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The Consumer Financial Protection Bureau (CFPB) announced a proposal to postpone the effective date of the new Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule to October 1 instead of August 1. The CFPB cited an “administrative error” and consumers’ busy schedules at the start of the school year as reasons why it is proposing the two-month delay. The National Association of REALTORS® and nearly 300 members of Congress had pushed for the delay or a period of restrained enforcement of the new rule so all parties can become accustomed to the changes.

The new rule, which is also referred to as the Know Before You Owe rule, is intended to benefit consumers by creating more accountability and offering consumers more time to understand the mortgage process and their options, but industry experts anticipate complying with the new rule could add at least a week to closings. They are concerned the potential delays might even give all-cash buyers an edge over home buyers who are depending on financing, especially when closing quickly is critical in a hot market.

The Know Before You Owe rule is essentially a consolidation of several forms. The Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosures will be combined into a new form called the Loan Estimate. The HUD-1 and the final Truth-in-Lending disclosures will be combined into another new form called the Closing Disclosure.

It is the timing requirements to deliver the Closing Disclosure that have real estate professionals concerned about potential delays in the closing process. If the Closing Disclosure is not actually received in person, the new rule requires an additional three-day period if it is delivered by mail or electronically. Sunday is not counted; then add a federal holiday to the mix the Closing Disclosure may have to be delivered seven days or more before consummation.

Also, since the responsibility for compliance with the new rule falls heavily on lenders, it is very likely that lenders will retain tight control over the process of issuing the Closing Disclosure. Any last minute changes to the contract, such as seller credits to buyers or removing a loan contingency, could trigger cause for reissuance of a new Closing Disclosure. This could create further delays in the transaction.

“Starting the loan approval process early will reduce the risk of delayed closings. It is imperative that buyers work with a REALTOR® who understands these new guidelines and can prepare the buyer for all possibilities,” advises Chis Isaacson, president of the Silicon Valley Association of REALTORS®.

 

 

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The Consumer Financial Protection Bureau (CFPB) announced on Wednesday that it would be “sensitive” to companies that make a good-faith effort to comply with the new Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure (TRID) regulation that goes into effect on August 1, 2015. Although the announcement by the CFPB is less than what some members of Congress requested, which was a hard deadline five-month testing or “grace” period, it is a net win and a welcome development toward clarifying the changes coming to real estate closings on August 1.

The National Association of REALTORS® (NAR) has been leading the effort to ensure an effective implementation of the TRID regulation. NAR has advocated a period of restrained enforcement and liability for the TILA-RESPA Integrated Disclosure rule.

NAR will continue to have a dialogue with Congress and the CFPB to minimize possible market disruptions or uncertainty when the rule takes effect August 1. It was through member efforts during the 2015 REALTOR® Legislative Meetings and Trade Expo that more than 275 U.S. Senators and Representatives signed onto a letter to CFPB Director Richard Cordray to ask for clarification of the new rule.

For the latest information on this issue, visit www.realtor.org/respa.

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Instanet Solutions has begun providing 24 hours a day, seven days a week, 365 days a year live TOLL FREE phone and chat support to all PRDS users. This new industry leading support level is being provided at no charge.

PRDS users can expect reliable and professional toll free service 24 hours a day, seven days a week at the Instanet Solutions support number you already use on your PRDS page, (800) 668-8768. All calls will be answered within one minute. Calls will be recorded to ensure call quality.

The new support specialists have been trained on virtually every aspect of the system, its features and common tech support inquiries. Of course, transitioning to a new service system may have some challenges. In order to ensure the highest first call resolution, a larger than usual team of experienced Instanet Solutions staff will be working to assist the support specialists off site, as needed.

In the meantime, email support will be answered from 9 a.m. – 5 p.m. ET Monday through Friday. Email support will transition to 24/7 in the next few weeks.

Instanet Solutions provides PRDS with a solid platform for technology growth. Users can load the complete library of PRDS forms, as well as their individual company forms. Editing can be done online and sent out electronically.

PRDS Forms are an extensive line of REALTOR®-created paper and online forms for residential purchase and sales transactions. These forms are available online free of charge as a member benefit to all REALTOR® members of SILVAR and the San Mateo County Association of REALTORS® (SAMCAR). The PRDS Forms library is simple and easy to use, up-to-date, and prints on plain paper.

In line with its goal to enhance members’ professional development, the Education & Technology Committee of the Silicon Valley Association of REALTORS® (SILVAR) will present an Online Transaction Management Training Series FREE for members beginning in September. The courses will focus on how to create and manage transactions online, including how to use, e-sign, and store forms. Members are invited to sign up for these classes online at ims.silvar.org.

The courses are:
OTM 101: Beginner’s Guide to Creating Stress Free Digital Transactions
September 5 and October 3, 1:30-3:00 PM both days
Instructor: Bryan Robertson

An overview of the online transaction process from beginning to end, including the software and online forms you’ll need, preparing digital forms, getting digital signatures, and sharing and storing your documents. You’ll learn about PRDS/C.A.R. forms, ZipForms, Docusign, Authentisign, CutePDF, PDFEscape, CamScanner, DropBox, and GoogleDrive.

OTM 102: PRDS Forms Online: Using Instanet and Authentisign
September 10, 10:00 AM-12:00 PM; October 8, 2013, 1:30-3:30 PM
Instructor: Robert Johnson, SILVAR IT Administrator

Learn about the new PRDS Forms on the Instanet Solutions platform and be able to access your forms anywhere and anytime, from virtually any Internet-connected computer. The class will demonstrate the procedures to log in, create transactions, fill out the forms online, and then either print or email those forms to a client. Students will get a better understanding of the Instanet Solutions platform, including how to use Authentisign.

OTM 104: A Workshop on Creating an Online Transaction on DocuSign
September 23 and October 22, 1:30-3:00 PM both days
Instructor: Chris Alston

In this hands-on workshop, you will create an online transaction from beginning to end on your laptop. You will prepare one PRDS form (e.g. purchase contract) and one C.A.R. form (e.g. AVID) for e-signature by buyer (fellow student) and yourself. Then you’ll email the signed documents in PDF form to listing agent (fellow student) and store the PDF in the cloud. The class will touch on the basics for doing this on an iPad, but the class is geared toward laptops.

A Notice of Credit-Based Denial to Rent (RNDR) is a new form that has been added to the PRDS library and may be accessed online by SILVAR and SAMCAR (San Mateo County Association of REALTORS®) REALTOR® members at http://www.prdsforms.com. The RNDR is a form needed in the event a potential tenant is turned down due to an unfavorable credit rating.

In addition to Form RNDR 5-09 Notice of Credit-Based Denial to Rent, the revised PRDS Supplemental Seller’s Checklist (SSC) is now also available online for SILVAR and SAMCAR REALTOR® members.

PRDS Forms is an extensive line of paper and online forms for residential purchase and sales transactions. These forms are available online free of charge as a member benefit to all SILVAR and SAMCAR REALTOR® members. Created by REALTORS® for REALTORS®, these forms are highly acclaimed, and have been heavily used for over 25 years by listing agents from leading offices in Silicon Valley and the San Francisco Peninsula.

To access these and other PRDS forms, visit http://www.prdsforms.com.

The PRDS Forms Committee has a revised Supplemental Seller’s Checklist (“SSC”). The revisions are intended to make the form more user-friendly and to assist sellers in making a full and complete disclosure of those material facts impacting the value or desirability of a property. These latest revisions make the form much easier for sellers to understand and use.

SILVAR will be offering a course soon on these revisions and disclosure issues that relate to both the SSC and the Transfer Disclosure Statement (“TDS”). In the meantime, SILVAR REALTOR® members can check out the August 2012 issue of the Silicon Valley REALTOR®, SILVAR’s monthly newspaper, which includes a detailed explanation of the revisions provided by SILVAR board attorney and PRDS Forms Committee member Dave Hamerslough.

PRDS Forms is an extensive line of paper and online forms for residential purchase and sales transactions. These forms are available online free of charge as a member benefit to all SILVAR (Silicon Valley Association of REALTORS®) and SAMCAR (San Mateo County Association of REALTORS®) REALTOR® members. The online version of the forms is an extremely robust and intuitive platform that is far easier to use than other platforms. Created by REALTORS® for REALTORS®, these forms are highly acclaimed, and have been heavily used for over 25 years by listing agents from leading offices in Silicon Valley and the San Francisco Peninsula.

The Standard Forms Committee, which is composed of 25 members from SILVAR and SAMCAR, meets every other week and works very hard to make sure all forms are current and reflective of local practice. The revised PRDS Supplemental Seller’s Checklist is a product of the committee’s work and efforts to continually get educated about recent laws passed and requirements in surrounding areas, take the information and input it into the forms.

REALTOR® members may access the new PRDS SCC form online free of charge by visiting prdsforms.com.

On January 1 both the U.S. Senate and House passed H.R. 8 legislation to avert the “fiscal cliff.” The bill was signed by President Barack Obama.

Below is a National Association of REALTORS® summary of real estate related provisions in the bill:

Real Estate Tax Extenders
• Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014.

• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.

• 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.

• 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement, so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains
Capital Gains rate stays at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return. After that, any gains above those amounts will be taxed at 20 percent. The $250,000/$500,000 exclusion for sale of principle residence remains in place.

Estate Tax
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.

On Thursday, SILVAR President Suzanne Yost updated members of the Cupertino/Sunnyvale District on the state of the Association. Yost announced the Association is financially secure (SILVAR hasn’t raised dues since 2002) and stressed that SILVAR highly values its membership.

SILVAR offers many valuable member benefits, including PRDS Forms, a complete line of paper and online forms for residential purchase and sales transactions. PRDS Forms were developed specifically for Silicon Valley’s REALTORS® by Silicon Valley REALTORS® who saw the need. These forms are highly acclaimed and available online free of charge as a SILVAR member benefit.

Yost assured members their dues dollars are very well spent, especially on government affairs. She highly credited SILVAR Government Affairs Director Adam Montgomery for his work in successfully warding off many point of sale and transfer tax proposals that could have hurt homeowners had they passed. A recent example is proposed regulations that would have included sewer lateral inspection and compliance mandates at the transfer of property for homeowners in southern San Mateo County. She added since it is a large association with a strong government affairs staff and many accomplishments, “SILVAR has a footprint” at the local, state and national REALTOR® level.

Yost noted SILVAR’s District Council system is an especially good model that emerged upon the merger of the five boards in 1995. This model provides another level of opportunities for leadership. Having more people “with ears close to the ground” helps ensure that the Association meets the needs of agents working in all five districts.

Members are very lucky to be doing business in Silicon Valley, said Yost. Recent speaking engagements before the New York State Association of REALTORS® and the Michigan State Association of REALTORS® brought home this fact, she said. While REALTORS® everywhere have had to face tough markets during the past three years, Silicon Valley’s housing market is improving due to its location and strong tech and other innovative industries.

SILVAR’s president encourages members to take part in the Association. Join your District Council, get involved in activities at the District and Association level, volunteer for RSVP (REALTOR® Service Volunteer Program) and help others in your community, Yost urged.

“We always want to develop new leaders and give you the opportunity to become leaders,” she stressed.

Yost is excited about a couple of new Association components this year. There is SILVAR’s Young Professional Network (YPN), which welcomes all members – the young, as well as the seasoned professionals. SILVAR is also developing a Global Business Council, an initiative which will have a strong education component to help REALTORS® learn how to effectively work with international buyers. She added that SILVAR highly values its Affiliate members and a group is currently working on written policies and guidelines for Affiliates.

Last, but not least, Yost urged members to continue to stay positive. “The numbers are getting better,” said Yost. “2012 is the year we’ll come out of this. 2012 will be better.”

More than 130 members of the Silicon Valley Association of REALTORS® attended SILVAR’s Los Gatos/Saratoga District tour meeting a few weeks ago and listened as Jacquie Berry, owner of Community Association Data Source, emphasized the greatest mistake any seller can make is an incomplete disclosure.

When dealing with homeowner associations (HOAs), it gets especially complicated because the law requires more disclosures from common interest developments (CIDs), in addition to the normal disclosures required in the sale of single-family homes. Common interest developments are condominiums and planned developments that are governed by a homeowner association which administers the property and is responsible for repairing, replacing, or maintaining the common areas. The homeowner association places restrictions on the use of the property and the common areas.

Berry shared the following statistics: There are over 48,000 homeowner associations in California; CIDs make up a quarter of all housing in the state of California; 49 percent of CIDs are self-managed and less than 25 percent are 100 percent funded in their reserves.

Berry said lenders are asking more questions about the financial health of HOAs so buyers won’t be caught by surprise by undisclosed defects in the common areas and underfunded reserve accounts, which result in special assessments. Agents and prospective buyers should review state laws, documents that HOAs are required to provide, and ask questions. She noted forms change, and homeowner associations rarely provide a complete or updated set of disclosure documents.

Also, HOAs may state they have adequate reserves to maintain deferred maintenance, but they do not specify a timeline for which these reserves are adequate. HOAs must prepare a reserves budget every year, providing a current estimate of the costs of repairing and replacing major common area components over the long-term. Ideally, reserve funds should be able to cover all major repair and replacement costs when needed.

“The value of the property is directly related to reserves,” stressed Berry.

Berry said it’s very important that these disclosures be obtained and reviewed by the appropriate professional so the buyer can make an intelligent decision as to whether or not to purchase the property.

“It’s all about disclosure,” Berry said. “It’s not about anything else but disclosure.”

Not being able to get a home insured can stall, if not kill, a transaction. At this morning’s SILVAR Cupertino/Sunnyvale District tour meeting, an affiliate panel shared information on how to avoid such a dilemma. The panel, moderated by Kyle Chuang (Farmers Insurance), included Walt Rowley (Liberty Mutual Group), Linda Bentson (Old Republic Title), Laura Roseblade and Pauline McDonald (both from State Farm Insurance).

Here are some of many tips the panel shared:
• Each insurance company is different and has its own limitations of coverage, so it’s important to shop around and make sure you are dealing with a true insurance professional who knows the business.

• While there are lenders who may insist that insurance should cover the amount of the loan, insurance companies will only cover the value of the home. The amount an insurance company will cover differs from the appraised value because the appraised value includes land, while home insurance just covers the structure.

• The condition of a house affects insurance coverage more than the age of a house. The following may affect coverage:

– Roof condition – Some companies may deny coverage if an additional layer is placed on top of the original layer.

– Trees and brush in close proximity to the house

– Distance of a fire hydrant or fire station to the house – Some insurance companies will not insure a home if it is more than three miles away from a fire station

– Certain pets

• You have to think in terms of risk. Would you take a risk on a condition that you have observed? Inform you client about a potential problem so it can be fixed right away.

• In the case of condominiums, work closely with the lender. It’s important to know the insurance company that handles the master policy, what the HOA master policy entails, and get a copy of the certification of insurance for the master policy.

• Once you have all insurance documents, get them to your escrow officer as soon a possible.

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