Please find some of our most recent blog posts below covering important news and updates from the real estate and real estate appraisal industries.
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February, 14 2012
A Heart Warming new course for Valentines Day ~ IRA Investments in Real Estate - Part 1
Many retirement investors today are wondering, ‘Where has all the money gone?’ Despite recent market decline, most investors still have substantially more cash in their retirement accounts than in their personal coffers. Many are anxious to begin rebuilding their wealth and this time they are seeking hard assets like real estate in addition to or instead of the paper assets that recently betrayed investor trust.
Let Uncle IRA teach you about the needs of the investor buyer and the available liquidity in the self-directed IRA market, and you stand to position yourself miles above your colleagues.
You do not need to be an investment real estate or retirement planning expert to begin reaching out to these investors. This course will help you grow your skills and transform your business to profit from today’s real estate climate.
Investing IRA assets in Real estate has been a well-kept "secret" opportunity. It is true; you and your clients may invest their IRA in real estate. You may help your clients buy real estate with their IRAs, opening an entirely new avenue for commissions. You may also buy and sell real estate in your own IRA/SEP or 401k plan, taking advantage of the "wholesale" market as a real estate broker and taking advantage of tax deferred retirement investment.
This course will serve as an introduction to making real estate investments with a self-directed IRA. After completing this two hour course, you will be able to:
Understand self-directed IRAs and how they compare to other retirement plans
Educate your clients about the ability to use their retirement funds to purchase real estate
Provide a higher level of service to your clients through knowledge of alternative funding sources
Access this highly liquid, qualified and savvy buyer base
Build your book of business – no matter the market conditions!
Don't let new strategies or ideas pass you by in the new real estate economy. Log on today to learn this timely and valuable information and to prepare yourself for future success. >>> Click Here for more information! or to Register today!
February, 9 2012
Recognizing the signs of Mortgage Fraud
Recognizing fraud is the first step in stopping it. According to the Mortgage Bankers Association of America, the U.S. Attorney and others have suggested that as much as 70-80% of mortgage fraud can be avoided through aggressive fraud awareness and detection efforts.
Although most people can rise above the temptation of ill-gained profit, our responsibility does not end there. As individuals and as an industry, we need to play an active part in fighting fraud. The days of being able to rely only upon the protection of the federal government are over. To believe in the goodwill of fraudulent practitioners and expect them to police themselves is pure folly.
Until we stop fraud on a case-by-case basis, establishing significant penalties and erecting sobering preventative measures, fraud will continue to reach epidemic proportions in our industry. We must be vigilant against fraud, recognizing its signs and taking proactive, definitive and realistic steps not only to prevent it, but also to punish it.
Recognition of fraud is the first step in prevention and control of the mortgage fraud epidemic. What does it take to recognize fraud?
Mindset. We must all adopt a mindset that, while not suspicious of every borrower and every person in the industry, is aware that fraud can occur in any transaction we process.
Knowledge. We need to know the most prevalent fraud schemes that are being used. We need to know the red flags that should signal us that something is awry in a loan application. We need to know the people we are working with in processing a transaction.
Attentiveness. We need to be attentive to details. We need to pay enough attention to what people are saying so that we hear the buzz words. We need to pay enough attention to the details in the documents we review to notice that something is not right. We need to be attentive to normal property values in the regions we service.
Thoroughness. We need to be completely thorough in our review of every statement and every document that passes through our hands. We need to be thorough in checking each document against the other documents in the loan package. We need to ask incisive questions. We need to investigate and confirm every detail.
The red flag lists provided in this will help you learn to recognize fraud. To be sure, in time you will become accustomed to checking applications and documents against the lists, and the actual lists may no longer be necessary. You will not only learn the red flags, you will develop a sense when something is not right. You will also learn to trust your instincts when something looks false or seems too good to be true.
The Warning Signs or Indicators of Fraud
Part of the reason fraud goes undetected in so many cases is that we fail to recognize the warning signs of fraud. It is to be hoped that the main reason we don't spot fraud is ignorance, not negligence.
In his cautionary article entitled, How to Commit Loan Fraud, Jonathan A Goodman explains: Lenders tend not to notice loan fraud unless the loan goes into default. Over the last decade or so we have had a strong real estate economy.
Appreciation tends to cover up loan fraud. But declining property values have begun to reveal problems. People in the real estate industry should be especially vigilant to avoid misleading mortgage investors about the true price when the buyer pays for the property."
REMEMBER: Loan fraud is typically committed with intent; it is not normally requested by the home buyer, but by the originator or real estate professional, or both in partnership, in order to close the loan so the originator and the real estate agent make a profit.
Key warning signs of fraud:
Information that looks false, inflated, or too good to be true (that usually means that it is).
Variations in a person's signature on the same application (or other possible signs of forgery).
Missing information that is promised at a later date, like forgetting the proper IDs for the Patriot Act.
Exclusive use of one appraiser.
Fees that is higher than customary.
Bonuses paid (outside or at settlement) for fee-based services.
Use of multiple Holding Companies used to increase property values.
Purchase loans that are disguised as refinances (which require less documentation and less lender scrutiny).
VanEd offers mortgage fraud education designed for real estate professionals. Select your state and program on the top of this page to learn more.
February, 7 2012
Graduate REALTOR® Institute course - G08 - Listing Contracts - updated for 2012
Listing Contracts (G08) is now available online in Colorado! VanEd is proud to be the home to the Colorado Association of REALTORS® online Graduate REALTOR® Institute (GRI) program, and the Listing Contracts course is one of a series of recently updated GRI and Colorado Contracts courses that are designed to help both new and experienced agents help their clients and customers understand current issues in real estate. including:
During the G08 - Listing Contracts - GRI course students will be introduced to all of the available listing contracts, forms and addenda in use in Colorado as well as basic elements of a contract and pre-listing activities necessary to both comply with Colorado Contract law but also to prepare for a listing appointment. At the conclusion of the course, students will be able to;
How to Determine which forms are applicable and when to use them
Completing the Exclusive Right to Buy or Sell for various property types
Explaining the terms of the Contract to clients and customers
Learn to Identify appropriate disclosures and addenda to use in any transaction, including new forms for 2012
This course will also cover how and when to use approved addenda, as well as the importance and proper use of the Sellers Property Disclosure forms. >>> Click Here for more information!
The most successful people in real estate choose VanEd.
January, 31 2012
Appraiser Qualifications Board (AQB) adopts changes to Licensing Qualification Criteria
While normally three years notice of changes wouldn't be cause for urgency, the recent adoption of the Real Property Appraiser Qualification Criteria may create just that for those who are thinking of upgrading their license or their level of authority. Granted you will have until January 1st, 2015 before the changes to the Criteria go into effect, but if you are a trainee and are working towards becoming a Certified General, take notice.
At it's December meeting the Appraiser Qualifications Board, or AQB, approved changes that will affect background checks (implemented and recommended at all levels), require additional trainee level coursework (supervisors get more education as well) and the education side of the criteria as college courses will now need to be reviewed by the AQB in order to be permitted. Other changes to the education profile include rules governing continuing education courses and new available CE topics. The new qualification summary can be found here: Download AQB Summary of Changes 2015
VanEd suggests that if you are planning on relocating or changing credential status after January 1st, 2015 you verify with your state agency the rules and regulations you will be required to comply with. Keep in mind that most states will not have updated their own rules or regulations until sometime later in 2012 in order to maintain compliance with the AQB's rules. It is also important to note that State Regulatory Agencies may determine that they will implement the criteria prior to the January 1st, 2015 deadline set for implementation by the AQB. You may also contact us at VanEd to see if a specific notice has been issued by your state.
January, 24 2012
IRS announces April 17th is deadline to file tax returns in 2012.
WASHINGTON — The Internal Revenue Service today opened the 2012 tax filing season by announcing that taxpayers have until April 17th, 2012 to file their tax returns. This is because April 15th falls on a Sunday and on Monday, April 16th, Washington D.C. celebrates Emancipation Day (we didn't know about it either, but you can learn more by clicking here).
The IRS encourages taxpayers to e-file as it is the best way to ensure accurate tax returns and get faster refunds. The IRS also announced a number of improvements to help make this tax season easy for taxpayers. This includes new navigation features and helpful information on IRS.gov and a new pilot program to allow taxpayers to use interactive video to get help with tax issues.
January, 17 2012
IRS Offers Top 10 Tax-Time Tips
At the start of each year we carefully watch for valuable tax information to share. For our first Finance Friday post of 2012 we shared an article posted by the IRS on the top tax-time tips.
IRS TAX TIP 2012-01, January 03, 2012
The income tax filing season has begun and important tax documents should be arriving in your mailbox. Even though your return is not due until April, you can make tax time easier on yourself with an early start. Here are the Internal Revenue Service’s top 10 tips to ensure a smooth tax-filing process.
1. Gather your records Round up any documents you’ll need when filing your taxes: receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.
2. Be on the lookout W-2s and 1099s will be coming soon; you’ll need these to file your tax return.
3. Have a question? Use the Interactive Tax Assistant available on the IRS website to find answers to your tax questions about credits, deductions, general filing questions and more.
4. Use Free File Let Free File do the hard work for you with brand-name tax software or online fillable forms. It's available exclusively at www.irs.gov. Everyone can find an option to prepare their tax return and e-file it for free. If you made $57,000 or less, you qualify to use free tax software offered through a private-public partnership with manufacturers. If you made more or are comfortable preparing your own tax return, there's Free File Fillable Forms, the electronic versions of IRS paper forms. Visit www.irs.gov/freefile to review your options.
5. Try IRS e-file IRS e-file is the safe, easy and most common way to file a tax return. Last year, 79 percent of taxpayers - 106 million people - used IRS e-file. Many tax preparers are now required to use e-file. If you owe taxes, you have payment options to file immediately and pay by the tax deadline. Best of all, the IRS issues refunds to 98 percent of electronic filers by direct deposit within 14 days, if there are no problems, and some may be issued in as few as 10 days.
6. Consider other filing options There are many options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free face-to-face help at a volunteer site. Give yourself time to weigh all the options and find the one that best suits your needs.
7. Consider direct deposit If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than a paper check in the mail.
8. Visitthe official IRS website often The IRS website at www.irs.gov is a great place to find everything you need to file your tax return: forms, publications, tips, answers to frequently asked questions and updates on tax law changes.
9. Remember this number: 17 Check out IRS Publication 17, Your Federal Income Tax, on the IRS website. It’s a comprehensive resource for taxpayers, highlighting everything you’ll need to know when filing your return.
10. Review! Review! Review! Don’t rush. We all make mistakes when we rush. Mistakes slow down the processing of your return. Be sure to double check all the Social Security numbers and math calculations on your return as these are the most common errors. Don’t panic! If you run into a problem, remember the IRS is here to help. Start with www.irs.gov.
January, 3 2012
2012 Colorado Real Estate Commission Annual Update Course available now
The 2012 Colorado Real Estate Commission Annual Update Course for real estate brokers is online and available at VanEd. This year the DRE sought input from no only the education task force but also E&O Insurance providers (including RIC, the state's group policy carrier). This years course covers advertising on social media, new forms and contracts that real estate professionals must now use and a host of new position statements. Van Education Center is an approved provider with the Colorado Division of Real Estate and the course is live and available online today.
In any three-year license renewal cycle brokers need to take this course annually (3 times) to equal 12 hours of Update Course credit as part of the 24 hours of total education required.
This course is presented without modification as required by the Colorado Real Estate Commission (CREC). This will be the only CREC Annual Update course offered by the CREC in 2012. If necessary, updates will be made to this course during the year as required by law changes, regulatory changes or the CREC.
Students will also be introduced to various concepts, including:
compliance issues for real estate brokers
general practice issues
new and proposed regulations
and of course the ever popular Consumer Tips section
Don't let the year slip away... take the CREC Annual Update Course early so that the information is most valuable. Log on today to learn this timely and valuable information and to prepare yourself for future success. You can also find this course in our Real Estate License renewal packages for Colorado Brokers.
December, 30 2011
New Rules for Texas Real Estate Broker Licensing go into effect January 1st, 2012
Below is a copy of the Texas Real Estate Commission announcment letter announcing the changes to broker licensing that begin in 2012.
New rules effective in January 1, 2012 are good news for consumers
At its October meeting the Commission adopted rules that change the requirements to obtain a real estate broker license in the state of Texas beginning January 1, 2012. Amendments to the rules driven by the passage of Senate Bill 747 establish requirements for "active experience" to qualify for a broker license.
The Commission approved these changes to strengthen the qualifications for becoming a broker in the state of Texas. In the past, in addition to certain education and examination requirements, two years of "active" status as a sales agent were needed to qualify for a broker license, regardless of whether the sales agent had gained any actual experience during the two year period. As of January 1, an applicant for a broker license will need to have four years of "active experience" to apply for a license. A point system will be used to quantify active experience in real estate transactions. Broker applicants will be required to document that they have obtained at least 3,600 points of active experience with evidence of specific transactions and a verification statement from the applicant’s sponsoring broker at the time the experience was earned. A complete explanation of the point system can be found on the Commission’s website.
Administrator Oldmixon echoed Chair Wukasch’s sentiments by stating, "As a result of these rule changes, consumers in the state of Texas can be more confident when working with real estate brokers in the future. These new requirements will ensure that real estate brokers will have the broad based knowledge that comes from transactional experience."
An applicant must document experience in each of four years out of the five-year period immediately before the application is filed, or be able to satisfy these requirements by the end of one year after the application is filed. While an applicant has up to a year after filing an application to meet all education and experience requirements, an applicant cannot take the broker examination until all education and experience requirements have been met.
Under these rule changes, as of January 1, a previous broker license holder whose license has been expired more than two years may only apply for reinstatement of the license if the applicant meets all the new requirements to apply for a broker license as described above. If these requirements cannot be met, the applicant must apply for a salesperson license.
December, 27 2011
Appraisers discuss Green building and Value
During the Fall meetings of the Appraisal Foundation Advisory Council (TAFAC) a session was filmed that discussed Green Building and what issues are raised when it comes time to determine the value of Green.
Appraisers in many cases have trouble placing a value on individual green products and features, but where will the market lead? What is going on now? Watch the video linked below from The Appraisal Foundation to hear what the panelists think.
Two succinct phrases perhaps best summarize the past and current history of water in the west, and in Colorado in particular:
"Whiskey is fer drinkin'-water is fer fightin'"
Although gold, silver and other minerals have played significant and intense parts in Colorado's history, water, its ownership, distribution and protection, is possibly the most important, long-lived and contentious issue in our state. The range wars and battles between adjoining landowners, settlers, miners and entrepreneurs, more often than not, centered on the ownership and control of water.
"Water flows uphill--towards money."
As in many other human endeavors, those with the most money have an advantage in the struggle to control the flow of water. This is most evident in the ongoing efforts of Colorado's Front Range to supply water to its growing population. Beginning in the early part of the 20th century, and continuing to the present, many projects seek, in one way or another, to transfer abundant Western Slope water to the Front Range. That water will flow "uphill" across (or really under) the Continental Divide to the Front Range as sufficient political and economic power is brought to bear on the problem.
The authors of these aphorisms, if they were every known, are long forgotten, but the wisdom of their words still rings true. As demand for the State's jobs, scenery, resources and lifestyle continues to grow, the question that is asked more and more often is, "Where is the water coming from?"
It is deceptively easy to think only of the water necessary to boil the eggs, run the dishwasher, shower, wash the clothes, irrigate the landscaping and flush the toilet. However, as our population grows, the demand for water seems to increase exponentially. A new home does not just add a new shower, it may also add steam showers, saunas, multi-head showers the size of a small bathroom, and bathtubs the size of stock tanks. After you leave the house in the morning, it takes water to operate the gas station where you stop to fill up (restrooms, food service, carwash, windshield service). The coffee shop you use for the morning "jolt" uses water not only for the various drinks, but, again, for restrooms, cleaning, etc. Even if the office in which you work does no more than supply a break room and bathrooms for the employees, a lot of water is consumed every day. The grocery store you visit on the way home consumes huge amounts of water in its operation, and, of course, the farms and ranches that provide the food in that grocery store need a great deal of water to supply the meat and produce you consume. According to the Colorado River Water Users Association, municipalities represent just under 7% percent of the state's total water consumption. Agriculture uses over 86% of our water, and business, industry and, increasingly, recreation (e.g., snowmaking) account for the remaining 7 percent of water consumed in the state. Tourism and recreation have grown steadily in Colorado and is now the state's second largest industry. Much of that growth is attributable to increases in outdoor pursuits, including skiing, fishing, hiking and rafting. Downhill skiing alone contributes $2.5 billion to the state's economy. Accordingly, free flowing rivers and streams and additional wintertime water supplies for snowmaking are under increasing demand.
It would appear at first glance that water will become the sine qua non of continued growth and prosperity in Colorado. Subdivisions will not be built (or should not be built) in the absence of an assured supply of water. New industry will have to demonstrate how, and at what cost, its water needs will be met. Politicians that promise unending growth and affluence must be challenged to tell us where the water will come from to fuel that kind of growth.
However logical this may seem, it may also be inaccurate. "The relationship of water and growth in the modern West is often misunderstood. Historically, it has been assumed that water development was a necessary precursor to growth and, similarly, that a lack of water development could act as a deterrent to growth. While these premises may have been true at one time, recent experience in Colorado and other western states shows both ideas are now unsupportable (sic). To the contrary, many of the regions showing the highest rates of growth in the West--from Douglas County, Colorado to Las Vegas, Nevada--show the opposite trend; growth is actually highest in some of the driest regions. Similarly, the veto of the proposed Two Forks dam on the Front Range by the Environmental Protection Agency in 1990 certainly did not deter growth in the Denver-Metro area." Peter D. Nichols et al., Summary Report: Water and Growth in Colorado, UNIV. OF COLO., NRLC, 1 (2001). (emphasis added)
As you can see, lack of water has not necessarily acted as a curb to growth, at least without additional controls or requirements imposed by governmental entities.
(NOTE 1: The terms "he", "she", "his", "hers", etc., are used interchangeably throughout the course, and have no meaning beyond a gender-neutral indication of the person being described. Also, whenever the term "Court" is used, the reference is to the Colorado Supreme Court, unless the context or the language specifically indicates otherwise. References to C.R.S. are to Colorado Revised Statutes, the laws of the State of Colorado. These can be found online)
(NOTE 2: You may see a familiar pattern. First, the basic concepts or rules of the issue under discussion are outlined. Exceptions, things to look out for, or other relevant matters are mentioned. Finally, the student will be cautioned that the issue is more complex than it might appear from the discussion, and is encouraged to seek counsel with expertise in water law and administration, and/or to recommend such counsel to his/her client. While a certain amount of such advice is to be expected in any course dealing with legal issues presented to non-lawyers, it is particularly appropriate in the water law setting. The purpose of the course is to provide the real estate professional with a better understanding of how water law works in Colorado in order that he/she can spot potential concerns and, at the very least, direct the client toward the person(s) that can investigate and solve or avoid the problem. It is not intended to replace competent legal counsel, but neither is it intended as a "feeder" to push new clients to hire water lawyers. Many professionals (especially lawyers and real estate agents) have found themselves in trouble by thinking they have the knowledge or expertise to handle an issue, only to find that a little knowledge is a dangerous thing. The most astute and successful agents/brokers are those with a broad range of knowledge of their profession and the various things that impact a transaction (price, location, competition, financing, zoning, water, Esc,), who use that knowledge to recognize areas in which a specialist is necessary, and are not reluctant to suggest or bring in the specialist.
One of the most important and famous cases in Colorado water law is Coffin v Left Hand Ditch Co., (6 Colo. 443) in which the court set forth the basis for Colorado water law. Ruling on this case in 1882, the Court said:
"We conclude, then, that the common law doctrine giving the riparian owner a right to the flow of water in its natural channel upon and over his lands, even though he makes no beneficial use thereof, is inapplicable in Colorado. Imperative necessity, unknown to the countries which gave it birth, compels the recognition of another doctrine in conflict therewith. And we hold that, in the absence of express statutes to the contrary, the first appropriator of water from a natural stream for a beneficial purpose has, with the qualifications contained in the constitution, a prior right thereto, to the extent of appropriation."
One way to remember this is that the Coffin case was the "coffin" for the riparian doctrine in Colorado. It was the judicial declaration of the "Colorado Doctrine" relating to water law.
The foundation of Colorado water law is language found in the Colorado Constitution of 1876, which states, in Article XVI:
"Sec. 5. The water of every natural stream, not heretofore appropriated, within the State of Colorado, is hereby declared to be the property of the public, and the same is dedicated to the use of the people of the State, subject to appropriation as hereinafter provided.
Sec. 6. The right to divert the unappropriated waters of any natural stream to beneficial uses shall never be denied. Priority of appropriation shall give the better right as between those using water for the same purpose; but when the waters of any natural stream are not sufficient for the service of all those desiring the use of same, those using the water for domestic purposes shall have the preference over those claiming for any other purpose, and those using the water for agricultural purposes shall have preference over those using the same for manufacturing purposes.
Sec. 7. All persons and corporations shall have the right of way across public, private and corporate lands for the construction of ditches, canals and flumes, for the purpose of conveying water for domestic purposes for the irrigation of agricultural lands, and for mining and manufacturing purposes, and for drainage, upon payment of just compensation."
Unappropriated water belongs to the public, is available for appropriation for beneficial uses, and if necessary, rights-of way for ditches, canals and flumes for the purpose of conveying the water to the place of use can be condemned so long as just compensation is paid. From those few words have sprung thousands upon thousands of lawsuits, laws, regulations, etc., and probably millions of pages of discussion, analysis, legal opinions, rulings by water courts and the Colorado Supreme Court.
December, 20 2011
Changes coming to 2012 Colorado Real Estate contracts - prepare yourself today
Continuing our line of popular update and review courses, The new2012 Colorado Contracts Review (#3517) course is now available online in Colorado! VanEd is offering this course online for three hours of continuing education credit in Colorado. This course, available to all Colorado Real Estate Professionals, is designed to help both new and experienced agents help their clients and customers understand the 2012 contracts and forms used in Colorado real estate transactions. The course will cover other various aspects important to real estate professionals, including:
How to Determine which forms are applicable and when to use them
Completing the Contract to Buy and Sell for various property types
Explaining the terms of the Contract to clients and customers
Learn to Identify appropriate disclosures and addenda to use in a transaction
This course will also cover how and when to use the short sale addendum, as well as the importance of the updated inspection forms. >>> Click Here for more information!
December, 15 2011
Colorado MLO mandatory continuing education course gets extension from DRE
Yesterday the Colorado Division of Real Estate (DRE) announced that the Colorado 2-hour mandatory Mortgage Loan Originator update course would be allowed to be made available through February of 2012. An excerpt from the announcement appears below;
In accordance with State regulatory requirements, all Colorado licensed mortgage loan originators must complete a two (2) hour Colorado-specific update course each calendar year prior to license renewals OR reinstatement. Therefore, the Division recognizes the need to continue to offer the 2011 update course through the reinstatement period for individuals who want to take advantage of the reinstatement period and who have yet not completed the prerequisite education. The reinstatement period is open until the last day of February 2012.
The announcement also included instructions for education providers such as VanEd on how to report completions of the 2011 MLO Update Course that occur after December 31st, 2011. VanEd will continue to offer the 2 hour MLO Update Course until the end of February in order to assist our students and support the efforts of the DRE.
Land Conservation: Incentives, Acquisitions and Easements
Land conservation - the practice of holding land open and free of development - has become a significant real estate activity in the United States. Since 1988 voters across the country have approved spending around $54 billion on land conservation in state and local ballot measures, according to the Trust for Public Land. Additional private money is spent on conservation through non-profit land trusts and conservation by individuals and corporations. Land conservation has become an important component of smart growth efforts, as well as for environmental protection and recreational opportunities.
Understanding the purpose, various techniques available and other issues associated with land conservation is essential for real estate and appraisal professionals. Land owners may receive benefits for conserving their land, but must also be aware of costs and potential issues. Sale of land for conservation may have additional benefits. Land conservation programs can have significant impacts on real estate markets, valuation, and can affect the use of adjacent land as well as the land being conserved. Implications for long term maintenance cost, valuation and taxes may be complex and substantial.
Many land conservation actions attempt to preserve the land in a natural condition to achieve environmental benefits. Other approaches may intend to preserve agricultural use rather than a natural environment. In any case, the overriding objective is usually to work cooperatively with property owners to limit urban development in order to achieve other public goals.
Land conservation actions can be as simple as an individual landowner deciding not to develop land, but instead preserve the natural environment. Land conservation can occur with relatively simple easements on private property that prevent future development. Easements can be sold, exchanged for other land, provide tax reductions, or granted for a variety of other considerations. Conservation can also occur through fee simple purchase of land. Purchase might be based on the full market value or for another negotiated value allowing some continued use or tenancy by the seller.
Government agencies are typically involved in land conservation efforts. Other non-governmental organizations (NGOs), such as non-profit land trusts and other conservation organizations may be partly or solely involved. In more complex circumstances, all the governmental and NGO entities and available tools may be used in some combination to conserve larger properties or areas.
The basic conservation tools are:
Personal action - efforts on the part of individual land owners to conserve their land because it benefits quality of life for themselves and the public. Historically, farming and ranching has maintained open land as an inherent part of the land use. Today, some individuals are acquiring and operating farms and ranches specifically for conservation purposes. Ted Turner is perhaps the best known, and is the largest private landowner in the United States. His working ranches are economically viable businesses that simultaneously support conservation goals, including water resource management, reforestation and reintroduction of native species.
Land acquisition - fee simple purchase of the land by government, land trusts, other conservation organizations or voluntary donation by the property owner. An acquisition example is the Richardson's Bay Sanctuary, located on the edge of San Francisco Bay in California. The Audubon Society purchased submerged and upland areas to provide habitat for wildlife and migratory water birds.
Conservation easements - these are legally binding agreements that limit uses and development of a property and protecting the ecological values of the property for public benefit. This is accomplished through either through voluntary sale by the property owner or grant. Conservation easements are the most commonly used conservation tool. Anyone interested in participating in a conservation easement should carefully review the conservation easement information found through state and local government resources, including a detailed review of the policies and procedures.
Financial incentives - other benefits provided by government to the property owner to conserve the land, such as special tax districts for open lands, tax rate reductions or deductions, or allowances to transfer the development potential to another location. Financial incentives typically work in combination with other tools such as conservation easements. Financial incentives such as reduction of inheritance taxes may be essential for land owners to maintain an existing use, such as farming or ranching and pass the land on to descendants.
Risks Associated With Land Conservation
All parties involved in land conservation assume some risks, such as:
Property owners entering into conservation easements limit the future use of the land; in most cases they won't be able to change their minds later. Tax benefits of conservation might be initially attractive, but future legislation could change those benefits. Depending on the structure of the easement, the land owner could be responsible for some maintenance with unanticipated costs.
The easement holder, such as a land trust, pays the cost of acquiring the easement, and may assume obligations to enforce the easement and, again depending on the specific easement, long term maintenance. They run the risk of unanticipated long term costs, and maintaining a cooperative working relationship with the current and future land owners. Unanticipated impacts to the easement area might reduce the value of the easement.
The public may risk similar unanticipated long term costs, as well as affects on tax base and revenues. In some cases acquisition of open space land may unexpectedly limit some future options if adequate long range planning is not first done.
Management of these and other risks indicates that all parties should exercise caution, and consult with appropriate professionals. The services of attorneys, accountants, appraisers, REALTORS and land planners may be needed, as well as coordination with government agencies and conservation organizations. The unique attributes and complexity of land conversation issues highlights the need for experienced professionals.
Summary
Planning for large scale conservation must consider implications to the local tax base and revenue; if public land acquisition is the preferred approach, the tax base may shrink with less private land, but remaining private land values may increase, providing an offset.
Property owners donating conservation easements may qualify for property tax reductions and income tax deductions; they should be cautious about ensuring they meet all applicable guidelines for claiming tax benefits.
Conflicts can result between active and passive recreational uses of open space; conservation actions should clearly identify the purposes of conservation and the uses consistent with those purposes in order to avoid conflict.
Long term maintenance of open space is a significant cost consideration that should be included in any conservation action.
Make sure that any professional you are working with is well educated in both the process and the law before engaging them in any conservation easement action.
December, 13 2011
Introduction to Real Estate Insurance for Realtors / Mortgage Brokers
Insurance requirements have become such an integral part of the real estate and loan transaction, they must be included in any comprehensive discussion of real estate finance. Every purchase transaction will require title insurance, and every mortgage will require homeowners insurance. In some situations, lenders may also require flood insurance and/or mortgage insurance. Even purchasers of condominiums and townhouses will have other insurance options to consider.
Title insurance was devised to eliminate most of the problems created by abstract attorneys and the abstract opinion. Title insurers examine all the recorded documents pertaining to a specific property to produce an insurance policy that covers the purchaser, the lender, or both, from any defects to the title. Title insurance policies are now fairly uniform, and the insurance companies have the financial resources to defend and compensate their insured.
Owner's Policy
The owner's policy insures a purchaser that the title to the property was transferred free of any defects, except those which are listed as exceptions. The settlement agent will obtain and record the documents required in the title commitment. In most real estate transactions, the seller will pay for the owner's policy. The buyer pays for the lender's policy and endorsements.
The owner's policy is valid as long as the ownership of the property remains the same. Transferring ownership of the property to another ownership entity, such as a family trust or a spouse by a quit claim deed may void the title policy. Whenever possible, the owner should use a special warranty deed instead of a quit claim deed to facilitate changes in ownership. This will keep the title insurance intact.
Lender's Policy
Often referred to as a loan policy, this is issued to mortgage lenders to protect their interest. Typically, lenders require standardized forms be used. The lender's policy will guarantee the validity of the loan documents, and will follow the assignment of the mortgage or deed of trust when the loan is transferred.
Homeowner's Insurance
Also referred to as Hazard Insurance, homeowner's insurance provides protection against damage to real estate improvements, damage to contents, and liability coverage. Every time a home is purchased with a mortgage, the lender requires the owner (borrower) to obtain property insurance as a condition of the loan closing. This insurance must be maintained until the home is paid off. This is a comprehensive policy that provides coverage for most available perils, including full replacement of improvements, liability, temporary living expenses, outbuildings, and contents. The contents coverage extends to losses away from the premises, such as in a car or storage unit. The insurance premiums are usually included as part of the mortgage payment (the 'I' in the PITI payment).
Flood Insurance
Prior to 1968, flood insurance was virtually unavailable through either the private sector, or the federal government. Until then, the Federal Government attempted to control coastal and river flooding through re-channeling of water, and using dams and levees to restrict the flow of water. The dams had the added benefit of producing hydroelectric power, and providing storage for irrigation. But the increasing cost of these projects, as well as the high cost of flood- related damage, influenced the government to explore offering flood insurance to reduce the disaster related payments. Typically, floods affect entire communities or towns, so the local leaders often looked to the federal government to provide disaster relief for the victims. The question debated by the Federal Government was whether they were better off using their limited funds to provide disaster assistance to flood victims, or to provide federally sponsored flood insurance coverage. Congress realized the government could not keep absorbing the escalating costs to taxpayers for flood disaster relief. This led Congress to establish the National Flood Insurance Program (NFIP) in 1968.
Lenders Mortgage Insurance
Mortgage Insurance is provided to enable lenders to close loans with small down payments. It is usually required when the down payment for a purchase is less than 20%. Mortgage insurance is strictly for the benefit of the lender. In the event of a default or foreclosure, the mortgage insurance company will pay the loss suffered by the lender. Typically, when properties are foreclosed on, the sale price at the auction is less than the current loan balance. This difference (along with the foreclosure costs) is the loss suffered by the Mortgage Insurance Company. Depending on the situation, the MI Company may attempt to recover this loss from the borrower. They can file for a deficiency judgment in court. Mortgage Insurance is provided by both government agencies (FHA) and private insurance companies.
Condominium insurance is a master policy that protects both the condominium association and each individual owner.
Credit Life Insurance
This is insurance that pays off the loan with the death of the borrower. This is basically Decreasing Term Life Insurance, where the benefit amount decreases at the same rate the principal balance of the loan decreases. The beneficiary is the lending institution. Very few mortgage lenders offer this type of insurance, and even less require it as a condition of the loan. However, deeds and deeds of trust are recorded and become public information. Many insurance companies 'fish' this information, and send notices to all listed borrowers. They will send out official looking documents trying to entice the owners to purchase insurance. These offers are not a good value and should be avoided.
Summary
Title insurance protects both the purchaser and the lender for hidden defects in the ownership of the real estate. There are many endorsements that provide the lender additional protection that are charged to the buyer. Even though the seller provides the buyer with clear title, it is the buyer's responsibility to pay the necessary premium to have the lender included in the coverage when purchasing a property.
Landlords and tenants have special insurance needs that should be addressed. Owners of condominiums and townhouses need to purchase contents insurance.
Mortgage lenders do not require credit life insurance. Companies that promote this coverage are predatory companies that should be avoided.
December, 7 2011
UAD Regulations for URAR Appraisal Reports
Overview
As of September 1st, 2011, appraisers were required to make significant changes in the way they prepare the URAR appraisal report because Fannie Mae, Freddie Mac, FHA, and the VA are now requiring all appraisal reports be transmitted electronically in a standardized format. All URAR appraisal reports with an effective date on or after the first of September have to meet the new Uniform Appraisal Dataset (UAD) standards (and at some future date, for the FHA and VA as well).
Introduction
Under the direction of the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac (the GSEs or Government Sponsored Enterprises) have developed the Uniform Mortgage Data Program (UMDP) to enhance the accuracy and quality of loan data delivered to each GSE. The Uniform Appraisal Dataset (UAD) is a key component of the UMDP which defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for a key subset of fields.
With the UAD, the GSEs will require that appraisals be completed with standardized responses in certain appraisal form fields. The standardization of certain data points will support consistent appraisal reporting, regardless of geographic location of the property or any localized reporting conventions, by addressing vague or disparate data currently included on some appraisal reports.
The UAD standardized response requirements include:
Standardized formats for fields that include dates, currency, and other values
Allowable values from a list of choices provided for certain fields
Standardized abbreviations to allow more information to fit on the printed appraisal forms
Standardized ratings and definitions for the "Condition," and "Quality," of the property and Updated/Remodeled" status
The UAD supports improved quality and accuracy of the appraisal data while preserving each GSE's ability to determine what the data means to loan performance and loan quality. The GSEs will each continue to exercise independent business judgment in evaluating and maintaining business terms, credit policies, and analytics. Differences in the assessment and use of the appraisal data will remain due to unique and separate business policies, mortgage products, and processes.
Uniform Data Portal
While all the GSEs began requiring information sent to them be delivered using the new UAD requirements as of September 1st, 2011, beginning on December 1st, 2011 the delivery of all loan information will be required to be submitted through a Uniform Collateral Data Portal (UCDP) which is a part of the Uniform Mortgage Data Program, or UMDP. UCDP is designed to standardize the data being delivered to the GSEs which will allow them to run specific metrics on the loan information to determine if they are worth purchasing.
Recommendation
In order to familiarize themselves with the new UAD standards appraisers should consider obtaining training material or instructional course work that presents a field-by-field explanation and example of the Uniform Appraisal Dataset with emphasis on:
UAD Required Fields
UAD Conditionally Required
UAD Requirements
UAD Instructions and Explanations
Appraisers will need to be able to identify and utilize field-specific standardization requirements for completing the GSEs' uniform residential appraisal report forms (the appraisal forms) and be able to navigate the fields on the appraisal forms. These changes are intended to provide specific instructions for lender underwriting and quality assurance staff to facilitate their review of residential appraisal reports for compliance with the GSE data standard. These requirements are in addition to either or both GSEs' appraisal-related policies and guidelines, which are subject to change and identified in the Fannie Mae's Selling Guide and Freddie Mac's Seller/Servicer Guide. Conforming to the UAD is in addition to, and does not replace, appraisers' development and reporting responsibilities as required by theUniform Standards of Professional Appraisal Practice (USPAP).
Technical specifications are available on the GSE websites for the UAD for lenders who are parsing the appraisal data in their internal systems for workflow and other purposes.
December, 6 2011
Loans, Limits and Legislation
H. R. 2112 passed both houses of congress and was signed by the president on November 18th. This bill restores the FHA loan limits that were increased as part of the Housing and Economic Recovery Act of 2008. These limits expired on September 30, 2011 and reverted to pre-2008 levels.
H. R. 2122 became effective on the date it was signed (FHA loans with case numbers ordered between October 1st and November 17th are stuck at the lower amounts). The base limit remains at $271,050, but can be increased to $729,750 in high cost areas. This loan limit authority extends until December 31, 2013.
Unfortunately this legislation did not restore the higher limits for Fannie Mae and Freddie Mac. The base loan limit remains at $417,000 but the limit for high cost areas, except for four counties in Hawaii, was reduced to $625,500. This means that in many parts of the country, it is possible to get a bigger FHA loan than a Fannie Mae loan.
The roller coaster ride for VA funding fees appears to be over. The funding fee for a no down payment loan for a Veteran's first use had been 2.15% of the loan. The Veterans Health Facilities Capital Improvement Act of 2011 reduced this fee to 1.4% effective on October 1st, 2011. H. R. 2646 restored the 2.15% funding fee effective on October 6th. This was rescinded on November 18th, so the funding decreased to 1.4%. H. R. 674, which was just signed on November 21st, restores the fee to 2.15%.
To summarize, the funding fee was 2.15% until September 30th, 2011. It was 1.4% between October 1st and October 5th, 2.15% between October 6th and November 17th, 1.4% between November 18th and November 20th, and as of November 21st it's 2.15%. Unless there is more tinkering, the 2.15% fee is set until September 30th, 2016.
Because funding fees are based on closing date (unlike FHA where MIP is based on assignment date), it was almost impossible for lenders to comply with the three day disclosure requiement under the Truth in Lending laws for VA loans closed October or November. It is interesting that congress could vote a tax increase for veterans without so much as a peep. Yes, they really do support our troops.
Guest Author Randy Kellyis a Mortgage Banker and Finance Author with Peoples Mortgage. You can find all of his posts online at VanEd.com/NewsLog.
November, 29 2011
There is good news for real estate in the passage of the "Minibus" spending bill
Recently the House and Senate both passed the appropriations “minibus” spending bills. These not only allow Government to remain open, it also included at least two real estate friendly components. The first is a month-long extension of the National Flood Insurance Program to December 16th that will give the Senate time to consider the House-passed five year re-authorization.That date coincides with the continuing resolution to keep funding other spending programs not included in the minibus legislation.
Perhaps more importantly the passage of the minibus spending bill includes a reinstatement of the FHA loan limits to their pre-September 30 levels effective as soon as the President signed the legislation (which he did on November 18th, using the auto-pen). This could immediately provide additional mortgage capital to borrowers in hundreds of counties across the country via FHA financing.
The loan limits will revert to 125% of median area home price, with a cap at $729,750. Those higher limits will be in effect until December 31st, 2013 at which point they will again revert to 115% of median area home price with a cap at $626,500.
The National Association of REALTORS® (NAR) has also congratulated Congress on reinstating the higher loan limits. "...we applaud members of Congress for restoring FHA’s previous loan limits, which will help reduce consumer cost burdens, stabilize local housing markets and allow qualified, creditworthy borrowers to access affordable mortgage financing,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami.
November, 22 2011
Will the housing market recover?
Most people are looking for security in their lives, and I don't mean security from the "terrorists". People are looking for job security, income security, health security, and financial security. Contrary to the beliefs of some politicians, most people don't want to be entrepreneurs (after all 50% of small businesses fail in the first five years). Most people would rather have a stable job with a decent salary and decent benefits.
Unfortunately, people don't have security in any of these areas. With the real unemployment rate running close to 15%, many people are worried about loosing their job. With the under-employment rate (working at a job below ones skills or training) close to 20%, there is very little income security. Workers are reluctant to ask for a raise with so many people wanting to take their job. There is very little health security. Most health insurance is tied to the job, so if you are worried about your job, you are worried about your health insurance. Also, premiums and deductibles have risen dramatically in the last few years, so a major illness may also be a financial nightmare even with insurance. People have very little financial security, having seen declines in their home values, their retirement accounts, and their mutual funds. Many people are concerned they won't be able to retire as planned. Can you say Wal-Mart greeter?
In the past, most people expected small annual increases in their pay that would at least keep up with the cost of living. Homes generally increased in value about the same as the rate of inflation. If you lost a job or got transferred, you could sell their house and bank the equity.
This is no longer the case. If you owe more on your house than it is worth, a major illness, a job loss or a job tranfer may also result in a foreclosure. Instead of being an asset, a home may now be a dead weight that could cause financial ruin. The obvious choice for most people is to rent, at least until they regain some security in their lives. So, if we are waiting for the real estate market to lead the recovery, we may have a long wait. I don't believe the real estate market will recover until the economy recovers.
Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Peoples Mortgage and a regular contributor to VanEd News. Find all of his posts at VanEd.com/NewsLog
November, 22 2011
Basic Residential Investments course available online
While new and emerging technology, the advent of social media and the use of services and applicationschange how we perform our daily tasks, real estate professionals must still be able to perform basic financial analysis in order to help clients and customers determine te effectiveness of any investment in real estate.
In our updated course, Basic Residential Investments, we will examine how to determine if an investment will meet the needs of your consumers. Buying real estate as an investment can be a sound practice but it requires research, understanding the market place and financial stability for tying up money for long term. Students will be introduced to how these concepts are applied in analyzing real estate investments. You will learn the fundamentals of how leveraging effects an investors Rate of Return, the potential profit as well as the potential risks incurred when purchasing investment property.
Students will also be introduced to various concepts, including:
basic factors affecting investment in real property
the fundamentals of how leveraging affects investment in real estate
methods used in choosing investment property
Don't let outdated strategies or ideas plague your business plan in the new real estate economy. Log on today to learn this timely and valuable information and to prepare yourself for future success. >>> Click Here for more information! You can also find this course in our Real Estate Investment 16 Hour package for Colorado Brokers.
September, 28 2011
Colorado Division of Real Estate announces education audit
The Division of Real Estates informed brokers (via email) that the audits will begin in October and that brokers will be chosen at random to participate. The email notification process (based on license number) will outline instructions for how licensees should respond to the audit. Fines for failure to comply range from $250 to $500. Brokers will need to respond as quickly as possible to the audit notifications.
For those licensees who do not have certificates, do not have the required 24 hours of education or have less than the 12 hours of mandatory Annual Commission Update course hours there are four ways to comply with license law;
Pass the Colorado portion of the state exam
Complete the 24-hour Brokerage Administration course
Complete the 24-hour Broker Transition course, or
Complete Colorado Contracts & Regulations and Real Estate Closings courses (Pre-License)
For complete license renewal information for Colorado licensees please visit the VanEd CE Requirements page online by visiting http://www.VanEd.com/Renew. You will also find information on how to prepare for an education audit on our site.
Please Note: Not every licensee will be audited by the DRE. Only those who are notified via e-mail will be audited at this time.
Have a question for us? Use the contact info at the top or bottom of this page and we will be happy to answer any questions you may have.
September, 22 2011
Upcoming real estate industry events to learn, educate and share
Check out these upcoming real estate industry events that are taking place over the next month and join the conversation with VanEd while you are there.
Real Estate BarCamp: Las VegasThis Saturday, September 24th, this one day event will bring together real estate professionals who will learn and share about tools and topics and all things real estate. Learn more at www.rebarcamplasvegas.com
ARELLO Annual meetings: The Association of License Law Officials will hold their Annual meetings in Baltimore September 29th - October 2nd. VanEd will be there, so look for an update on the industry issues that regulators are concerned about. We will be using the hashtag #ARELLO for our updates.
Colorado Association of REALTORS® Annual Conference and Expo: The conference moves to Denver where attendees will have the opportunity to network as well as attend CAR business meetings and enjoy education sessions. The conference opens with two days of community service opportunities. REALTORS® Care, REALTORS® Share Days is an opportunity for REALTORS® and others to give back to the community.
AARO Fall 2011 Conference: The Association of Appraisal Regulatory Officials will hold their annual Fall conference in Washington D.C. October 15th - 18th. Besides committee and regulatory updates, there will also be discussions on the 2012-13 USPAP and Green Construction. Find out more online by visiting the AARO website at http://www.aaro.net/.
International Real Estate World Summit: The upcoming international real estate “World Summit” in Panama City Beach, Fl. October 20th - 22nd promotes global networking and education. The program offers a series of topical sessions on global trends and issues and an industry product expo. It is expected to draw 2,000 industry professionals from around the globe and the US.
September, 20 2011
Colorado Division of Real Estate announces MLO CE Compliance Rates at less than 10%
Mortgage Loan Originators take note: Those who regulate you are watching.
The Colorado Division of Real Estate who oversees the Mortgage Loan Originator Program in Colorado published in their Spring/Fall 2011 edition of Real Estate News that MLOs in the state were less than 10% compliant in completing mandatory continuing education. Nationwide less than 20% of all MLOs had completed the mandatory education.
The required Colorado Mortgage Loan Originator continuing education is available online! VanEd is proud to be able to offer our students the 8 hours of NMLS required education and to be the home of the two hour Colorado Mandatory course online. The 2 hour course was developed by the Division of Real Estate and covers a number of topics.
VanEd also offers access to the 8 hours of required NMLS education in many states. Find your state information online by clicking here.
September, 16 2011
2012-13 USPAP Changes - Free video from The Appraisal Foundation
The Appraisal Foundation issued the following press release and link to a video discussing the changes made to USPAP for the 2012-13 edition. In order to allow access to our appraisal and other students we are posting the release sent out by the Appraisal Foundation here:
The Appraisal Foundation is pleased to announce the release of a free video on its web site entitled, A Preview of Changes to the 2012-13 Uniform Standards of Professional Appraisal Practice (USPAP).
The video, shot on location at the Foundation’s headquarters, is a 23 minute interview with the 2011 Chair and Vice Chair of the Appraisal Standards Board (ASB), J. Carl Schultz, Jr. and Barry Shea, respectively. A PowerPoint presentation is available for simultaneous viewing as well.
Please visit the following link to access video on the Foundation’s eLibrary:
USPAP changes discussed in the video include:
Revisions to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;
Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE;
Revisions to Advisory Opinion 21, USPAP Compliance; and,
Revisions to STANDARDS 7 & 8: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT & REPORTING.
September, 15 2011
Understanding Real Estate Insurance can help to raise the bar of professionalism
Insurance requirements have become such an integral part of the real estate and loan transaction, that they must be included in any comprehensive discussion of real estate finance. Every purchase transaction will require title insurance, and every mortgage will require homeowners insurance. In some situations, lenders may also require flood insurance and/or mortgage insurance. Even purchasers of condominiums and townhouses will have insurance options to consider.
Real Estate professionals need to have a thorough knowledge of all types of insurances to properly guide their clients though the real estate and loan process. This will include Title and Homeowners Insurance requirements as well as mortgage, flood and potentially even credit life insurance. But what is the purpose of each of these?
Title insurance protects against loss from defects in the title to real property while homeowner’s insurance provides protection against damage to real estate improvements, damage to contents, and liability coverage. The National Flood Insurance Program (NFIP) provides property owners the opportunity to purchase flood insurance protection made available by the Federal Government. Mortgage insurance is strictly for the benefit of the lender and Credit Life Insurance pays off the loan with the death of the borrower.
Having an understanding of the various insurance products available to consumers will help the real estate professional remain the conduit of information for their clients. You can learn more about Insurance as it relates to your transactions and clients by registering today for online MRE course: Insurance in Real Estate.
September, 13 2011
Help Real Estate Clients with Environmental Sensitivities
Have you worked for clients with environmental sensitivities such as asthma or chemical allergies? Would you like to be able to provide them with accurate and helpful information on topics like indoor air quality issues?
It is estimated that people spend 90-95% of their time indoors. This makes indoor air quality very important to health.
Clients with environmental sensitivities (and even those without) will be impressed by the value you bring and will benefit tremendously from the resources you provide to help improve indoor air quality. You can read more online at http://www.ecobroker.com/misc/articleview.aspx?ArticleID=22, or forward the article from EcoBroker International to your customers.
This reliable green information is brought to you courtesy of the EcoBroker Certified(R) professional designation, currently offered by VanEd. Find out more at www.vaned.com/EcoBroker.
