John Hall & Associates - Phoenix Real Estate Brokerage

Sam Wercinski signed a new Substantive Policy Statement this month that took effect June 18, 2008. It covers the actions the Department is going to take in the event a licensed real estate agent is convicted of Residential Mortgage Fraud. Not only does the SPS cover the intended actions, it also provides recommendations to keep you out of jail. Straight from the Statement…

The Department recommends that a licensee who provides a premium, credit, or rebate in a real estate transaction disclose the premium, credit, or rebate to all parties in the transaction, including the lender and third-party service providers, such as appraisers, in the purchase agreement and the HUD-1 statement (or other writing if no HUD-1 is required).

Good advice! And strangely similar to Jim Sexton’s last post.

This intense headline was released this afternoon by the U.S. Attorney’s Office.  (h/t: Kerry Melcher)  We gave Sandy Raynor (writer of the press release) a call to make sure we could post it in its entirety.  We didn’t really want to take our chances with her employer. :)  As Sandy gave us the okay, she also talked about the importance of getting the word out there about the mortgage fraud ‘hotline’ email address they have set up.  So, if you know of any suspicious mortgage activity past or present, please don’t hesitate to send them an email.  Without any further ado…

PHOENIX - The U.S. Attorney’s Office and the Federal Bureau of Investigation (FBI) announced today a takedown of mortgage fraud schemes, the culmination of substantial coordinated efforts during the last three and a half months to identify, arrest and prosecute mortgage fraud violators in Arizona. Operation Cash Back highlights the strong enforcement response undertaken by the U.S. Department of Justice and its law enforcement partners to combat the threat that mortgage fraud poses to the housing industry and credit markets.

From March 1 to June 18, 2008, Operation Cash Back in Arizona resulted in six mortgage fraud cases in which 36 defendants were charged. In the past two days, 30 arrests were made in mortgage fraud-related cases in the Tucson and Phoenix areas. The FBI estimates that approximately $100 million in losses were inflicted by the mortgage fraud schemes employed in these cases.

In Arizona Operation Cash Back represents the collaborative efforts of the U.S. Attorney’s Office, FBI, Internal Revenue Service-Criminal Investigation Division, U.S. Immigration and Customs Enforcement, Department of Housing and Urban Development Office of the Inspector General, U.S. Marshals Service, Arizona Department of Financial Institutions, and the Scottsdale Police Department.

United States Attorney Diane J. Humetewa stated that “The individuals charged in these Arizona indictments are responsible for more than $100 million dollars in fraudulently obtained loans in Arizona. The investigation & prosecution of mortgage fraud is a top law enforcement priority & we are jointly committed to aggressively pursuing those involved in these crimes.”

“Over the last few years with the fluctuation in Arizona’s real estate market, too many individuals associated with this industry have exploited this market for their own personal gain. Innocent homeowners and businesses all across Arizona are paying a steep price for the selfish and illegal acts of others who attempt to capitalize on this market” stated John E. Lewis, Special Agent in Charge, FBI Phoenix. “Mortgage Fraud is similar to other crimes which involve criminals exploiting innocent people and businesses for their own illegitimate gain. The FBI is dedicated to working with our law enforcement partners to combat this problem facing the lawful citizens of our state.”

Operation Cash Back in Arizona is part of the nationwide Operation Malicious Mortgage fraud law enforcement effort. Nationally the Operation resulted in 144 mortgage fraud cases in which 406 defendants were charged. 60 arrests were made in mortgage fraud-related cases in 15 districts. Nationally, the FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes.

Mortgage frauds employ a variety of tactics including misrepresentations, deceit and other criminal abuses to fund, purchase or insure mortgage loans. Operation Malicious Mortgage addresses primarily three types of mortgage fraud schemes: lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower’s financial status, such as overstating the borrower’s income or assets, using false or fictitious employment records or inflating property values. Foreclosure rescue scams involve criminals who target legitimate homeowners in dire financial circumstances and fraudulently collect fees for foreclosure prevention services or obtain ownership interests in residential properties. Both of these fraudulent mortgage schemes may be furthered by filing bankruptcy petitions that automatically stay foreclosure.

Dawn Mertz, Assistant Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division stated that “Mortgage fraud adds to the underground economy that erodes the integrity of our tax system and threatens the financial health of our communities. IRS CI is committed to pursuing individuals who commit these types of crimes.”

Kenneth M. Donohue, Inspector General of the Department of Housing and Urban Development (HUD), stated, “Today is an important milestone in a combined effort by law enforcement and the U.S. Attorney’s Office against mortgage fraud. The Real Estate Settlement Procedures Act (RESPA) was enacted to protect all parties involved in real estate transactions, to including the lenders. These cases involve individual homebuyersand real estate professionals, driven by greed, who falsified closing documents that diverted “cash” to the buyers. Mortgage fraud and white collar crimes - whether aimed at the lender or the borrower - strike at the economic heart of the American system. To the extent that we can uncover and prosecute these activities, it’s to everyone’s benefit. Accordingly, I am happy for the HUD Office of Inspector General to join the U.S. Attorney’s Office in heralding this successful effort.”

“Mortgage fraud is a serious problem in Arizona and we are committed to working with city, state and federal agencies to protect Arizona residents and lenders. I applaud the hard work of the U.S. Attorney’s office, law enforcement and our state agency investigators,” stated Felecia Rotellini, Superintendent, Arizona Department of Financial Institutions. “We will continue to cooperate in the investigations and to pursue administrative actions against our licensees to send the message that mortgage fraud will not be tolerated in Arizona.”

“This case sends an important message about maintaining high standards for the mortgage industry,” stated Alan Rodbell, Chief of the Scottsdale Police Department. “It’s clear how these types of crimes can affect all levels of the community, from the financial industry to neighborhoods and individual homeowners. We are pleased to be part of this collaborative effort.”

An indictment is not evidence of guilt. All persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt. The prosecution is being handled by Kevin Rapp, Assistant U.S. Attorney, District of Arizona, Phoenix.

RELEASE NUMBER: 2008-160(Operation Cash Back)

# # #

To report mortgage fraud, send an email to px_cashback@ic.fbi.gov

Sandy Raynor

Public Affairs Officer
U.S. Attorney’s Office
District of Arizona
Office 602.514.7625
Cell      602.525.2681
Fax       602.514.7676
sandra.raynor@usdoj.gov
http://www.usdoj.gov/usao/az/

I was excited to receive in today’s mail Issue #2 of the “periodic” bulletin from ADRE, and since I have been asked to blog with you, what a good topic… So I went to ADRE’s website to provide you the link here and lo and behold there is even a more recent bulletin, Issue #3, posted on their site. Remember it is your responsibility as a licensee to go online and read their periodic updates.

It is also essential that you log on to ADRE and notify them whenever you move or need to change other personal information. If you haven’t already logged on to view your license information, take a moment to do so. Provide your email address to ADRE and you will be notified just prior to your license expiring. You can also sign up for email updates that are very informative.

Remember the bulletin is not only where disciplinary actions are published but lots of other good educationary materials as well.

Diane Scherer, CEO
Phoenix Association of REALTORS®

Words, even a single word, can create an image or give us ideas.  Corporations and trade organizations go to untold lengths and spend millions to give you a particular image when you use “their” word.  What word do you use for a cola drink, a copy machine, tissue or a light beer? 

When did you become a REALTOR®?  When you were born? When you passed your state exam for a real estate license?  When you were hired by a real estate firm?  Nope, nope and nope.  If you are a REALTOR®, you became a REALTOR® when you applied for and completed the membership requirements of a local association of REALTORS®.

“REALTOR®” is a collective membership mark owned by the National Association of REALTORS® (NAR).   The REALTOR® organization is unique in that when a real estate licensee joins a local association, completes their orientation and Code of Ethics requirement and becomes a REALTOR® member they are a member at all three levels of the REALTOR® family - local, state and national. REALTOR® members not only take Code of Ethics training but are held to that higher standard by both their peers and the public.  For licensees that are not REALTORS® they are not accountable to the REALTOR® organization. 

REALTOR® membership is a voluntary individual membership.  For that reason there is limited usage of the word REALTOR® in a firm name.  It is not allowed to be contained in the firms actual name, including either the corporate or fictitious name.  The word REALTOR® can only be used “with” the name, not as a part of a name AND some form of punctuation must be used to separate the term REALTORS® from the company name.    

REALTOR® members may use the term REALTOR® as part of an email address or domain name to distinguish themselves; however , rules governing the proper use of the REALTOR® mark must be adhered to at all times regardless of the media used.  An individual may use their name and the word REALTOR® such as JohnDoeREALTOR@xyz.com or JDoeREALTOR@abc.net or john@jdoerealtor.com.   Descriptive words used in combination with the word REALTOR® are never allowed, for example, PhoenixREALTOR@webnetservices.com , GreatREALTOR@johndoe.com, TheBestREALTOR@bestrealtor.com. 

The preferred way for the word REALTOR® or REALTORS® is always in all capital letters with a registration mark.  When that is not possible, the term REATOR may appear in all upper case letters without the registration or with only initial upper case “R” and the registration symbol.   There are two exceptions (1) on the internet, which has adopted the use of lower case only letters without symbols and (2) when in newspapers and print media.  In news media it is permissible (not preferable) for Realtor® to appear in upper and lower case without the registration mark.  

The REALTOR® trademark distinguishes REALTORS® from all other real estate licensees in the real estate profession.  A group of real estate licensees should never be called REALTORS® unless you intend to identify them as Members of a REALTOR® Association and every member of the group is indeed a REALTOR®.   Firm’s marketing their products and services to real estate agents should not use the term REALTOR® unless it is in reference to a particular member.   Generally speaking, it is inappropriate for firms soliciting real estate agents to use the word REALTOR® in their advertising campaigns.   If a private firm, such as an insurance company or carpet firm,  is having a networking breakfast, it can not be entitled “REALTOR® Breakfast”  just as any organization outside the REALTOR® organization is prohibited from giving an award named “REALTOR® of the Year”.   The “REALTOR® of the Year” award is one of the most prestigious and highly sought after awards in any REALTOR® Association.

Oh and by the way, did you know that when you hear the term REALTOR® it could be someone other than a real estate licensee?  For example, a principal, partner or corporate officer of a real estate firm or a licensed or certified appraiser? 

So, have I changed your view of the word REALTOR®?

 By:     Diane Scherer, CEO Phoenix Association of REALTORS®

This just in from NAR-

On May 27, 2008, NAR and the U.S. Department of Justice reached a favorable settlement, concluding a two-year DOJ investigation followed by two and a half years of litigation, regarding NAR’s multiple listing policy as it pertained to the display of listings from the MLS on brokers’ virtual office Web sites, or VOWs.

Read more on usdoj.gov…

Jim Sexton had an oldie but goodie show up on the blog-dar. Jim Zirbes with HomeSmart said,

“I’ll always remember Jim Sexton, the owner and designated broker and owner of John Hall & Associates, saying that the more he thinks he understands Agency, the more he knows that he doesn’t fully understand it. I find that pretty profound. Here is one of the brightest guys around and he (and I don’t think with false modesty) says he still is at least sometimes confounded by it. Wow! Where would that put most of the rest of us?”

As I shared this with Mr. Sexton today, his eyes lit up and he said, “Absolutely! Even with all the changes that is still true. I said that 18 years ago.” I think that qualifies as an oldie but goodie.

Register Now

Barbara Freestone
Arizona Association of REALTORS®
VP Professional Development
602-248-7787

Just a reminder concerning recent law changes and the impact on previously acceptable practices regarding commission rebates.  I was listening to one of the sessions from NAR (yes, still going strong after 5 months) and I liked the following advice concerning buyer concessions.  While in the past it was alright to pay the buyer a “rebate”/commission reduction after closing, with last year’s Mortgage Fraud legislation this practice is no longer acceptable. A rebate/commission reduction can still be done, but it must meet certain conditions.

The conditions are as easy as 1,2,3. They are:
1) It must be on the contract;
2) The lender must be aware of it; and
3) It must be on the HUD 1.

These conditions apply for any reductions that an agent might make.

Instead of releasing new forms throughout the course of the year AAR releases new form updates once a year in February.  Not too much action in the AAR forms world right now, but you should be looking for the following forms to be released at AAR’s next release date on February 1, 2008:

·        Revised Residential Rental Agreement (major overhaul of the Rental Agreement with a new name)

·        Revised Residential Seller’s Property Disclosure Statement

·        Vacant Land Seller’s Property Disclosure Statement

·        Commercial Seller’s Property Disclosure Statement.

The changes made to the SPDS forms are minimal, and, as follows:

NOTICE TO BUYER:  THE ARIZONA DEPARTMENT OF REAL ESTATE PROVIDES EARTH FISSURE MAPS TO ANY MEMBER OF THE PUBLIC IN PRINTED OR ELECTRONIC FORMAT UPON REQUEST AND ON ITS WEB SITE AT www.azre.gov.

On the Residential SPDS the update is at line 73, on the Vacant Land/Lot SPDS it’s at line 129, and on the Commercial SPDS it’s at line 86.  Please note that only the Rental Agreement and Residential SPDS forms will be printed. The others will be available on ZipForm only. 

If you are using ZipForm Online the new forms will be automatically updated.  For those users with ZipForm Desktop will need to download the updates.  

Remember this is the last year AAR will be printing any forms - Jan. ‘09 they are switching to digital forms only. 

In the past, if your home was sold for less than you owed on a mortgage and the lender forgave some of the debt you owed - most sellers got taxed on the amount forgiven similar to normal income. 

As of December 20th, a new bill was passed that relieves many home sellers of this tax.  The home has to have been sold between January 1, 2007 and December 31, 2009.  If you have any questions about a specific transaction - CONSULT A TAX ADVISOR!  

Read the summarized details of the bill.