Tag Archives: regulation

7 Common “Qualified Mortgage” Myths

Consumer Financial Protection Bureau logoThe CFPB’s Qualified Mortgage and Ability to Repay rules have been effective for just over a week, and there still seems to be confusion from both consumers and industry professionals.  While truthfully we will not know the full effects of these rules for some time, there has been a lot of speculation regarding how these rules will be a detriment to consumers.  In an attempt to dispel some of the rumors that have been floating around the industry, the CFPB released a three-page document that shoots down some of the myths surrounding the rule.

While mortgage professionals are surely intimately familiar with the rule by now, here are the guidelines for a Qualified Mortgage (QM) for the rest of our readers:

A Qualified Mortgage:

  • Cannot have excessive upfront points and fees, for example, points and fees greater than 3% on loan amounts equal to or over $100,000;
  • Cannot be longer than 30 years;
  • Cannot have certain risky features like interest-only payments;
  • Must fulfill one of these three criteria:
    • The monthly loan payment and other debt payments must not exceed 43 percent of the borrower’s monthly income; or
    • The loan qualifies for purchase by Fannie Mae or Freddie Mac, or is insured or guaranteed by a federal housing agency; or
    • The loan is made by a small lender that keeps the loan in portfolio

Now, just because a mortgage loan is not a “Qualified Mortgage” does not mean it is illegal or cannot be made. So long as the mortgage lender has considered the customer’s ability to repay, lenders can choose to not follow the QM guidelines and still make a loan based on their good faith determination. For more information on this, and other common QM and ATR misconceptions, click here to read the full CFPB article.

Maintaining Client File Confidentiality in the Real Estate Office

(Jeff Sorg – OnlineEd) – Oregon law requires that certain client information be maintained as confidential. The ability of associates in the same office or company to represent the seller and buyer in the same transaction as single agents with the full range of fiduciary obligations necessitates enhanced protection of client confidential information.

Every real estate office should clearly have policies and procedures in place that will fulfill the confidentiality requirements of both Oregon Revised Statutes and Oregon Administrative Rules. These confidentiality requirements can best be met by establishing two file systems:

  1. Client Files; and
  2. Transaction Files.

Client Files will start out as active and eventually become inactive. Generally, these files will contain such things as client contact information and profiles, financial information, a list of properties shown to the client and why they were liked or disliked, as well as other confidential client information.

Transaction Files contain all documents relating to the transaction itself. A single transaction file is necessary for each transaction reduced to writing – whether the transaction is accepted, rejected, expired, closed or failed to close.

The following are some of the more important issues that should be considered in developing file keeping procedures for client and transaction files:

  • The principal broker must maintain the active client files. If there is more than one principal broker in the office, then principal brokers should not have access to the active client files of any other principal broker.
  • Every principal broker should maintain active client file confidentiality by limiting access to the files and by providing secure locking storage facilities. If unlicensed personnel have access to the files to assist the principal broker in carrying out their duties, they should be instructed not to discuss the contents of the files with any other licensee, unless principal broker authorization is given.
  • Active client files should be maintained separately from inactive or closed transaction files. An active client file should be established once an agency relationship has been entered into with the client. All pertinent client information should be maintained in the active file.
  • The associate who established the agency relationship with the client may either maintain the active client files under the control of the principal broker or, with the principal broker’s permission, maintain a separate duplicate containing confidential information relating to the client or transaction. In either case, licensees in the office should not have access to the active client files of other licensees. If the licensee maintains the file, the licensee should ensure, at all times, that the files are secure and not available for examination by others in the office.
  • If there is any inadvertent or intentional violation of a client’s confidentiality by another licensee, this should be reported immediately to the principal broker and should be considered as grounds for licensee termination. In addition, the principal broker should immediately report the violation to the client. If the principal broker maintains the files in a central location, procedures should be in place to make sure that only the licensee who has the agency relationship with the client has access to the file.
  • All active client files should be marked or stamped Confidential.
  • The principal broker must maintain a secure file maintenance system for transaction files relating to the sale, purchase, lease option, or exchange of real property. These files are necessary for transactions that closed escrow and those that failed to close. Only licensees having an established agency relationship with the clients of a particular file should have access to that file. If unauthorized access does occur, the principal broker should be notified immediately. The principal broker has a duty to take disciplinary action, including termination of the offending licensee, and notify all clients who were subject to the unauthorized access.
  • Confidential client information should not be maintained in Transaction Files. Instead, all confidential client information should be maintained in Client Files. For storage purposes, both types of files are under the control of the principal broker. Most information provided by third parties to a transaction is not confidential information and should be filed in the Transaction File. All other information should be filed in the Client File.
  • Transaction and Client Files can be cross-referenced.
  • The preservation of client confidential information also means that discussion of any confidential client information with other licensees, office personnel, or third parties who should not have access to confidential client information is prohibited. Violations of this policy should be immediately reported to the principal broker for disciplinary action and immediate reporting to the clients who had their confidentiality violated.
  • All discussion concerning confidential information between agents and clients must be in an environment that allows for appropriate privacy. Conversations over speaker telephones, or with conference room or office doors open should not be permitted.
  • A system must be in place to protect the confidentiality of faxes and telephone messages. This means that confidential faxes should only be sent to a fax machine situated in a private environment.
  • The same office personnel or assistants cannot assist brokers who represent different clients to the same transaction.

The utmost care and attention should be given to make sure the fiduciary responsibility of confidentiality is preserved in real estate offices of all sizes. Clients and transactions can be damaged by the real estate broker’s failure to keep files and information confidential.

###

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was updated on December 19, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.


Advertising Rules for Oregon Real Estate Brokers, Principal Brokers, and Property Managers

(OnlineEd – Portland, OR) – Current Oregon Real Estate Agency advertising rules can be found in Oregon Administrative Rules (OAR 863-015-0125), which is reprinted below. For additional information in summary format, please be sure to read our other blog article, Important Advertising Points for Oregon Real Estate Licensees.

(This article was last upadted on July 5, 2019)

OAR 863-015-0125
Advertising

(1) As used in this rule, “advertising” and “advertisement” include all forms of representation, promotion and solicitation disseminated in any manner and by any means for any purpose related to professional real estate activity, including, without limitation, advertising by mail; telephone, cellular telephone, and telephonic advertising; the Internet, E-mail, electronic bulletin board and other similar electronic systems; and business cards, signs, lawn signs, and billboards.

(2) Advertising by a licensee, in process and in substance, must:

(a) Be identifiable as advertising of a real estate licensee;

(b) Be truthful and not deceptive or misleading;

(c) Not state or imply that the real estate broker or property manager associated with a principal real estate broker is the person responsible for operating the real estate brokerage or is a sole practitioner or principal broker;

(d) Not state or imply that the licensee is qualified or has a level of expertise other than as currently maintained by the licensee; and

(e) Be done only with the written permission of the property owner(s) or owner(s’) authorized agent.

(3) Advertising that includes the licensee’s name must:

(a) Use the licensee’s licensed name; or

(b) Use a common derivative of the licensee’s first name and the licensee’s licensed last name.

(4) The licensed name or registered business name of the principal real estate broker, sole practitioner real estate broker, or property manager must be prominently displayed, immediately noticeable, and conspicuous in all advertising.

(5) Except as provided in section (8) of this rule, a real estate broker must:

(a) Submit proposed advertising to the licensee’s principal broker for review and receive the principal broker’s approval before publicly releasing any advertisement; and

(b) Keep a record of the principal broker’s approval and make it available to the agency upon request.

(6) Except as provided in section (8) of this rule, a principal real estate broker:

(a) Is responsible for all advertising approved by the principal broker that states the principal real estate broker’s licensed name or registered business name; and

(b) Must review all advertising of a real estate broker or a property manager who is associated with the principal real estate broker.

(7) A principal real estate broker may delegate direct supervisory authority and responsibility for advertising originating in a branch office to the principal broker who manages the branch office if such delegation is in writing.

(8) A licensee associated with a principal real estate broker may advertise property owned by the licensee for sale, exchange, or lease option without approval of the principal real estate broker, if:

(a) The property is not listed for sale, exchange, or lease option with the principal broker;

(b) The advertising states that the property owner is a real estate licensee; and

(c) The advertising complies with all applicable other applicable provisions of ORS Chapter 696 and its implementing rules.

(9) Advertising in electronic media and by electronic communication, including but not limited to the Internet, web pages, E-mail, E-mail discussion groups, blogs, and bulletin boards is subject to the following requirements:

(a) Advertising must comply with all other requirements of this rule;

(b) Advertising by a licensee must include on its first page:

(A) The licensee’s licensed name as required in section (3) of this rule;

(B) The licensed name or registered business name of the principal real estate broker, sole practitioner real estate broker, or property manager; and

(C) A statement that the licensee is licensed in the State of Oregon.

(c) Sponsored links, which are paid advertisements located on a search engine results page, are exempt from the requirements contained in subsection (b) of this section if the first page following the link complies with subsection (b).

(d) E-mail from a licensee is exempt from the requirements of subsection (b) of this section if the licensee’s initial communication contained the information required by subsection (a).

(10) No advertising may guarantee future profits from any real estate activity.

(11) A licensee may use the term “team” or “group” to advertise if:

(a) The use of the term does not constitute the unlawful use of a trade name and is not deceptively similar to a name under which any other person is lawfully doing business;

(b) The team or group includes at least one real estate licensee;

(c) The licensee members of the team or group are associated with the same principal broker or property manager;

(d) The licensee members of the team or group use each licensee’s licensed name as required under section (3) of this rule;

(e) If any non-licensed individuals are named in the advertising, the advertising must clearly state which individuals are real estate licensees and which ones are not; and

(f) The advertising complies with all other applicable provisions of ORS Chapter 696 and its implementing rules.

Statutory/Other Authority: ORS 696.385

For more about real estate licensee advertising, please be sure to read our other blog article, Important Advertising Points for Oregon Real Estate Licensees.

 

 

###

OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

OnlineEd® is Oregon Real Estate Agency Certified Education Provider No. 1038