Women's Council Liaisons to NAR Committees - A Midyear Update
We thank our 2017 Women’s Council Liaisons to NAR Committees! These roles provide an important link between NAR and Women’s Council activities, and ensure a seat at the table to decisions being made at various levels of the REALTOR® organization. Below is a synopsis on each report.
NAR Professional Standards Committee: It’s Role in Code Interpretation and Code Enforcement - Brenda Ghibaudi, PMN
It’s important for our members to understand that our profession is regulated and has a code of conduct that needs to be followed and respected. The Constitution of the National Association provides for the establishment of the Committee. It’s the duty of this committee to interpret the Code of Ethics, and to recommend appropriate action on inquiries of members and boards concerning enforcement and amendments. What is important for our members to understand, we have the right to request an interpretation or clarification of the meaning and intent of the Code of Ethics. Our National Professional Standards consist of 100 members and an Advisory Board is comprised of approximately 15 members of the full committee. This Advisory Board meets twice a year for two days to consider issues presented by the board and board members and then can make recommendations to be considered by the full Professional Standard Committee. These recommendations may be accepted, rejected or modified as appropriate.
At this year’s Legislative Meetings in DC, the Committee did the following:
- Approved 72 of the Interpretations of the code of Ethics, Code of Ethics and the Arbitration Manual, in order to modernize references to the code, pricing, marketing strategies, and internet tools.
- Approved the addition of a model Arbitration Settlement from the Arbitration Manual.
- Approved revision of the code and manual deleting references to ethics hearing or appeal panelist providing disagreements with the majority.
- Heard a report of the Commitment to Excellence Advisory Board which was established in May of 2015. This Advisory Board states that REALTORS® strive for excellence in a number
Competencies, including the NAR Code of Ethics, laws, regulations affecting real estate, and advocacy efforts on behalf of a strong real estate market.
A Summary of the REALTOR® Commitment to Excellence has been adopted as a REALTOR®:
- Understand the laws and regulation standards to provide to my clients and the public
- Embrace the code of Ethics
- The term REALTOR® stands for competency, fairness and integrity
- Believe in the value of the land and adequate housing
- Meet ongoing education requirement to maintain my license and designations
- Providing superior customer service
- As a broker-owner be committed to creating and maintaining an environment that promotes excellent customer service.
NAR Global Business & Alliances Committee
Linda Lee, PMN - NAR President's Liaison to China
It is with great honor to serve as Women’s Council’s liaison to NAR Global Business & Alliances committee. The Committee had a packed agenda. Here is a summary of the committee meeting.
First topic of discussion was China and U.S. trace by Scott Tatlock, Executive Director for China and Mongolia at the U.S. Department of Commerce. Mr. Tatlock shared the trade imbalance between China and U.S. further, interested parties wait to see the new administration’s policy and how they may be carried out.
Dr. Lawrence Yun followed by stating the new NAR annual home buyers report will be available in a month or so. Mr. Russell Riggs provided a legislative update and touched on the EB-5 program has a perception issue among some of House Representatives and Senate.
New bilateral-partner signed with Belarus and Mexico and Guatemala renewed their NAR bilateral-partner agreement. NAR Treasurer, Tom Riley, signed the agreements with representatives from these countries.
Increased amount of global activities by our members for both inbound and outbound clients continue to trending up. This is definitely a very exciting area where our NAR members may experience and explore more growth opportunities.
NAR Business Issues Policy Committee
Wendy Furth, PMN
When you think Money Laundering you probably come up with the images from “Wolf of Wall Street”. However, we are indeed confronted with Money Laundering without realizing it. If Leonardo Di Caprio comes to your $2 million open house with cash to purchase it on the spot as an investment property, your settlement or title company has several actions it must perform.
A presentation from Lawrence Scheinert, the Director for the Office of Special Measures at the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) was very enlightening.
The laws impose the following duties on real estate agents, brokers, title or settlement companies:
1. IRS form 8300 must be used to report any single or series of related transactions in which they receive cash in excess of $10,000.
2. The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries collectively called Specially Designated Nationals (SDNs). SDN assets are blocked, and all businesses have a responsibility to ensure that they are not dealing with any SDN by checking the list provided by OFAC. The SDN list can be found at: www.treasury.gov/sdn.
At this time, real estate professionals engaged in brokerage or property management activities and their real estate firms are not required to implement anti-money laundering or anti-terrorist financing (AML/TF) programs, but the Treasury Department has the authority to expand coverage of these requirements to include real estate professionals.
NAR believes that such requirements would be overly burdensome compared to the risks. NAR worked with the Department of the Treasury to develop suggested voluntary guidelines for real estate professionals to follow to be on guard for possible money laundering situations and how to report those situations.
In early 2016, FinCEN began to issue Global Targeting Orders (GTOs), imposing new data collection and reporting requirements on specific title companies involved in certain high-end real estate transactions where natural persons with 25 percent or greater ownership interest in a legal entity making an all cash real estate purchase.
The latest GTO, effective until August 22, 2017, covers the following geographic areas and transactions:
$500k and above – Bexar County, Texas
$1m and above – Miami-Dade, Broward, and Palm Beach Counties, Florida
$1.5m and above – New York City Boroughs of Brooklyn, Queens, Bronx, and Staten Island
$2m and above – San Diego, Los Angeles, San Francisco, San Mateo, and Santa Clara Counties, California
$3m and above – New York City Borough of Manhattan
Can I buy you a cup of coffee? We have long shied away from taking a tissue from a Title Representative. But lately lenders and other Affiliated companies have created co-marketing situations that can be questionable.
Learn more about the Consumer Financial Protection Bureau’s recent consent orders with two real estate brokerage firms for RESPA violations arising from their interactions with a mortgage lender, plus tips on how to avoid similar actions against your brokerage with this video from Finley Maxon, Senior Counsel for NAR.
This is a handy guide to stay out of trouble:
RESPA CO-MARKETING DO’S AND DON’TS FOR SOCIAL MEDIA & OTHER WEB-BASED MARKETING TOOLS
Real estate brokers and agents are subject to the Real Estate Settlement Procedures Act (RESPA) when engaging in transactions involving federally related mortgage loans. RESPA generally prohibits any person from giving or receiving any “thing of value” in exchange for the referral of settlement service business. Liabilities for RESPA violations may be severe, ranging from significant fines to imprisonment. Below are some guidelines for real estate professionals when engaging in co-marketing activities via social media and other web-based marketing tools:
- Do ensure that each co-marketing party pays its proper share of the advertisement.
- Each party’s share should be based on the proportionate split of the fair market value for any and all services in connection with the advertisement (e.g., creation, design, distribution, etc.); and
- Each party’s share should be equal to each advertised settlement service provider’s prominence in the advertising.
- Do ensure that the agreed upon marketing is actually performed and that any payment made in connection with such services is the fair market value for the services performed.
- Remember—just because a social media platform is “free” for users to join or post in, it does not mean that all uses of the platform are offered at no cost or that there are no costs associated with the development of the advertisement.
- Be aware of what may constitute a thing of value, and remember it does not require a transfer of money. Any benefit or concession (a “quid pro quo”) may be a “thing of value.”
- Do include the word “Advertisement” in a prominent location on each party’s information included on the co-marketing materials.
- Do document procedures to calculate co-marketing charges and/or create a standardized rate sheet for the fair market value of such marketing.
- Do consider maintaining written agreements of the co-marketing arrangement to demonstrate compliance with RESPA Section 8 as well as federal and state laws and regulations governing your co-marketing efforts, including those regarding advertising, privacy, and licensing requirements, as applicable.
- Do ensure that the advertisements are distributed to the general public, such as publicly-facing, broadly-reaching websites, and cannot be viewed as “targeting” specific consumers.
- Do ongoing oversight of the co-marketing arrangement that may be required by either or both co-marketing participants.
- DO NOT enter into the arrangement with a co-marketing party without getting the necessary corporate authorization for such arrangement for yourself or for your co-marketing party.
- DO NOT directly or indirectly defray expenses that would otherwise be incurred by anyone in a position to refer settlement services or business to you, by use of a co-marketing arrangement.
- Payments by settlement services providers to third party real estate listing aggregator sites that reduce your advertising costs can create a direct RESPA violation.
- DO NOT exchange any “thing of value” with anyone for a referral, no matter how small the “thing of value” is. RESPA does NOT have an exception for minimal “kickback” amounts and even a small amount (i.e., $5 coffee gift card) is considered a “thing of value” under the law.
- DO NOT require or allow your co-marketing party to endorse you, exclusively or otherwise, or vice versa.
- Do not allow either co-marketing party to refer to the other as a “preferred” service provider, or a “partner,” or some other similar designation.
- Beware of any perceived endorsements, such as “likes,” follows, re-postings, tagged pictures with one another, and other favorable commentary on referral sources’ pages, whether such activity is conducted from your personal or your business accounts. Remember that promotion of business activities generally should be conducted from business accounts/pages, not personal ones.
- DO NOT enter into co-marketing arrangements before considering the implications of any other concurrent relationship with the co-marketing party (e.g., lead sales, desk rentals, etc.).
- DO NOT direct any of the co-marketing efforts to specific consumers with whom either co-marketing party has a relationship or over whom either party has the ability to influence the selection of a settlement service provider (as compared to marketing of general distribution).
- DO NOT evaluate or adjust the compensation paid under an arrangement based on “capture rate,” which is the percentage of referrals that convert to actual clients or customers.
- DO NOT allow one party to act as a “gatekeeper” when dealing with a third-party marketing company. Both parties should have a separate agreement with third-party marketing firms.
- DO NOT perform services for the other co-marketing party that are outside the terms of the agreement. For example, if a real estate agent and a lender are co-marketing, the lender should not “incubate” or cull leads on behalf of the real estate agent as that is outside the terms of the co-marketing agreement and is not a compensable service.
- DO NOT share the cost of leads generated through websites or arrangements. Each party must pay the fair market value of the leads they purchase.
Disclaimer: This document is provided for informational/instructional purposes only and does not constitute the giving of legal advice by NAR. Consult with a RESPA attorney to make sure you understand and properly comply with any and all applicable laws. As a reminder, some state and local laws prohibit or otherwise restrict activities that may be permissible under RESPA.
NAR’s Recommendation on the Restructure of CFPB
The committee made the following motion which was approved at the NAR Directors’ Meeting in Washington DC.
“That NAR continue to support the existence of a federal agency such as the CFPB designed specifically to protect consumers’ interests with regard to financial products and services. Further, it recommends that NAR support policy proposals that restructure the CFPB or similar agency from the current single-director arrangement to a qualified five member board with no more than three members from one political party. The existing independent agency structure and funding sources for an agency such as the CFPB should be preserved.”
Rationale: The Dodd-Frank – CFPB Work Group recommends that NAR support the existence of an independent federal agency, like the CFPB, that promotes necessary consumer protection laws and responsible lending practices to advance the pursuit of homeownership. Such an agency is essential to identifying problematic financial services industry practices that harm consumers and is most effective when important procedural safeguards are in place to avoid unwarranted executive overreach.
To best accomplish this role, the CFPB or similar agency should be structured as a five member board to ensure accountability and policy consistency, while reducing arbitrary decision-making and abuses of power that may occur with a single-director structure. With no more than three members of one political party serving on the board at any given time, the structure would help ensure the agency’s authority reins in and protects against egregious or excessive enforcement actions while promoting proper consideration and analysis of formal rules and informal guidance before being issued. Board members should be appointed by the President and confirmed by the Senate, serving initial staggered five year terms.
This 5 member board is consistent with decision making boards throughout the Regulatory system.
NAR Federal Financing & Housing Policy Committee
The purpose of the committee is to analyze current & prospective federal housing issues affecting FHA single family (1-4 units) housing programs, HUD-assisted housing programs, VA Home Loan Guaranty Program, the rural housing programs under the Rural Housing & Community Development Service, the Famer MAC & Farm Credit System & federal budgetary policies & actions pertaining to each, and the Committee recommends appropriate public policies to address them.
The following are some issues that are being reviewed:
1. FHA mortgage insurance program is strong & financially stable. It has grown since the housing crisis. The HECM (Home Equity Conversion Mortgage/the Reverse Mortgage program) has been “volatile” impacting the financial outlook for all of FHA.
2. The committee has had long discussions on fees paid by the veteran borrower that were hindering the veteran’s ability to compete with other buyers in the market. The Department of Veteran Affairs has received complaints from veterans, the committee, REALTORS & other stake holders regarding restrictions and charges to the veteran. The result is: on April 13, 2017, the Department of Veteran Affairs (VA) released an advanced notice of proposed rulemaking regarding revisions to allowable charges & fees associated with VA Guaranteed Home Loans.
FAIR HOUSING 50TH ANNIVERSARY CELEBRATION 2018
3. An announcement was made regarding the Fair Housing 50th Anniversary & that the NAR Task Force is in progress of developing the sequence of events that will initially be acknowledged by Elizabeth Mendenhall, 2018 NAR President, in August at NAR Leadership Conference. Council members, Gail Hartnett & Deborah Gilmore have the honor of being part of this Task Force.
More issues can be reviewed under the committee minutes related to length of time to acquire appraisals and the proposed federal budget possible effect on the rural housing programs. Go to realtor.org, sign in and search for 2016-2017 Committees. Follow the search to the Federal Financing & Housing Policy Committee minutes.
NAR Executive Committee
The NAR Executive committee meeting the last 2 full days of the NAR mid year meeting. We receive updates and action items from the Committees during that time. Some action items are voted on by the Executive Committee and moved forward to the Board meeting for discussion and Board approval by vote. The committees do a great deal of research and work and then we review and one of our top priorities this year was the additional commitment to the UpStream project. This project protects our MLS data across the Nation. NAR is committed to protecting our Data. Rest assured that great work is being done at NAR to support, you, our members and our clients from Across the Nation. A video summary of board of directors decisions can be viewed here.
Please Note: These reports are the perspectives from official Women's Council liaisons to the NAR committees, and the information in these reports are from their perspective and should be considered complimentary to the official NAR report. The official reports can be accessed via www.realtor.org/governance (note: login information required).
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