HAR MANAGEMENT CENTRALLEGAL UPDATE

Dick HargisVincent Lopez Serafino Jenevein, PCJune 22, 2011

THE NEW, IMPROVED DTPA (At Least For Real Estate Licensees)

Important Federal Issues

Ethics Citation Program

THE NEW DTPA

THE NEW DTPA

Exempts real estate brokers and salespersons from DTPA claims except for claims of:

A) an express misrepresentation of a material fact that cannot be characterized as advice, judgment, or opinion;

B) a failure to disclose information in violation of Sec. 17.46 (b)(24); or

C) an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion.

THE NEW DTPA

The below laundry list items typically form the bases of a DTPA claim against brokers. (5)  representing that goods or services have sponsorship, approval,

characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he does not;

 (7)  representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;

 (12)  representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;

(24)  failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed;

New law knocks out (5) (7) and (12). That’s something, but not the whole ball of wax.

THE NEW DTPA

So, What’s left? A) an express misrepresentation of a

material fact that cannot be characterized as advice, judgment, or opinion;

B) a failure to disclose information in violation of Sec. 17.46 (b)(24); or

C) an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion.

IMPORTANT FEDERAL ISSUES

Issue 1 – Reauthorization of the National Flood Insurance Program (NFIP)

NAR’s top priority issue for HAR Urge passage of H.R. 1309 - The Flood Insurance

Reform Act  of 2011(Biggert, R-IL; Waters, D-CA) Extends for 5 years, NFIP’s authority to issue flood

insurance which is not available in the private insurance market, except for the wealthiest property owners.

Reform the NFIP to strengthen participation and put the program back on the path to fiscal solvency.

IMPORTANT FEDERAL ISSUES

Issue 2 – Qualified Residential Mortgage (QRM) Standard

Dodd-Frank and Consumer Protection Act Requires financial institutions to retain at least 5%

of the credit risk. Exempts qualified residential mortgages (QRMs)

from the requirement

IMPORTANT FEDERAL ISSUES

Issue 2 – Qualified Residential Mortgage (QRM) Standard (cont’d)

Now federal banking regulators have released a proposal to create qualified residential mortgages or QRMs.  The proposed standards would require an 80% loan-to-value, which requires a 20% down

payment would limit the mortgage payment to 28% of gross income and

limit all debt to 36% Federal Regulators are accepting comments on the

proposed rules through August 1, 2011 39 U.S. Senators signed a letter to regulators

expressing the Senatorial intent on QRM and opposing the imposition of a sizable down payment

163 House Members signed a similar letter

IMPORTANT FEDERAL ISSUES

Issue 3 – Preserve the Mortgage Interest Deduction (MID) Urge Members of Congress to Co-Sponsor H.Res. 25,

expressing the sense of Congress that the current MID should be preserved AS IS

The following Houston-area Members of Congress have signed on: John Culberson Al Green Gene Green Shelia Jackson Lee Ron Paul Ted Poe

Average MID per home owner is $2,489 in Texas Estimates of a loss of 19% of home value in Texas Curtailment of MID is a new tax on home owners

IMPORTANT FEDERAL ISSUES

Issue 4 – Government Sponsored Enterprise (GSE) Reform Major issue on the horizon Preservation of 30-year fixed rate mortgage, requires some

federal government role NAR supports the objectives, though not all the specifics, of

H.R. 1859 – The Housing Finance Reform Act of 2011 Preserves the 30-year fixed rate mortgage Unwinds Fannie Mae and Freddie Mac, replacing them with private

companies Maintains federal-government backed securities

NAR opposes H.R. 1182 (Hensarling, R-TX) and S. 693 (McCain, R-AZ) – The comprehensive GSE reform bills would effectively shut down Fannie Mae and Freddie Mac.    

CITATION PROGRAM

Effective January 1, 2011

Faster Resolution of Ethics Complaints

Anonymous Complaints an Option

CITATION PROGRAM (cont’d)

What articles are bases for citation Art. 3 - Cooperation with other brokers

except when not in best interest of client

Art. 4 - Disclose ownership interest when buying or selling property

CITATION PROGRAM (cont’d)

Art. 5 - No professional services for property

REALTORS have a present or

contemplated interest without full

disclosure

Art. 6 - No commission, rebate or profit on expenditure for

client without client knowledge or consent

Art. 12 - Present true picture in advertising

CITATION PROGRAM (cont’d)

Art. 14 - REALTOR must cooperate in professional standard

proceedings

Art. 16 - REALTOR shall not interfere with

exclusive representation agreement

that other REALTORS have with

clients

CITATION PROGRAM (cont’d)

REALTOR who receives citation can ask for full hearing

Salesperson’s Designated REALTOR is notified of citation

Fines 1st offense - $300 and NAR Ethics Course 2nd offense - $600 3rd offense - $900