This year has produced some major legislation affecting real estate and mortgage lending practices in the State of Michigan. Earlier in the summer, I wrote about a New Disclosure Law which went into effect on July 1, 2008 for Real Estate Brokers.

This disclosure provides a clear definition of the contract for services in hiring a real estate broker. The New disclosure also requires that a Minimum Service brokerage indicate which services they are/are not providing and reveal these limits to potential clients, thus hopefully clearing some of the confusion surrounding WHAT real estate brokers actually are DOING to provide VALUE to the real estate transaction.

Within the next 6 months, another far reaching piece of Legislation, Public Act 60, will also go into effect. This impacts the lending industry. The legislation has been in process for some time and predates the current lending crisis. Public Act 60 will require that loan originators in Michigan be registered with the State of Michigan to legally conduct business. A continuing education requirement has been added which includes 24 hours of Pre-licensing education and 6 hours of yearly Continuing Education Credit on a yearly basis.

Michigan now joins a list of 26 other state which require loan originators to be licensed. The Act does not cover banks but only applies to mortgage brokers. There are on going challenges still being resolved with the implementation of Public Act 60 which will be enforced starting January of 2009. Perhaps some of the most significant questions are:

1. What the Registration Process will cost

2. What the educational coursework will contain although broad perimeters have been established

One of the most important aspects of the Act, in my opinion is the requirement for criminal background checks for all loan officers. Readers of my blog may remember a post I wrote last year in which an individual interviewed for a job as an agent in my office. He was a convicted felon and yet was processing loans. The rub was that his conviction was for...fraud and financial theft.

In an article for the Ann Arbor Business Review, Carol Marshall offers a comprehensive analysis of the impact of the new law in addition to some of the cautions in regarding it as a solution to ALL the problems the industry faces. One lender is quoted as saying that just because someone can pass a test and a criminal background check does not mean that they are a good person or an ethical lender.

Well, that's the truth. We've had licensing requirements for agents and brokers for many years in Michigan and there are still bad apples in the lot. However, the process needs to start somewhere. It makes no sense to me that hair dresser and barbers in the State of Michigan still have educational requirements much more stringent than those required for real estate professionals and mortgage lenders.

In a real estate market in which just under 1 out of 2 homes which are actually SOLD are Short Sales or Foreclosures, more home sellers in the Grand Rapids, Michigan area are inquiring about if a Short Sale may be a viable path to consider.

It is no secret that there has been a precipitous slide in home prices over the past year.  This coupled with the sub-prime mortgage mess has placed some home owners into a situation in which the Value of their home is LESS than what they currently owe  on their mortgage payment.  In some cases...way less.  As a result, some home owners are bringing thousands of dollars to the closing table to make up the difference owed to the bank.

But what can you do if you don't have Thousands of Extra Dollars sitting in a bank, savings or retirement account?  Unfortunately, this is a question, many home owners are asking.  Individuals who have to move due to a job loss, illness or divorce.  Individuals who can no longer afford to stay in the home they bought.

Short Sales are complex real estate transactions.  Although banks do not want to 'own' real estate, they are often less than cooperative in situations in which the debt obligation to them will not be fulfilled.  To make the case to the bank about the specifics of your situation and your intention to try to fulfill your obligations to the best of your ability, it is wise to hire a real estate agent who has successfully completed Short Sale negotiations and who understands the intricacies of the process.

There are several stages within a Short Sale Negotiation.  The first determination is to gain a comprehensive understanding of your specific situation.  Questions which need to be answered include your payment history and a complete analysis of your financial resources; including a detailed rendering of any extenuating circumstances which may impact your ability to repay your obligation.

The home in question must also be verified through a market analysis to substantiate the loss in Value.  This will often include not just a real estate broker evaluation but also an independent appraisal or Broker Price Analysis from another source.  Then the home must be marketed aggressively, as NOTHING proceeds forward until you obtain a viable buyer.

Once an offer is tendered, the real 'fun' begins.  In some instances, we have encountered Loss Mitigation Specialists assigned to handle up to several hundred files at a time.  The pressure on them is enormous and they often fail to answer their phones or respond to any attempts of communication.  It is here that hiring the RIGHT agent makes all the difference in the world. 

It is important that your real estate agent/broker possess the following qualities when negotiating a Short Sale.

1.  They must UNDERSTAND the process...knowledge of the different aspects of foreclosure & short sale

2.  They must KNOW how to price your home to actually SELL

3.  They should have a good INTERNET presence to attract the largest pool of buyers

4.  They must be PERSISTENT in their negotiation efforts

5.  They should have an inherent grasp of the DETAILS to ensure that all parties remain informed

6.  Your agent must be DETERMINED to represent your best interest

Successful Negotiation of Short Sales is a mandatory element of the training which the agents of Audu Real Estate receive during their 1-2 year apprenticeship.  Audu Real Estate has successfully short sales on behalf of our clients. 

We strive to conduct our negotiations in a way which honors the dignity of those involved and protects their privacy.  If you'd like additional information or a private consultation regarding your Short Sale options, please contact us at: info@audurealestate.com.

Related Links:

Additional Real Estate Short Sale Articles by Audu Real Estate

Summer weather roared in with blazing high temperatures and strong storms here in Grand Rapids, Michigan!  It's been a little while since I've been able to look out my window at a clear blue sky and gently swaying trees.  In some ways the recent rush of climatic activity is a metaphor for the real estate situation here in West Michigan.

2008 has been a year in which we have seen some stormy conditions.  The year commenced with the down draft in the mortgage sector due to the sub-prime lending crisis.  In fact, until just recently, most of West Michigan was considered a declining market which meant that New Home Buyers were being asked to bring additional money to the closing table to close loans.  Money which many of them were hard pressed to find. Zero down programs evaporated into the cosmic ethers.

Yet, not all the news was bad.  In the midst of this tempest, affordability levels increased as the prices of homes plummeted sharply creating all sorts of opportunities for buyers and investors to pick up properties at rock bottom prices.  Home owners learned hard lessons about the laws of supply and demand Because bank owned properties now constituted almost 1 out of every 3 sales, marketing times increased to almost a year and homes that were not priced correctly were all but ignored.

In an environment in which so many winds of change are raging, it's often difficult to decipher exactly what is going on.  Recently, Jennifer Granholm the Governor of Michigan signed some important legislation into LAW!  It's the Agency Responsibility Act (ARA)  I think that this legislation is one of the best things to emerge out of the storm which has engulfed our industry.

The Governor's signature on the acts is the culmination of the Michigan Association of Realtors hard fought efforts to clarify for consumers the real estate services that were being provided by various agencies.  This movement was brought about by the amazing discovery that the ONLY duties imposed by statue or rule of law when representing seller or buyers or real estate property were:

The duty of agents to present offers to sellers within a reasonable period of time

The duty of listing brokers to review and sign the closing statements.

ASTOUNDINGLY, THAT WAS IT!

While most Realtors® were offering substantially MORE than this, the public had limited understanding of the potential vast difference of service levels between brokers because all brokers were using the "Exclusive Right to Sell Contract." (Buyers usually are serviced under a Buyer Agency Agreement)

As a result of this legislation, brokers who do NOT provide the required MINIMUM service levels will now have to use a LIMITED SERVICE AGREEMENT form which clearly defines exactly what they are doing or NOT doing.  The ARA also amends the law to make it a VIOLATION of the Occupational Code if a Realtor FAILS to provide all Statutory Services unless they are expressly waived by a client in a limited services agreement.

The is a huge advancement forward for the rights of consumers to ensure they understand exactly WHAT they are getting when they sign up with a real estate broker.  I think it will help to dispel some of the misunderstanding and confusion which has marred the positive perception of the real estate industry. 

Sometimes, it takes a storm to bring out the best in nature.  Today, my lawn is a gorgeous green and the flowers are blooming.  It may have been a little rough getting here, but the results I'm witnessing make it worth it.  The Act becomes effective as law on July 1, 2008. My hope is that the turmoil in our industry will continue to yield changes which serve the good of our profession and the clients we have the privilege of assisting.

Copyright 2008  Audu Real Estate  All Rights Reserved

There's a simple proverb that says..."When the student is ready, the teacher will appear. 

For thousands of students in Michigan, including myself, that teacher has been Gwyn Besner. My initial interraction with Gwyn was during a Continuing Education Class. I found her teaching style interesting and she definitely kept us awake!

Through the years, I have recommended Gwyn Besner to many students who through her instruction and encouragement successfully passed their real estate licensing exams.  More importantly, these new real estate agents finished her classes with a clear sense of what the real estate profession aspires to be and were well prepared to launch their new profession. 

Today, Gwyn is the President and Instructor for the Acme Institute and continues to teach students across the State of Michigan.

So, I am delighted to be able to have the opportunity to have Gwyn Besner participate in the Continuing Education Courses that are being offered in Grand Rapids, Michigan on May 28th, 2008. 

Gwyn will be joining us in the afternoon of May 28th, 2008 to teach the Code of Ethics!  This class will function for double duty!  In addition to qualifying for 3 hours of Continuing Education Core Curriculum, this class will also allow members of the Grand Rapids Association of Realtors to have an interesting, live interactive Code of Ethics class...one of the requirements for ALL members of GRAR.

Don't Miss this Opportunity!

Here's a Description of the Course that Gwyn will be teaching on May 28, 2008... 

Honesty, Integrity and Commitment are not just buzz words.  As a REALTOR® those are the promises you make.  The public knows that because you can use the term REALTOR® after your name, they can expect nothing less from you.  Do you really understand the promises you are making?  Join us for a fresh perspective of the Code as we celebrate its 100^th birthday. 

This class contains the NAR required curriculum for the Second Cycle of Quadrennial training and has been approved by the Department of Labor and Economic Growth of the State of Michigan for three hours of continuing education, including the mandatory two hour core curriculum (legal update) #K299, K5047.  Presented by Gwyn Besner of The Acme Institute Approval code K348

Class Starts at 1:00 p.m.

Registration begins at Noon* Participants in the Blogging Courses can register for all 3 courses and obtain 7 hours of Continuing Education in one day and have all your requirements for Continuing Education, Core Curriculum/Legal Update AND Code of Ethics in one day! If you register for all 3 Courses...We'll Feed You Lunch!

Place:  660 Kenmoor SE, Grand Rapids, MI 49546

Click this LINK to REGISTER for the Code of Ethics class!  (the registration button is at the bottom of the page)

Click this LINKG to REGISTER for Blogging Continuing Education Classes!

Related Links:

Information about the Blogging & Technology Continuing Education Courses on May 21 & 28th, 2008

State ID K1062 & 1063  Instructor Approval Code ~ Audu Real Estate K355

Download Registration Form for  Blogging & Technology Continuing Education Courses

View Video of Class held in Grand Rapids, Michigan in 2007

Click to read more from Gwyn Besner's blog...

Visit Gwyn Besner's Website...