergency rules were passed.

Click here for information on the TREC website.

As with any new rule there can be hic ups. I am convienced that the staff at TREC will work to make the process less of a problem for those affected by IKE.

When To Never Refer Potential New Agents To The Local Real Estate School!

2008-09-09T12:28:00.002-05:00

If you are a broker, you are always looking for new talented agents. Many times you will teach a few classes to get that valuable exposure. However if the local school’s instructor policy promotes recruiting instead of education never send your high quality prospects to that school. I saw an advertisement for a real estate school looking to recruit new instructors. This was in the ad:

“YOU CAN SELECT THE CREAM OF THE CROP OF UP AND COMING AGENTS BEFORE THEY EVEN BEGIN THEIR CAREER.”

"NO TEACHING EXPERIENCE REQUIRED.”

Why is this bad for you? Simple instead of being a place for a new agent to learn it is a cattle call with the instructors cutting out your top prospects for themselves. Just think that every day in class someone is working to steal away that great prospect.
Get with your local school and make sure class time is dedicated to teaching and not a meat market for real estate agents. Drop in and just audit part of a course.

Now, should you or your company be represented as an instructor in the local school? Absolutely yes. In most cases the serious prospects will be offended if you waste their class time recruiting. After all they paid for a class not a career day. I always told my instructors the best way to recruit is to show the class just how smart and professional you can be. At the end of their courses they are going to remember the outstanding teachers and many will want to work with someone who clearly knows how to be a professional. If the local school is just a recruiting hall for brokers find another source for the required education your new agent needs to be licensed.

Dead Broker Learnin'

2008-08-04T15:29:00.010-05:00

Another great story coming straight for the enforcement files (crypts) at the Texas Real Estate Commission. This could be a movie.

“Night of the Living Broker”
“Dawn of the Broker”

It seems that a person that needed a sponsoring broker was not going to let a little thing like the death of the broker get in the way of their real estate business. This salesperson started working on their own broker’s license but needed some time to meet the Broker requirements. In this case most folks would go and find a new broker. But, not this salesperson. Why not keep renewing their DEAD sponsoring broker’s license? This salesperson even went as far as taking MCE classes for the DEAD broker. This puts a whole new spin on those who say they were bored to death during their last MCE class.

How did this agent get caught? Simple! Someone contacted TREC and I’ll paraphrase here. Did you hear about So & So dying?

Well looking at the TREC record it seems that old So & So had been renewing their license from “The Other Side” for about 2 years.

To make a long story short the salesperson had by this time received their broker’s license. However, that was not going to last that long. Broker’s license REVOKED plus an $8,000 fine. There was no reference on any disciplinary action against the Dead Broker for allowing someone else to take their MCE. :)

It just goes to show you. No matter how clever you think you are, breaking the rules is going to catch up with you. Maybe, even from that great Real Estate office in the sky.

WE HAVE A NEW WINNER!

2008-07-18T09:10:00.005-05:00

Each month the Texas Real Estate Commission will post their enforcement actions. Every now and then one just pops up and you have to ask "WHAT IN THE WORLD WERE THEY THINKING?"

This takes the cake for someone with nerves of steel and common sense of mush.

A contract was executed for a sale of a property where the Seller agreed to pay a maximum of $6,500 in closing cost. The actual amount of the closing cost was $5,327.67, a savings to the seller of $1,147.33.

At the closing the listing Broker gets their hands on the contract and inserts into the contract that the Seller would pay the listing Broker a "Bonus" of $1,147.33. Not a bonus of $1,000 or $1,100 but $1,147.33. The listing Broker then informed the Seller they could not close unless the "Bonus" was paid.

The Seller paid because they needed to close. The Seller filed a complaint and to say the least the Texas Real Estate Commission was not pleased. The listing Broker now has a blotch on their record and was required to give the money back to the seller. The Commission will be looking to hold Brokers and Agents accountable if they try similar schemes in the future.

New TREC Contracts Approved

2008-07-17T14:27:00.003-05:00

The Texas Real Estate Commission has approved changes to the standard promulgated forms. There are several small changes and a new termination notice has been created. Form 38-2.

We have created a study guide form where many of the changes have been highlighted. Click here for a copy.

For a complete review and a copy of the new forms check the TREC web site at:

http://www.trec.state.tx.us/formslawscontracts/forms/forms-contracts.asp

The new forms can be used now and become mandatory 9/1/2008.

April 28, 2008 The Texas Real Estate Commission Addressed Some Interesting Issues.

2008-05-02T09:30:00.002-05:00

The Commission voted to change the contract forms. Most of the changes are not drastic with the exception of putting all the termination notices on one form. There was a small change in the option paragraph. In yet another attempt to educate agents that the OPTION MONEY goes to the seller. PLEASE STOP SENDING THE OPTION MONEY TO THE TITLE COMPANY. PLUS TITLE COMPANIES PLEASE STOP ACCEPTING THE OPTION MONEY FROM AGENTS. The forms are now in the public review step of the approval process. Check out the changes and make your comments to the Commission. The proposed forms should be posted on the TREC site. Click here to see if the proposed forms have been posted.

The Commission also voted to withdraw a rule that would have opened correspondence courses to private schools. A member of the legislature expressed their concern and suggested that the problem should be addressed in the legislature not by the rule making process of the Commission. The problem they want to address is the lack of control over correspondence course and the rise of "RENT A COLLEGES". This is where instead of supervising the educational program as they did in the past some of the colleges or universities have simply sold off their naming rights. When this rule was put into place many years ago with the colleges and universities offering the correspondence courses it was with the understanding that the colleges or universities would supervise the course programs to maintain educational integrity. This "RENT A COLLEGE" problem has resulted in some certificate mills setting up shop offering correspondence courses. In one case they were advertising that a student could complete all 210 hours required to get a license in just 24 hours. Before you say "What's wrong with getting 210 hours in only 24 hours" remember that real estate transaction where the other agent didn't have a clue of what to do. Think about it! Better education helps everyone. I hope with this new legislation these certificate mills will either clean up their act or go out of business. The overall goal is to improve the quality of this type of real estate education. If you have ideas about how to improve real estate education please drop me an e-mail:

rick@cretc.com

A new Commissioner was also welcomed at the meeting. Avis Wukasch of Georgetown. In my opinion a great selection.

One disturbing statistic came from the Monthly Report for Feburary. It concerns the number of new license applications.

Broker License Original Applications Received were up 5.01%
Sales License Original Applications Received were down 24.13%
Total Original Applications were down 20.34%

It seems the negative National news has had an affect on people getting into real estate. Reports still indicate that Texas is doing better than other areas of the country.

Real Estate School May Be In Big Trouble.

2008-05-01T20:10:00.010-05:00

On April 18, 2008 in Federal District Court Western District in Austin a copyright infringement suit was filed against a Texas Real Estate School. The school in trouble is not Capital Real Estate Training. The suit was filed by one of if not the largest real estate publishers in the nation.

This school claims to be the largest real estate school in Texas and even has made claims that one of their products is "So Unique It's Patented". The patent claim has since been proven false.

If you want to track this suit follow these instructions.

Go to http://www.pacer.uscourts.gov/ and create an account. (There is a fee if you download documents but it is only 8 cents a page.)

After you have created an account log in and select "CIVIL"

Then select the Region:
Texas-Western District

On the search form enter in the case number:
1:2008cv00287
Or after you have a PACER account click on the case number above.

You will now be able to follow this case as it progresses.

Texas Real Estate Educators Meet In Dallas

2008-04-24T13:58:00.004-05:00

I attended the annual meeting of the Texas Real Estate Teachers Association (TRETA) on April 17-19. This is the oldest real estate educators association in America. As usual I came away with lots of good new information.

The one item that stood out was a true story of an Oklahoma broker investigated by the FBI. The broker was indicted because they witnessed mortgage fraud and did nothing. This story was told in reference to the new Texas statue that requires anyone who suspects mortgage fraud must report it to the Texas Mortgage Fraud Task Force.

The new TREC administrator, Tim Irvine, made his first appearance at TRETA. He and Gwen Jackson brought us up to date on what is going on at the Commission.

One thing they talked about was that TREC could now require licensees to pay refunds. This is new!
He also talked about a new process that TREC can suspend a license very quickly if there is an ongoing and current threat to the consumer.
TREC has developed a plan to speed up certain enforcement actions. As an example in the future those who do not pay their fees or complete their Continuing Education will have their enforcement files streamlined. In short hand if you don't renew your license as required then you will not have an active real estate license. In the past this had to go through a long enforcement process. Under the new rule you have certain requirements and certain time constraints to renew your license. Failing to do what is required in the time allowed then "BOOM" you are no longer holding an active real estate license. With these bureaucratic type of enforcement complaints fast tracked the resources of the Commission can focus on the more serious issues. Such as lying, cheating and stealing real estate agents.
They are talking about creating a broker responsibility rule. This is still in the creation process but I believe it will be unlike the minimum services rule. As things progress I'll make note of the changes here on my Blog.

If you have not looked into joining the Texas Real Estate Teachers Association check them out at http://www.treta.org/.

If you can't trust your real estate school, who can you trust?

2008-02-16T12:36:00.008-06:00

An Austin Real Estate School in what I believe is one of the most foolish advertising schemes in real estate education history. It might rate right up there with "NEW COKE".

The site is http://www.austinrealestateschool.info/. It is, in our opinion, an attack web site where they posted negative and false claims about other real estate schools in Austin. They also posted the other school's phone numbers so their false statements could be exposed. Finally around the first week of June, 2008 they have taken down this attack website. However, on 6/6/2008 the attack site was back up and it has changed but still has incorrect information.

Why would they post claims that knew or should have known were false?

Why would they not make changes when they were informed there was a problem?

Why would they post the contact information so their false claims could be exposed?

Why would anyone believe their other claims like market share or they can make you rich, after seeing this site?

Why would a real estate company pay for advertising on a site like this?

Why didn't someone at the company say; "Excuse me but isn't this a really stupid idea????"

Why would they think that companies who are the subject of the false claims will just sit back and let this continue?

If you have an answer to these questions or other comments about this site or this school let us know.

E-mail us at:

youcantfixstupid@cretc.com

When our attorney contacted them they elected to ignored our letter. So, TREC has been notified and the TREC complaint file number is: #081192. We tried to resolve the problem without filing a formal complaint with the Real Estate Commission. But they left us no choice.

They claim we do not have 100% online courses.

That is false.

They claim that we do not have unproctored correspondence exams.

That is false.

They claim our web sites are not secure.

That is false.

The list goes on and on. Not just about us but other schools as well.

Know what is a good idea. Take their other claims with a grain of salt and take your classes from a school you can trust.

New MCE Legal and Ethics Course

2007-12-19T10:11:00.000-06:00

As you may know ALL current TREC legal and ethics courses expire 12/31/07. TREC is in the process of approving providers with the new course as we speak. However, in conversations with TREC I have been told many providers have not even submitted their application to offer the new course. We just received approval of a 6 hour legal and ethics course 06-06-129-6503. We submitted our course early November and Texas Tech University CPD (#143) just now received the approval letter. If you are a broker you might want to inform your agents not to procrastinate if they expire in January. Agents should also confirm that any legal or ethics course taken after 12/31/07 is the new course. One way to check is the course number. The third set of numbers is the expiration date of the course. As an example in the course number above the expiration date is "129" or 12/31/09. If you are any of your agents have a question about their MCE please have them give us or TREC a call.

TREC Commissioners Tackles A Hot Button Issue At Monday's Meeting.

2007-10-09T12:50:00.001-05:00

The E&O Insurance for Inspectors has been addressed. See the TREC web site for more details.

On Monday October 8, 2007 I knew something was up when I arrived 30 minutes early for the TREC meeting and the parking lot was almost full. The hot button issue was the new statutory requirement that Inspectors carry insurance. The hubbub was the Legislature was not clear on the type of insurance. What type of insurance does the law require Inspectors to carry; business liability or E&O? One thing you can say about the Inspector community they know how to Rally Their Troops. There were long lines at the podium for speakers.

Hopefully this insurance question will be resolved when the Attorney General renders his opinion on what the statute means. He could rule that:

Inspectors are required to carry E&O
Inspectors are required to carry business liability insurance
Inspectors are required to carry both
The statute is unenforceable
or Something entirely different.

You can enroll yourself on an e-mail list at http://www.oag.state.tx.us/ and receive an e-mail alert when the Attorney General releases his opinions.

TREC has a new Administrator, Mr. Tim Irvine, and this was his first meeting so welcome and yes it is too late to change your mind. Mr. Irvine and Chairperson Walton, kept the meeting moving and respectful.

Other items from the meeting:
The Inspector's Advisory Committee was created.
Two new members of the Broker Lawyer Committee we appointed.
Minor changes in the New Home Contracts along with the Third Party Financing Addendum. Also a new Notice Addendum was presented 43-0 and they changed form 34-3 Addendum for Property Located Seaward of the Gulf Intracoastal Waterway. Watch the TREC web site for the new forms.
Several new rules regarding fees and procedures were also passed. These were related to new changes from the last legislative session.

So much was addressed in this meeting giving you all the details here would be too time consuming and my purpose is to give a summary not a blow by blow retrospect of the meeting. Check the TREC web site and the minutes of the meeting will be posted at a later date. I have been attending these meetings for many years and you should try to attend from time to time, especially if they are discussing a policy that effects your profession.

All information is deemed to be correct but is not guaranteed. Posts are for eduction purposes only and are not intended to replace professional advice.

Are Flat Screen TVs Going To Be The Next Artificial Fireplace Logs?

2007-10-04T12:46:00.000-05:00

Over the years as building concepts and technical innovations occur the contract forms needed to keep up. Many years ago people in rural areas only access to cable type channels was using a satellite dish. Not these small dishes we see today but huge 10-12 foot monsters. At one time the satellite dish was added to paragraph 2. The intent was the seller would leave a functional satellite system. In reality the seller left that huge dish cemented into the ground but took all the electronics in the house. So, the form was changed adding "satellite dish systems and equipment".

A similar situation happened with artificial fireplace logs. These needed to be added a short time ago to clarify that these did in fact stay unless the seller reserved them.

Now with very expensive plasma or flat screen televisions mounted to the wall we are seeing the same confusion. If you have a home with these televisions mounted on the wall it would be a good idea to list them in the final contract that the seller will remove them. However, the belief is that any mounting hardware attached to the wall would remain. Stating that the seller is going to remove the televisions in the listing agreement is not enough. This reservation must be listed in the contract and the acceptable place would be paragraph 2. In the past who would have thought that a TV would be considered real property, so it was not addressed. With new technology some televisions are attached to the wall and MIGHT be considered part of the property.

All information is deemed to be correct but is not guaranteed. Posts are for eduction purposes only and are not intended to replace professional advice.

Educators & Regulators Meet In Austin Discussing New Regulations And Market Conditions.

2007-08-26T16:21:00.000-05:00

August 24, several educators and regulators from Texas and surrounding states met at the OMNI Hotel. What is unique about these meetings is that the information comes from some of the most knowledgeable sources in real estate.

Here are just some of the tidbits from the meeting.

There has been a drop in the number of agents who renew after their first year.

September 2005 - June 2006 73.3% renewed their license.
September 2006 - June 2007 68.7% renewed their license.

Two possible reasons were discussed.

1. The increase to the 60 core hour renewal requirement. This might dissuade those who are leaving the business from keeping their license in either active or inactive status.

2. If new agents were not given a reasonable expectation of what the job requires. I've seen several ads that give new agents misleading impression of earning potential. One ad is "Earn $150,000 a year in real estate". Another was an education provider advertising that getting a license and taking their class can make you rich. Many agents enter this profession with images of an easy path to wealth and prosperity.

However there is a positive trend. The renewal rate for the second years is around 75%.

Mortgage Fraud

We all know this is going on but you may not know to what extent. It is reported that real estate is responsible for 23% of America's GNP. The Federal Government and State Governments are taking this very seriously. In all major cities there are FBI agents dedicated to mortgage fraud. Starting very soon there will be a new Government Task Force dedicated to finding mortgage fraud. Looks like the statute of limitations on mortgage fraud will be increased to 10 years.

One new requirement falls on the borrower.

************************

NOTICE OF PENALTIES FOR MAKING FALSE OR MISLEADING STATEMENT

Effective September 1, 2007 and pursuant to Section 1. Subchapter B, Chapter 343, Section 343.105 of the Texas Finance Code, each mortgage lender, mortgage banker or licensed mortgage broker/loan officer shall provide to each applicant for a home loan this written notice at closing for full verification and execution by each loan applicant.

WARNING:
Intentionally or knowingly making a materially false or misleading statement to obtain property or credit, including a mortgage loan, is a violation of Section 32.32, of the Texas Penal Code, and, depending on the amount of the loan or value of the property, is punishable by imprisonment for a term of 2 years to 99 years and a fine not to exceed $10,000.

If a person determines or reasonably suspects that fraudulent activity has been committed or is about to be committed, the law requires that person to report the information to an authorized governmental agency.

Texas Department of Savings and Mortgage Lending
2601 North Lamar Blvd., Ste. 201
Austin, Texas 78705
Toll Free Consumer Hotline: (877) 276-5550
Main Number: (512) 475-1350
Email: smlinfo@sml.state.tx.us Website: http://www.sml.state.tx.us/

I/we, the undersigned home loan applicant(s), represent that I/we have received, read, and understand this notice of penalties for making a materially false or misleading written statement to obtain a home loan.

I/we represent that all statements and representations contained in my/our written home loan application, including statements or representations regarding my/our identity, employment, annual income, and intent to occupy the residential real property secured by the home loan, are true and correct as of the date of loan closing.

_____________________________________ ____________
Applicant .......................................................................... Date
_____________________________________ ____________
Co-Applicant(s) ............................................................... Date
Fraudulent activity has been defined as any act that constitutes a violation of a penal law and is part of an attempt or scheme to defraud any person. If a person determines or reasonably suspects that fraudulent activity has been committed or is about to be committed, the person shall report the information to an authorized governmental agency, namely:

The Texas Attorney General,

A local or state law enforcement agency of this state or a federal law enforcement agency, or

A U.S. Prosecuting attorney or prosecuting attorney of a county or judicial district of this state, or one or more of the following agencies:

The Texas Department of Savings and Mortgage Lending (TDSML),

The Texas Department of Public Safety (DPS),

The Texas Department of Insurance (TDI),

The Office of Consumer Credit Commissioner (OCCC),

The Texas Real Estate Commission (TREC),

The Texas Credit Union Department (TCUD),

The Texas Department of Banking (DOB), or

The Texas Appraiser Licensing and Certification Board (TALCB).Effective September 1, 2007 and pursuant to Section 1. Subchapter B, Chapter 343, Section 343.105 of the Texas Finance Code, each mortgage lender, mortgage banker or licensed mortgage broker/loan officer shall provide to each applicant for a home loan this written notice at closing for full verification and execution by each loan applicant.

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This is intended for people doing stated income loans who state an income to get the loan not what they actually earn. Can you see how that last paragraph will apply to agents? So if the agent knows the borrower is not telling the truth the agent is required to "RAT OUT" the borrower. To answer the question "HOW WILL THEY EVER FIND OUT?". Simple it will be in the secondary market review or if the loan goes into default. You can check out more changes at:

http://www.sml.state.tx.us/Website%20Proposal%20for%2080th%20Legislature%20Activity.htm

There is also a provision similar to the drug laws. We all know if the drug dealer gets caught the governments will seize their assets. Well looks like the same rules will apply regarding mortgage fraud.

One twist on identity theft is a rash of identity theft of appraisers. This is where flippers get the identity of a certified appraiser to create bogus appraisals to inflate the values.

Short Sales

Remember when a lender forgives a portion of the loan to do a Short Sale don't be surprised when that 1099 shows up as taxable income for the portion the bank forgave.

This was the most surprising of all.

TREC has between 140,000 and 150,000 licensees that they regulate. In fiscal year 2006 there were 5,391 complaints. Of those 2,020 were from the public. The rest were administrative complaints for things like not completing MCE, hot checks paid to the TREC etc. Of those 2,020 complaints from outside TREC only 12.1% were ruled that a valid violation of TREC rules or laws was committed. Run those numbers real fast and it looks like overall Texas has a majority of licensees following the rules. However there were several complaints that did not violate the law but were filed because the consumer felt the agent did not meet their expectations. A 1998 study published in the REEA Journal supported by a similar study out of Ohio establishes the contention that States with stringent pre-licensing education requirements have fewer consumer complaints filed with the licensing agency.

Not the happiest news but information you need to know in your real estate practice.

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SCEG speakers included:

Dr. Wayne Thorburn, Jerry Rutledge, Chuck Jacobus, John Stovall, Joe McClary, Carmel Streater and Connie Miller.

All information is deemed to be correct but is not guaranteed. Posts are for eduction purposes only and are not intended to replace professional advice.

Is The Sky Falling?

2007-08-17T09:28:00.000-05:00

It seems that every time I turn on the news there is bad news about real estate. However, there should be an * about Texas. As of now Texas and Central Texas in particular seems to be bucking the bad news trend. Yes there is a change in the market but not on the level reported on the national news.

Even if there is a down turn locally I doubt it will be anything like the 1980's. Let's take a trip down memory lane and look at what was going on in Austin, Texas in the mid to late 1980's.

Interest rates went as high as 20% plus.
Foreclosures were in the thousands each month on a regular basis.
Armed Federal Marshals were doing SWAT like raids on Saving and Loan offices.
Financial Institutions executive officers were being taken out of their offices in handcuffs.
Lenders could not lock in interest rates because by the time the borrower signed the loan application and the lender dialed the number to lock the rate, the interest rates had already jumped.
If you took a listing for less than a year it was too short.
HUD was selling homes for $10,000 with a 30 year loan and a 3% down payment.
Entire streets of duplexes were being sold in a block.
Investment property was being sold where the lender would count anticipated rents towards qualifying for the loan.

It was real estate Armageddon.

So when you hear the news put it in perspective. Also ask yourself this question. If the real estate market changed today what do I need to do so I can take advantage of the change?

A good agent knows they need to plan for future changes in the market.

All information is deemed to be correct but is not guaranteed. Posts are for eduction purposes only and are not intended to replace professional advice.

New Laws Starting September 1, 2007

2007-08-09T10:13:00.000-05:00

At the last Texas Real Estate Commission meeting Monday 8/6/07 several TREC rules were passed to comply with the new statute.

Here are some of the changes effective September 1, 2007.If you take an online MCE course you cannot complete the course in less than 24 hours. So if you wait until the last day of your renewal and you only need 1 more hour of MCE you will not be able to get credit for 24 hours after you have started the ONLINE course. It is my understanding that this 24-hour rule only applies to ONLINE classes not classroom or correspondence MCE courses.

TREC took action to replace the Real Estate Inspectors Committee with a new advisory group established in the statute. There were several discussions on the new requirement for Inspectors to carry E&O coverage. Some inspectors asked for guidance on what the E&O needed to cover.

In the past TREC could not order a licensee to issue a refund. As of September 1, 2007 that will change.

If you have a complaint filed against you and hearing is held it will no longer be with a TREC administrative hearings officer. Cases will now be assigned the State Office of Administrative Hearings.

If you do a late renewal be prepared to pay higher fees. The late fees depends on how long you have let your license go inactive.

Some of these rules were passed on an emergency measure. This will allow TREC to have rules in place 9/1/07 but also allow them to create more permanent rules later.

Some of the new laws do not become effective until January 1, 2008.

If you apply for a broker's license on or after 1/1/08 you will need 30 CORE hours in a Real Estate Brokerage courses. This course will have a TREC number in the 700's. Such as our Real Estate Brokerage 0712 course. The total number of hours did not increase. This Brokerage course will be part of the required 270 CORE hours.

Fingerprinting and more extensive criminal background checks will be required for new applicants and current licensee renewals.

TREC also took action to approve a new TREC Seller's Disclosure. This is NOT a mandatory Promulgated TREC form. It can be used by any agent or seller who may not have access to a TAR or local board's Seller Disclosure form.

All information is deemed to be correct but is not guaranteed. Posts are for eduction purposes only and are not intended to replace professional advice.