Transcript 2009 CREC Update Course

2010 CREC Annual
Commission Update Course
2010 Commission Update Course
Slide #1
Table of Contents
1)
2)
3)
4)
5)
6)
Carbon Monoxide
Property Management
Issues
Warranty of Habitability
2010 New & Revised
Forms
Seibel Case
RESPA Reform
7)
8)
9)
10)
11)
12)
SAFE Act Update
Foreclosure Protection
Act
License Management &
Continuing Education
HVCC
Consumer Tips
Quiz
2010 Commission Update Course
Slide #2
Carbon Monoxide Legal Compliance
Properties Covered By The Law
1.
Single-Family Dwellings
2.
Multi-Family Dwellings
3.
All Residential Rental Properties
2010 Commission Update Course
Slide #3
Triggering Features & Events
1.
2.
3.
4.
Triggering Appliances and
Structures
Triggering Events
Compliance Scenario Analysis
Local Laws and Ordinances
2010 Commission Update Course
Slide #4
Alarms & Installation
Complying Alarms – National Fire Alarm
Protection Association
1.
1.
2.
3.
4.
2.
3.
Distinct audible alarm
Conform to standards
Power source
Combination detectors
Installation Methods
Installation Location
2010 Commission Update Course
Slide #5
Maintenance Responsibilities
Landlords and Managers
1.
1.
2.
3.
New tenancy – replace
New tenancy – battery
Written notice – repair/replace
Tenants
2.
1.
2.
Keep, test, maintain
Notify landlord – issues
2010 Commission Update Course
Slide #6
Limits on Liability
Generally
1.
38-45-106(1) C.R.S.: No claim against
1.
1.
2.
3.
2.
3.
2.
Property owner
Agent for owner
Installer
If installed to manufacturer’s instructions and
CO statute
38-45-106(2) C.R.S.: Purchaser
Real Estate Brokers
2010 Commission Update Course
Slide #7
Property Management Without Employing
Broker’s (EB’s) Knowledge
 You could be violating several rules and statutes by
performing property management without the EB’s
knowledge, especially if representing a separate
company to the consumer.
 There are significant trust accounting and transaction
file problems because the EB has no knowledge of
their employee doing property management
 Accounts must be in the name of the employing
broker, license is non-transferable, and supervision is
required
 Rules E-1 (a) (c) (p), E-29 – E-32
2010 Commission Update Course
Slide #8
Property Managers May Not Markup
Services Without Disclosure
 Taking any undisclosed amount (due to the
principal) of compensation or commission is a
violation of C.R.S. 12-61-113 (1) (q)
 Payment to broker for services are considered
“earned”…..after contracted services have been
performed. See Rule E-1 (f)
2010 Commission Update Course
Slide #9
HB 08-1356: Warranty of
Habitability
1.
2.
3.
4.
5.
Applies to all leases after 9-1-08
Defines Uninhabitable Premises
Establishes a Statutory Warranty of
Habitability
Defines when the Warranty of Habitability is
breached
Resident remedies for breach of the
Warranty of Habitability
2010 Commission Update Course
Slide #10
The Landlord Has Breached the
Warranty of Habitability if:
1.
2.
3.
The condition which makes the premises unfit
for human habitation is materially dangerous
or hazardous to a tenant’s life, health or safety
and
Landlord has received written notice of the
condition and
Landlord has failed to cure the problem within
a reasonable time.
2010 Commission Update Course
Slide #11
Required Property Conditions
1.
2.
3.
4.
5.
Functioning heating, lighting, running water, and
reasonable amounts of hot water.
Common areas that are clean and free from debris
and garbage.
Unbroken windows and doors with working locks.
An appropriate extermination response to
rodent/vermin infestation throughout the premises.
Compliance with all applicable building and health
codes.
2010 Commission Update Course
Slide #12
Tenants Now Have a Statutory Duty to
Maintain the Premises
1.
2.
Should the tenant fail to maintain the
premises, he/she may be evicted under HB
08-1356.
Tenants are now statutorily liable for
knowingly, intentionally, deliberately, or
negligently destroying, defacing, damaging,
impairing, or removing any part of the
premises.
2010 Commission Update Course
Slide #13
Tenant Remedies
1.
2.
3.
Lease Termination.
Injunctive Relief: The court may order
landlord or tenant to immediately fix
the problem.
Withholding of Rent: The tenant may
claim breach, withhold rent, and then
later assert the breach as a defense to
an eviction action.
2010 Commission Update Course
Slide #14
Tenant Remedies (cont’d)
4.
Payment of Rent: If the tenant withholds rent
because s/he alleges a breach of the Warranty
of Habitability, the law requires the court to
order the tenant to immediately pay all or part
of the rent due into the court registry at the
time the tenant asserts a breach of warranty
of habitability claim.
2010 Commission Update Course
Slide #15
Tenant Remedies – Lease Termination if
the Warranty of Habitability is Breached
1.
2.
3.
The problem must make the premises
uninhabitable.
The tenant has given written notice of the
problem and landlord failed to cure within a
reasonable time.
Tenant must send a 2nd written notice of
intent to terminate if the problem is still not
remedied within 5 business days.
2010 Commission Update Course
Slide #16
2010 New Foreclosure Forms







CBSF1-7-09 Contract to Buy & Sell
(Foreclosure)
NCF34-7-09 Notice of Cancellation
NTCF43-7-09 Inspection Notice
CPF40-7-09 Counterproposal
AEF41-7-09 Amend/Extend Contract
SWF30-7-09 Seller Warning (NEW)
The Seller Warning and the Notice of
Cancellation must accompany the CBSF1.
2010 Commission Update Course
Slide #17
Strike Through Example


Strike-Thru Allowed: Second to last
sentence of Sect. 10.5 in the Listing
Contract
…Therefore, if the Act applies, Seller
agrees that Broker is not authorized to
prepare such a contract for the sale of
the Property…
2010 Commission Update Course
Slide #18
When to use the Foreclosure
Forms?




The property is Residential
There is a mortgage against the property
The seller is a Homeowner
The Buyer will not live on the property for at
least one year
* There may be situations where the foreclosure
forms may not be necessary even though it
meets the above test. Brokers should seek
advice from legal counsel.
2010 Commission Update Course
Slide #19
Can NOT draft the Contract if…



The Seller does not speak English as their
principal language
The Seller will lease the property after
closing
The Seller has a right to repurchase the
property after closing
2010 Commission Update Course
Slide #20
List of New Forms




DSD17-1-09 Dual Status Disclosure
SPD29-5-09 Seller’s Property Disclosure
(Residential)
BDT20-5-09 Brokerage Disclosure to Tenant
NTT44-5-09 Notice to Terminate
2010 Commission Update Course
Slide #21
List of Revised Forms









CBS1 Contract to Buy & Sell
CL8 Closing Instructions
CP40 Counter Proposal
AE41 Agreement to Amend/Extend
LB36 Licensee Buyout Addendum
SSA38 Short Sale Addendum
SPD19 Seller’s Property Disclosure (All Properties)
BD24 Buyer Disclosure
SD16 Seller Disclosure
2010 Commission Update Course
Slide #22
List of Revised Forms (cont’d)







DD25 Working Relationships Definitions
BDD56 Broker Duties Disclosure REO
TD72 Deed of Trust (Strict)
TD73 Deed of Trust (Creditworthy)
TD74 Deed of Trust (Assumable)
SS60 Closing Statement
SS61 Closing Statement Worksheet
2010 Commission Update Course
Slide #23
List of Revised Forms (cont’d)


EBA53 Exclusive Brokerage Listing
Addendum to Exclusive Right-to-Sell
Listing Contract
OLA54 Open Listing Addendum to
Exclusive Right-to-Sell Listing Contract
2010 Commission Update Course
Slide #24
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09


Mandatory 2009
§2.5 Computation of Time


“Day” clarified to include entire day ending
at 11:59pm MT
Computing time periods

When no deadline is specified



1st day excluded/Last day included
Example: “3 days after MEC”
When deadline falls on weekend or holiday

Check box: Deadline extended to next weekday that is
not a weekend or holiday
2010 Commission Update Course
Slide #25
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§3.1.6 Water Rights

Change in Well Ownership form filed with
Division of Water Resources within 60 days
after Closing
Filed by Closing Services Provider or Buyer
 “Small capacity” water wells and “Domestic
exempt” water wells


The Division of Water Resources website:
http://water.state.co.us/
2010 Commission Update Course
Slide #26
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§3.1.6.3 Water Tap/Sewer Tap

Note: Buyer is advised to obtain, from the
provider, written confirmation of the amount
remaining to be paid, if any, time and other
restrictions for transfer and use of the tap.
2010 Commission Update Course
Slide #27
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§2.3 Dates & Deadlines


§6.2.2 Appraisal Provisions/Conventional


Line 10. Appraisal Objection Deadline
(§6.2.2)
Objection Deadline language added
This deadline of course is NOT applicable
to transactions using FHA or VA
financing.
2010 Commission Update Course
Slide #28
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§4.2 Earnest Money


If Earnest Money Holder will not be one of the
brokers to the transaction, Closing
Instructions must be completed no later than
when Earnest Money Holder receives the
Earnest Money
Broker signature lines at end of Contract
restate this point
2010 Commission Update Course
Slide #29
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§4.3 Cash at Closing

Failure to have necessary funds at Closings =
DEFAULT
2010 Commission Update Course
Slide #30
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§6.1 Property Approval

For repairs required by lender:
Seller’s right to cancel no longer subject to “5 days
before Closing” requirement
 Avoids the time trap created by lenders who notify
parties of required repairs late in the transaction
 Especially FHA & VA

2010 Commission Update Course
Slide #31
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§7.1 Evidence of Title

Sellers must provide Abstracts of Title in their
possession to Buyers
2010 Commission Update Course
Slide #32
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§9 Lead-Based Paint

Buyer must sign and return disclosure to
Seller at time of or before executing the
Contract to Buy & Sell



Disclosure must be signed by seller, buyer, and
real estate brokers
Transaction cannot legally continue without
this step. Contract will be considered VOID.
Don’t forget to provide Lead Based Paint
information booklet!
2010 Commission Update Course
Slide #33
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§10.2 Inspection Objection Deadline


New language adds proximity to existing or
proposed roads, highways, and other
environmental issues (noises, odors) to list
of items which permit Buyer to cancel
contract
§10.8 Carbon Monoxide Alarms
2010 Commission Update Course
Slide #34
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§15.4 Closing Instructions



Text revised to emphasize the importance of
completing the Closing Instructions early (before
delivery of Earnest Money)
Joint Position Statement with Division of
Insurance
Closing Instructions form removed from the
Contract to Buy & Sell but preferred treatment is
to complete them at the time of executing the
Contract to Buy & Sell
2010 Commission Update Course
Slide #35
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§16.1 Tax Proration


Tax proration will be adjusted if the Seller
qualifies for the “qualifying seniors property
tax exemption”
Please note that SB09-276 suspended this tax
exemption for the period beginning January 1,
2009 and ending January 1, 2010.
2010 Commission Update Course
Slide #36
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§16.2 Rents

Adds language telling Seller to notify tenants
in writing that their security deposits will be
transferred to Buyer
2010 Commission Update Course
Slide #37
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§17 Possession

Clarifying language makes clear that Per Diem
charge accrues for the entire day if Seller fails
to deliver possession as called for by the
Contract, despite §2.5.1 which defines a “day”
to mean one ending at 11:59pm
2010 Commission Update Course
Slide #38
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§24 Earnest Money Dispute

New last sentence added to emphasize that
this section only applies if Earnest Money
Holder is one of the real estate brokers to the
transaction

Reinforces importance of having Closing
Instructions signed by all parties before delivery of
earnest money to Closing Company
2010 Commission Update Course
Slide #39
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§30 Colorado Foreclosure Protection Act


Buyer now required to check a box indicating
whether buyer intends to occupy property as
personal residence for at least 1 year after
Closing
This provides an easy way to determine
whether the Foreclosure Protection Act may
apply
2010 Commission Update Course
Slide #40
Contract to Buy & Sell
CBS 1-5-09 and CBSF 1-7-09

§31 Notice, Delivery and Choice of Law


§31.1 Adds word “document” providing for
any notice “or document” to be effective upon
physical delivery to buyer or seller
§31.2 Adds “internet” as acceptable method
of electronic delivery
2010 Commission Update Course
Slide #41
Closing Instructions
CL8-9-08



Form separated from Contract to Buy &
Sell
Text updated to reflect changes to
Contract to Buy & Sell
Important form when Earnest Money
Holder will be a closing company instead
of one of the brokers
2010 Commission Update Course
Slide #42
Counter Proposal CP 40-5-09
Agreement to Amend/Extend
AE 41-5-09
Licensee Buyout Addendum
LB 36-9-08

Updated to reflect changes to Dates &
Deadlines table and section numbers in
Contract to Buy & Sell
2010 Commission Update Course
Slide #43
Brokerage Relationship Disclosures
BD24-5-09, BDT20-5-09, BDD56-5-09, SD 16-5-09



Buyer or Seller not vicariously liable for
acts of broker unless approved, directed,
or ratified
Buyer or Seller’s relationship with
brokerage firm is at the designated broker
level, not with the entire firm
Reminder to Buyer or Seller that they may
shop for settlement services and
prices/quality vary
2010 Commission Update Course
Slide #44
Broker Disclosure to Tenant
(BDT 20-5-09)


As of 1-1-09 there is a new BROKERAGE
DISCLOSURE TO TENANT form, required in all
leasing transactions.
Based on broker disclosure to buyer form, a
major change is Seller is now Landlord and
Buyer is now Tenant. This new form was
mandatory as of 1-1-09.
2010 Commission Update Course
Slide #45
Brokerage Disclosure to Buyer
BD 24-5-09


Added Megan’s Law disclosure
Megan’s Law: If the presence of a
registered sex offender is a matter of
concern to the Buyer, Buyer understands
that Buyer must contact local law
enforcement officials regarding obtaining
such information.
2010 Commission Update Course
Slide #46
Seller’s Property Disclosure
(all Types of Properties)
SPD 19-9-08
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Toll roads
Transportation projects
Carbon Monoxide alarm
“N/A” column replaces “Not Present”
column
2010 Commission Update Course
Slide #47
Seller’s Property Disclosure
(Residential) SPD 29-5-09


Shorter form easier for most residential
transactions
Review Notices to buyer and seller on the
last page
2010 Commission Update Course
Slide #48
Notice to Terminate
NTT 44-5-09
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

New form
Provides precise, clear language when one
party to the Contract to Buy & Sell wishes
to terminate
Is not an agreement to terminate, just a
notice. Remember to include earnest
money release.
2010 Commission Update Course
Slide #49
Closing Statement
SS 60-9-08
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
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Formerly called “Statement of Settlement”
Updated to reflect typical costs and fees
Checkbox to indicate “estimate” or “final”
Name change reduces confusing it with HUD-1
Statement of Settlement
2010 Commission Update Course
Slide #50
Short Sale Addendum
SSA 38-9-08

Modified to allow either Buyer or Seller
to terminate

Must be done before Lender’s Acceptance
(§8.3)
2010 Commission Update Course
Slide #51
Joint Position Statement CP-30




Originally released 2003
CREC & Board of Real Estate Appraisers
Joint Statement
Seller Concessions
Revised to reflect change in IRS treatment
of some providers of down payment
assistance

No longer treated as tax-exempt charities
2010 Commission Update Course
Slide #52
Seibel v. Colorado Real Estate
Commission (1974)


(ref. 5-5 Colorado Real Estate Manual)
At issue:

Does the Commission have jurisdiction over
“non-agency” activities.
2010 Commission Update Course
Slide #53
Seibel v. CREC

Seibel (buyer in transaction) executes
receipt and option agreement through
listing broker


Unable to close – accepts return of deposit
New buyer – Arvidson – signs a receipt
and option agreement, again through
listing broker

Seibel unaware of new transaction
2010 Commission Update Course
Slide #54
Seibel v. CREC

Seibel contacts owners



Contact is made directly – not through
listing broker
Contact made without consent of listing
broker
Seibel records original agreement
2010 Commission Update Course
Slide #55
Seibel v. CREC

Proceedings held


Seibel found in violation
Seibel appeals to Appellate Court

What did the appellate court conclude?
2010 Commission Update Course
Slide #56
CP-20 Personal Assistants


Revised October 13, 2009
This statement was revised to clarify
relationship between a personal assistant
and the broker who employs them vs. the
duties of the Employing Broker of a real
estate firm.
2010 Commission Update Course
Slide #57
DRE Director’s Position Statement
on Broker’s Discussion of Financing



SAFE act defines minimum national
licensing standards
C.R.S. 12-61-902(7.7)(c)
C.R.S. 12-61-902(6)(a)
2010 Commission Update Course
Slide #58
RESPA Reform

New Good Faith Estimate (GFE)




Reduced from 4 to 3 pages
Includes a page of instructions for consumers
Designed to improve consumers’ ability to
understand and compare loan costs
HUD limits closing costs that can and
cannot change at closing, and by how
much
2010 Commission Update Course
Slide #59
RESPA Reform
New HUD-1 Settlement Statement

New page to allow borrower to compare GFE estimates
with final HUD-1 costs
HUD-1 references specific line items from GFE



New loan charge tolerance requirements


Lender/settlement service provider has 30 days after
closing to correct overcharges and/or repay borrower
http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm
2010 Commission Update Course
Slide #60
SAFE Act Implementation



Term “Mortgage Broker” replaced with the
term “Mortgage Loan Originator” (MLO)
All MLOs must be registered with the
Nationwide Mortgage Licensing System
(NMLS) by July 31, 2010.
http://mortgage.nationwidelicensingsyste
m.org/Pages/default.aspx
2010 Commission Update Course
Slide #61
Newly Affected Mortgage Loan
Originators




Mortgage loan originators working for affiliates
of depository institutions, as defined in section
1503 (2) of the S.A.F.E. Act;
Mortgage loan originators involved in chattel
financing relating to residential real estate;
Mortgage loan originators working for nonprofit organizations; and
Independent contractor loan processors and
underwriters.
2010 Commission Update Course
Slide #62
Foreclosure Protection Act
(Statute Changes)
Effective July 1, 2009, the Foreclosure
Protection Act was amended to include
protection for primary resident owners
who are at least 30 days delinquent on
their mortgage.
2010 Commission Update Course
Slide
Slide
#63#63
CO House Bill 1276



A delinquent borrower may qualify for a
90 day deferral of the foreclosure process
while attempting a loss mitigation with the
servicer.
Every eligible borrower will receive a
posting from the lender with instructions.
A borrower must meet with a HUDapproved Housing Counselor to determine
qualification.
2010 Commission Update Course
Slide #64
Short Sale Transactions


Short sale transactions are a function of the
current economic climate and will likely continue
as long as lenders see them as a better
alternative to foreclosures.
Offering brokerage services to distressed
homeowners is a reasonable and necessary
service to the public in this market.
2010 Commission Update Course
Slide #65
Short Sale Transactions (cont.)

Care should be taken to assure that all
contingencies are clearly disclosed and
that buyers and sellers are given all of the
information they need to make fully
informed decisions.
2010 Commission Update Course
Slide #66
Short Sale Disclosures


A seller facing foreclosure who elects to
attempt a short sale should be made
aware that there are potential
ramifications after closing.
The lender could elect to take steps to
collect the deficiency from the seller after
agreeing to the short sale.
2010 Commission Update Course
Slide #67
Short Sale Disclosures (cont.)


If the deficiency is forgiven, the difference
between the amount owed and the short
sale payoff could have tax implications.
If a licensee offers negotiation of a short
payoff as a listing-related service, the cost
of that service must be clearly disclosed.
2010 Commission Update Course
Slide #68
Short Sale Disclosures (cont.)


Having separate “A” and “B” side closings does
not relieve the real estate licensees from
disclosing that one side of the transaction is
contingent on the other.
The settlement statement must list the payment
for short sale negotiations in a manner that does
not attempt to conceal the actual recipient or
the true nature of the charge.
2010 Commission Update Course
Slide #69
General Short Sale Expectations


Brokers who engage in those services are
expected to exhibit sufficient knowledge of
foreclosures and short sales and the
competence to assist buyers and sellers in
those transactions.
Supervising brokers should be well versed
in the mechanics of those transactions as
well.
2010 Commission Update Course
Slide #70
General Short Sale Expectations
(cont.)

Brokers who elect to make short sale
transactions part of the inventory of
services they provide should take care to
ensure that basic disclosures regarding the
nature of the transaction are clearly made
to buyers and sellers, including use of
forms that comply with the Colorado
Foreclosure Act.
2010 Commission Update Course
Slide #71
Traditional Short Sale
agrees to lien release
Contract to
Buy & Sell
Buyer's
Broker
Seller's
Broker
Foreclosing
Lien Holder
Seller
Licensed
Licensed
Real
Estate Broker
Real Estate Broker
$
$
Buyer
OR a Transaction Broker
2010 Commission Update Course
Slide #72
Double Close Short Sale
Lien Release
Contract to
Buy & Sell
Contract to
Buy & Sell
"A"
"B"
$
$
$
$
Foreclosing Lender
Seller
Intermediate Buyer
(Unlicensed Person)
Transaction
"A" Broker(s)
SHOULD NOT
BE
SAME PERSON
End Buyer
$
End Buyer's Lender
Transaction
"B" Broker(s)
2010 Commission Update Course
Slide #73
Undisclosed Short Sale
"B" Contract price - "A" Contract price
= Profit for Intermediate Buyer
Contract A
With Opt-Out Clause
Contract B
Not Disclosed
Seller
Intermediate
Buyer
$
Foreclosing Bank
$
$
End Buyer
Financing from End buyer used
throughout A&B and B&C transactions
2010 Commission Update Course
Slide #74
Short Sale Concerns
The three areas of concern for brokers are the following:
Relationships: Real Estate Brokers should be aware of the
relationships that they are contractually obligated to maintain. It is
impossible to maintain fiducary duty to a seller if you attempt to
revert to being a transaction broker over two simultaneous
transactions. The broker should also be aware of who the client is,
and who is not. The Foreclosing lender is not your client when you
have a listing agreement with the seller, the seller is your client.
Real Estate Broker
Compensation: You should include all compensation on all HUD1 Settlement Statement, and no one should recieve undisclosed
compensation.
Disclosure: A Broker should use a Short Sale Addendum form
whenever invovled with a transaction that may result in the short
payoff of a lien holder. All parties to the transaction(s) should be
made aware of each other, every contract and all compensation
should be disclosed. The seller should be advised to seek legal
counsel, and tax advice regarding the potentially negative effects
from participating in a short sale
2010 Commission Update Course
Slide #75
Name Rules



C.R.S. 12-61-103 (10)
Rule C-18 Brokerage activity only in trade
name or full licensed name
Rule C-20 disallows identical licensed
entity names.
2010 Commission Update Course
Slide #76
Name Rules (cont.)


Rule C-19 (e) – no broker shall advertise
in such a manner as to mislead the public
as to the identity of the licensed broker.
Rule C-19 (f), (g), (h) and (i) – exception
for franchise names, requires unlicensed
trade names to “clearly and unmistakably”
include licensed name.
2010 Commission Update Course
Slide #77
Team Names



Teams not prohibited, but must be clearly
identified as being a “team”
Team advertising must never omit the
licensed brokerage name.
Yes, this includes online social media sites!
All Types of Advertising!
2010 Commission Update Course
Slide #78
Payment to Wholly Owned
Employee’s Corporation



CP-18 – Payment to entities owned by
employed licensees allowed.
Does not allow corporation to be licensed
under a broker.
Entity name should never appear in any
type of advertising!
2010 Commission Update Course
Slide #79
Errors & Omissions Insurance



100% Audit in February of each year
D-14(d), inactivation immediately upon
expiration of policy
January 31 coverage purchase deadline
2010 Commission Update Course
Slide #80
Errors & Omissions Insurance
(cont.)


Entity/Employing Broker policies
Forged E&O certificate
2010 Commission Update Course
Slide #81
License Upgrades

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2 years of active licensure required for
independent level
24 hour Broker Administration required for
employing level
If initially licensed as a salesperson (pre 1997),
will be required to complete state exam
If license issued after 1997, exam requirement
has already been met
2010 Commission Update Course
Slide #82
Continuing Education Requirements




12 hours CREC Annual Commission Update (not
NAR ethics course)
12 hours Continuing Education Electives
24 hours total still required during every three year
renewal period
Education provider and course must be approved
under Rule B-6 or by application.
2010 Commission Update Course
Slide #83
Fee Schedule


Fee setting takes place once a year,
usually around November 15th
Fees are subject to change at any time
during the year and may go up or down,
depending on the status of the budget.
2010 Commission Update Course
Slide #84
Renewal Notices – Discontinued


In an attempt to reduce costs, DRE has
discontinued the printing of license
renewal notices.
Expiration date is printed on licenses and
available on our online e-services site.
2010 Commission Update Course
Slide #85
Home Valuation Code of Conduct
(HVCC)

The commission has been receiving many
inquiries regarding the HVCC. These next
slides are to clarify what the HVCC is and
what issues you may experience as a
result of this new policy.
2010 Commission Update Course
Slide #86
Home Valuation Code of
Conduct Background



December 23, 2008, Federal Housing Finance
Agency (FHFA) creates a revised Home
Valuation Code of Conduct (HVCC) effective
May 1, 2009
HVCC is not legislation
Imposes restrictions on selection, compensation
and solicitation of appraisers.
2010 Commission Update Course
Slide #87
Why It Matters

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

FHFA policy not to purchase mortgages from
sellers that do not adopt the HVCC
Complications from increased use of Appraisal
Management Companies (AMCs)
Changes appraiser’s administrative processes.
AMCs beginning to have detrimental effects
2010 Commission Update Course
Slide #88
Complications

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
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“Cram Down” of Appraisal Fees
Misrepresentation & Increased Appraisal
Fees to the Consumer
Less Qualified Pool of Appraisers
Processing Times
2010 Commission Update Course
Slide #89
Complications (cont.)



Geographic Competency
Poor Communication
Coercion Through Fear of Retribution
2010 Commission Update Course
Slide #90
AMCs and the IVPI
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
AMCs/Lenders indicate AMCs are not
source of problem, but byproduct of
changing economy
Independent Valuation Protection Institute
(IVPI), once operational, should assess
complaints of coercive practices
2010 Commission Update Course
Slide #91
Recent Updates
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
“Strengthening Appraiser Independence
and Improving the Valuation Process”
FHFA notice (July, 2009).
FHFA finalizing complaint form regarding
HVCC violations
2010 Commission Update Course
Slide #92
Going Forward
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

DRE has requested consideration of
legislative proposal to create
licensure/registration for AMCs
Board of Real Estate Appraisers would be
designated regulatory body.
Contact your state representative and
FHFA to voice your concerns
2010 Commission Update Course
Slide #93
Broker Price Opinions



C.R.S. 12-61-702(5)(b)(2) – allows BPOs
not used for financing
C.R.S. 12-61-718(1)(a) – de minimis
exemption
C.R.S. 12-61-718(1)(b) – limits exemption
and requires notice regarding absence of
appraiser’s license
2010 Commission Update Course
Slide #94
Broker Price Opinions (cont.)

Required Disclosures


Board rule 15.2: “NOTICE: The preparer of
this appraisal is not licensed as a real estate
appraiser under the laws of the State of
Colorado.”
CP-24: “NOTICE: The preparer of this
appraisal is not registered, licensed or
certified as a real estate appraiser by the
State of Colorado.”
2010 Commission Update Course
Slide #95
Avoiding Rental Scams

Warning Signs:




Security deposits via wire transfer
Owner unable to meet in person
Rent amount “too good to be true”
Advertisements with grammatical errors
2010 Commission Update Course
Slide #96
Questions to Ask Your Mortgage
Loan Originator


What will the monthly payment be for every month of
the loan, and could it increase? When could it increase?
What would my new payment be? Could my monthly
payment increase more than once?
Does the monthly payment include an escrow amount to
pay for my property taxes and homeowners insurance?
Or must I pay these costs on my own? If I have to pay
on my own, can you give me an estimate so I can
budget accordingly?
2010 Commission Update Course
Slide #97
Questions to Ask Your Mortgage
Loan Originator (cont.)


What is the term of the loan (for example, 15
years? 30 years?)? How many payments will I
have to make? Would the loan be paid off at the
end or would I still owe a “balloon” payment?
Will I have to pay prepayment penalties to
refinance and pay off the loan early? If so, how
much, and when would they apply? If the loan
has an introductory or teaser rate, can I
refinance, without penalties, before the rate
resets and my payment increases?
2010 Commission Update Course
Slide #98
Questions to Ask Your Mortgage
Loan Originator (cont.)


Is the person I am speaking to about my
mortgage a state of Colorado licensed
loan originator?
Only speak to someone who can verify
that they are licensed, or otherwise prove
that they are exempt from licensure, or
you may not get the correct information.
2010 Commission Update Course
Slide #99
Consumer Tips



Consumer Corner: available on the Division’s
Website at http://www.dora.state.co.us/Realestate/
Complaints with the Commission can be done
online by clicking on the button labeled
“Complaint Process” from the Division’s home
page.
License Look-up can be accessed by clicking on
the button labeled “Search Licensees” from the
Division’s home page.
2010 Commission Update Course
Slide #100
Real Estate Newsletters and
Listserv


The Division of Real Estate currently
offers an electronic version of the
quarterly newsletter. Sign up using the
form located at the bottom of the
Division’s home page.
Signing up for the newsletter also enrolls
you in our email listserv to receive
important DRE notifications and alerts.
2010 Commission Update Course
Slide #101
DORA Website



http://www.dora.state.co.us/real-estate/
Sign up for newsletter, email alerts, renew
your license, check the status of your
license, look up disciplinary actions, stay
current with new legislation and rules or
submit a complaint.
Also on Twitter!
www.twitter.com/ColoRealEstate
2010 Commission Update Course
Slide #102
Quiz
2010 Commission Update Course
Slide #103