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Audio: Dealing with Cyberthreats

Steve Spano, president and chief operating officer of the Center for Internet Security, recently visited NAR’s Washington offices to discuss techniques real estate professionals can employ to stay safe online. Listen to his comments below.

Yes, Interest on Home Equity Loans is Still Deductible

There’s been confusion since the big tax law was enacted over the deductibility of interest on home equity loans. NAR has been saying that the interest is still deductible for the part of the loan that’s used for home repairs, renovations, and additions. And that’s the correct interpretation, according to the IRS. The agency confirmed that in a memo about a week and a half ago.

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The part of the loan that’s used on the house to fix something or improve it remains deductible under the new tax law. Loan proceeds that are used for personal living expenses or anything not related to improving the home are not deductible.

The clarification is looked at in the latest Voice for Real Estate news video from NAR.

The video also looks at an important vote in the House on so-called drive-by lawsuits. These are lawsuits filed by people who are using accessibility requirements under the Americans with Disabilities Act to extract fees from small property owners. People are sending letters to property owners alleging they have an ADA violation and threatening a lawsuit unless the owner reaches a settlement with them. The person sending the letter typically doesn’t even say what the alleged violation is. The only way the owner can find out is by going to court. Most owners end up settling as the cheaper alternative and if there was ever any violation the owner never finds out what it is.

The House passed a bill requiring people who send these letters to identify what the alleged violation is and to give owners a chance to correct the problem before taking them to court. It’s a solution that addresses a clear abuse of an important law and NAR supported its passage. The bill still has to be taken up in the Senate.

Other topics in the video include NAR’s Commitment to Excellence initiative, which will roll out later this year, to give NAR members a chance to voluntarily assess how well they perform on key aspects of their business, including technology, the Code of Ethics, and the forms and contracts they use.

The video also gives an update on home sales—they’re off to a slow start this year, mainly because of inventory shortages in many markets, especially among lower-cost starter homes—and what’s happening in commercial real estate. Briefly, transaction volume on small cap properties is doing okay but volume on large cap properties is slowing down.

Watch and share video.

What’s the Right Way to Structure a Marketing Service Agreement?

Real estate practitioners entering into marketing service agreements with lenders, title companies, and other settlement service providers is a well-established practice, but a recent court decision shows why you have to structure these agreements the right way.

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An appellate court just ruled that it’s okay for a mortgage lender to refer business to mortgage insurers who are buying reinsurance from an affiliate of the lender, because the reinsurance is a bona fide service and the insurers are paying fair market rates for it. In other words, the arrangement doesn’t amount to a kickback.

Although the case involves a lender, insurance companies, and a reinsurer, the structure of the agreement is something that applies to the kind of marketing service agreements you might be involved in as an agent or broker. Any agreement you enter into with a lender or title company must be for actual services rendered and priced at fair market rates and not simply an arrangement for referrals.

How do you ensure a marketing agreement is appropriate under federal anti-kickback rules? The most important thing is to have it looked at by an attorney who’s familiar with the Real Estate Settlement Procedures Act, or RESPA. For a general idea, though, there are two tests you can apply:

1.Is the marketing fee you receive based on the number of referrals you make to the company, whether it’s a title company, a lender, or another service provider? If the fee corresponds to the number of referrals, you could be inviting a close look by the Consumer Financial Protection Bureau (CFPB), which is the federal agency that enforces RESPA.

2. If you have an arrangement to split costs on a joint project, like a newspaper ad, is the split reflective of what each of you get in return? For example, if you and the title company are splitting the cost of the ad down the middle, then half the ad should go to the title company and half should go to you. If the title company is covering 75 percent of the cost of the ad but only taking up 25 percent of the space, that split makes it look like the company is subsidizing 50 percent of the ad cost. Again, you could be inviting a close look by the CFPB.

Learn more about the recent court decision in the latest Voice for Real Estate news video from NAR. The video also looks at what was in the budget agreement enacted into law about two weeks ago. Among other things, the new law extends the tax deduction for mortgage insurance premiums and retains the prohibition on taxing forgiven mortgage debt as income. It also looks at why a recent Supreme Court decision on the regulation of bodies of water is important to your inbdustry.

Watch video now.

Marilia Cathcart, GRI, E-PRO, CHS, HPS

City and Coast Properties
Broker/Mortgage Broker
CA BRE License #00496226
717 Union St. Ste K
San Diego, CA 92101
NMLS Licenses #385315 & 244536
Notary Public -  CA - Comm. # 1916637
Phone: 619-300-5008

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Marilia Cathcart’s professionalism, knowledge of the real estate market, the loan process and her continuous vital support in all aspects of buying and selling a home were invaluable and very much appreciated. She is easy to work with, personable and made the whole loan process, as well as buying and selling our home very smooth and uncomplicated. It is wonderful to find someone like Marilia who will go the extra mile to assure peace of mind every step along the way. Her availability, and most of all her professionalism, generosity and kindness make her an outstanding representative of her profession. She took us under her wing and guided us through every detail to completion. My husband and I will not hesitate to recommend Marila Cathcart to anyone who is thinking of securing a loan or who is looking to buy or sell their home – she is the BEST. Oscar and Rita Carlson
Endorsement for Marilia Cathcart: In my career as a physician-scientist, I have lived in the northeast, southeast, northwest, and southwest USA, as well as in the middle of the country. As was my custom when moving to a new city, as soon as I knew I would be joining the faculty at UCSD, I flew to town, rented a car, and drove around until I found an attractive neighborhood near my future workplace. I then went to the nearest shopping area for that community, and walked into the realtor offices, tucked to the side of the grocery store. There she was, standing inside the door with a big smile to greet this weary traveler, the lady who would change my life for the better, Marilia Cathcart. She not only showed me houses while I was in town, but continued to send me pictures and information on prospects after I had returned to Seattle where I was finishing training. She paid close attention to what I said I was looking for, the health problems I needed to accomodate, and found many wonderful possibilities. When we found my dream house, she helped me see how I would be able to afford it by calculating how much the mortgage interest deduction would save me in taxes. She found me a banker that gave me the loans I needed, she found me wall-to-wall carpeting at wholesale prices, and she even fixed me up with a very attractive and nice young man I still think about. I ended up so crazy about that house that I wish I still lived there. When I had to move back east, she helped manage that California property for me, and when I finally needed to sell it, she handled that, too, in the middle of a real estate slump, no less. I had bought the house in 1977, and sold it in 1991, so this all may seem like ancient history, but is not the end of the story. When I retired in 2000 and decided to move back to San Diego County, she reprised her role as lifesaver. After looking at loads of houses both physically and now with computer assistance, on line, she found me another perfect house for my needs. She later helped me find a reliable outfit to refinance my loan when the interest rates dropped sufficiently. I have been in this home ten years now, and they will need dynamite to dislodge me. Marilia Cathcart is, quite frankly, the best real estate manager/seller/broker I have ever dealt with, and from coast to coast, there have been quite a few. She has a wonderful business sense, and is frugal with both the buyer's and the seller's money--I know because she has handled both for me. She is also a terrific "people person", with good instincts about what people want, and what will work for them. She was "networking" before the word was invented-- she would call it making friends, and putting people together who can help each other. Since she knows everybody, and never forgets a good guy, when you know Marilia, you potentially know a whole phonebook-full of good guys who can do anything from give you a mortgage loan to fix your sprinkler. As an added bonus, she is just a lovely human being, and a pleasure to know, even after nearly 34 years. Marilia Cathcart has my highest recommendation, without reservation. Charlotte B. McCutchen, M.D. Dr Charlotte B. McCutchen
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