NAR Drafts RESPA Reform Proposal
NAR Drafts RESPA Reform Proposal
WASHINGTON, D.C.--Real estate settlement service providers should have the ability to package all settlement services and offer them directly to consumers at a guaranteed price, according to a proposal put forth recently by NAR to change the Real Estate Settlement Procedures Act.
The proposal would permit any settlement service provider, including the real estate broker, mortgage lender, title insurance company, and so on, to offer one-stop settlement service packages to buyers. Settlement package contents would be disclosed to the consumer, indicating what services are provided, who's providing them, and the total price of the package.
NAR presented the proposal to the Mortgage Reform Working Group, a coalition of several dozen industry and consumer groups looking at reform of RESPA and the Truth in Lending Act. The group is expected to present a consensus proposal to Congress in early 1998.
The NAR proposal differs from a plan presented earlier by large mortgage lenders, known as the Consumer Mortgage Coalition, that would guarantee a package of settlement services at a single price but would not disclose to the consumer what companies were providing the various settlement services, a practice referred to as “blind bundling.”
Other key elements in the NAR proposal:
- For effective comparison shopping, a basic package must be defined to include all the items necessary to close the loan.
- There shall be no required use of settlement service packages. However, if a consumer chooses to purchase a package, the provider can require the use of the specific service providers included in the package.
- Optional packages can be offered for those services not required to close the loan but purchased for the consumer's added due diligence, such as home, septic, and lead-based paint inspections.
- If consumers choose to purchase settlement services separately, which is often the case today, they should have that option.
The proposal was based on nine recommendations approved by the Board of Directors at the annual meeting in November.
RESPA, a federal law originally passed in 1974, is designed to ensure that buyers and sellers in a real estate transaction have knowledge of all settlement costs.
Fannie, Freddie Raise Loan Limits to $227,150
WASHINGTON, D.C.--The loan limits for conforming conventional mortgages purchased by Fannie Mae and Freddie Mac have been increased effective Jan. 1.
The new limit for single-family houses is $227,150, up from $214, 600. Loan limits for multiunit loans were also increased as follows: two-family properties, $290,650; three-family, $351,300; and four-family, $436,600.
The maximum amounts are 50 percent higher for first mortgages on properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands than in the rest of the country.
The adjustments were made to reflect increases in the national average home price between October 1996 and October 1997, according to Fannie Mae and Freddie Mac.
Sands Dropping Commercial Business
LOS ANGELES--Fred Sands, REALTORS®, of Brentwood, Calif., is getting out of the commercial real estate business by merging Sands Commercial with Los Angeles--based Charles Dunn Co. Inc. The merged unit will assume the Charles Dunn name and does not affect Sand's thriving residential brokerage.
President Fred Sands said his attempts to acquire rivals during the 15-year operation of his one-unit commercial office were unsuccessful. The transaction gives Dunn exposure in the growing West Los Angeles commercial market and Sands a percentage of the Dunn brokerage. The value of the merger was not disclosed.
NAR, HUD Create Diversity Training, Certification
WASHINGTON, D.C.--NAR and the U.S. Department of Housing and Urban Development have formed a partnership to develop a cultural diversity training and certification program for real estate professionals.
The goal of the program, part of President Clinton’s One America Initiative and based on fair housing principles, is to increase homeownership, particularly among minorities and immigrants. The program is scheduled to kick off in the spring.
Real estate professionals who are certified will be able to use the new One America logo in advertising and promotional materials. The symbol will enable homebuyers to identify real estate professionals committed to diversity and equal housing opportunity. The symbol is also expected to be a marketing tool that will help certified real estate professionals attract additional clients.
“The One America logo will be like a Good Housekeeping Seal of Approval for REALTORS®,” says HUD Secretary Andrew Cuomo.
The training and certification will be open to all real estate professionals across the country, not just NAR members. Under the agreement, NAR will develop training for real estate professionals, building on fair housing principles to find ways to open up housing markets to all population groups.
For certification, real estate professionals will have to pass the training course, be free of any violations of the Fair Housing Act, and make a commitment to a set of program principles. HUD plans to publicize the use of the One America logo.
Realty One to Begin National Acquisitions
CLEVELAND--Realty One is expected to announce soon the first in a series of acquisitions of large, independent brokerages in urban areas nationwide.
Realty One, among the largest residential brokerages in Ohio with 1,500 sales associates, was acquired last September by Insignia Financial Group Inc., Greenville, S.C. Insignia is a large manager of multifamily residential properties across the country and is facilitating financing to make Realty One a national organization.
Realty One has been talking with large, independent brokers who want to participate in industry consolidation but don’t want to become part of a franchise network—the only alternative that was previously available, according to Joseph T. Aveni, chairman and CEO of Realty One. “We intend to move aggressively to become the independent alternative and create a national organization,” he says.
The company will maintain its brand identity, says Aveni, and retain its headquarters in Cleveland. It’s unclear what name the newly acquired brokerages will have—Realty One or a combination of the old brokerage name and Realty One.
Auctions Work: $4.2 Million in Properties Sold
NEW ORLEANS--A historic uptown mansion here was gaveled to the highest bidder at $785,000, the highest price paid at a real estate auction sponsored by NAR during the annual convention.
The auction sold 23 of the 34 properties up for sale, for a total of $4.2 million. More than 600 bidders, buyers, and sellers attended the event, designed to show REALTORS® that auctions can be a powerful and effective means of selling property. A variety of real estate, including residential, commercial, and undeveloped properties, was offered at the auction, conducted by REALTOR® David Gilmore, of Gilmore Auction & Realty Co., Kenner, La.
Selling Houses Among Most Stressful Jobs
Real estate salesperson is among the 25 most stressful jobs, according to the third edition of Jobs Rated Almanac, published by National Business Employment Weekly.
Other high-stress jobs include air traffic controller, police officer, senior corporate executive, public relations executive, college basketball coach, firefighter, stockbroker, and U.S. president.
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