your cLieNts` mortgage optioNs

Transcription

REALTOR
UTAH
®
OFFICIAL MAGAZINE OF THE UTAH ASSOCIATION OF REALTORS® • first quarter 2012
EXPAND
your clients' mortgage options
Utah Housing grows programs to include repeat
buyers and those with low FICO scores
Legislative Recap: New
law changes deficiencies
Page 16
what happened to
the non-occupant
addendum?
Page 11
REALTOR
®
UTAH
Table of contents
PAGE
16
UTAH
REALTOR
®
first Quarter 2012
departments
8
11
14
16
23
2
The UAR is promoting the
improving market.
Happenings
Review Utah REALTOR®
events and learn about
the UAR’s new advertising
campaign.
economic
Housing market indicators are
improving: Foreclosures are
down, home sales are up, and
affordability is at record highs.
legal
Learn how to handle
disclosure issues when a client
hasn’t lived in a property.
ethics/legal
Be careful when advertising
mortgage products.
government affairs
See what bills affected
REALTORS® during the
legislative session.
quiz
Does your client have
authority to sell the home?
utah Realtor® • www.UtahRealtors.com
19
expand your clients'
mortgage options
Utah Housing Corporation is expanding its reach beyond first-time
buyers. A new set of programs will now provide 100 percent financing
for repeat buyers and borrowers with low credit scores.
REALTOR
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3
4
President’s Message
®
REALTOR
UTAH
®
president's message
UTAH
REALTOR
®
Utah REALTOR® magazine is published
by Bennett Communications, Inc.,
and is distributed to all members and
affiliate members of the Utah Association of Realtors®. The contents of
this publication are copyrighted 2012,
all rights reserved, and may not be
reproduced in any manner without
permission from the publisher and
the Utah Association of Realtors®.
Articles in Utah REALTOR® do not
necessarily reflect the views or policies
of the Utah Association of REALTORS®.
Address corrections for members of
the Utah Association of REALTORS®
should be sent to your local board of
REALTORS®.
2012 UAR President
Lori Chapman, CRS, GRI
UAR Chief executive officer
Christopher J. Kyler, J.D.
Executive editor
Deanna Devey, [email protected]
Utah Association of Realtors®
230 W. Towne Ridge Parkway, Suite 500
Sandy, UT 84070
(801) 676-5200 · (800) 594-8933
www.UtahRealtors.com
Publisher
Matt Bennett, [email protected]
EditorS
Jeanette Bennett, [email protected]
Greg Bennett, [email protected]
ART DIRECTOR
Leah Aldous, [email protected]
Advertising Representative
John Stemmons
ADVERTISING INFORMATION
(801) 802-0200
424 W. 800 North, Suite 201
Orem, UT 84057
UTAH
REALTOR
®
a changing
market
by lori chapman, CRS, GRI · 2012 UAR President
T
he market is changing. That’s what I’m seeing in my
own business and that’s what I’m hearing from you
as I travel around the state. Sales are picking up, inventory is down and prices are starting to stabilize.
Those are the messages I’ve been spreading in coordination with the Utah Association of REALTORS®’ winter/
spring advertising campaign.
In February, the UAR launched a series of five TV ads to
help spread the message that Utah real estate is improving and to create confidence
in home buying. In addition to the ads, we’ve been working with statewide media
outlets to spread this message in the news.
We encourage you to also share the good news with your own clients. The TV
commercials are available for download at UtahHousingTracker.com, and the UAR
regularly posts housing news on that same site. Please use these resources to extend
the campaign beyond its official conclusion in April and, hopefully, increase your
business.
I think we’re already seeing the benefits of both this campaign and the improving
market. This year, statewide home sales are up 13 percent compared to last year
and the supply of inventory now represents seven months. In many areas, the sales
are even higher and markets are becoming more favorable to home sellers — a
trend we have not seen in some time.
In fact, based on the improving numbers, Realtor.com recently named Salt Lake
City as the sixth best market in the country in which to invest in real estate. The
organization built the top 10 list by analyzing housing inventories, price trends and
unemployment rates.
Along with national recognition and improving market fundamentals, home sales
should also be helped by the fact that more loan options will be available to buyers
who have been hit by the economic downturn.
Utah Housing Corporation recently announced that it now offers down payment
and closing cost assistance to repeat buyers and those with less-than-perfect credit.
This is great news, and I hope you will share the information with your clients.
More details about the programs are available on page 19.
In addition to promoting the improving market, the UAR has been busy at the
Utah Capitol. After a busy 45 days and many hours spent reviewing documents, the
UAR successfully promoted REALTOR® interests with the passage of several bills.
A complete discussion of the legislation and its impact on REALTORS® is available
on page 16.
The UAR Forms Committee has also been hard at work. In an effort to reduce
REALTORS®’ risk of being sued, the committee eliminated the Non-occupant of
Property Addendum. For a complete discussion on why the change was made, its
benefits to REALTORS® and what to do in the form’s absence, see page 11.
We’ve had a busy first quarter, and I would like to thank each of the members of
my team for their work on behalf of the Association. Our Executive Committee,
committee chairs and committee members have donated countless hours on our
behalf, and I truly appreciate their commitment and service.
I also thank you for your efforts on the front lines to promote our profession and
our clients. It is an honor to serve you this year.
www.UtahRealtors.com • utah Realtor® 3
REALTOR
®
UTAH
happenings
UTAH
REALTOR® Happenings
REALTOR® Day at the Legislature
A
bout 500 REALTORS® gathered in Salt Lake on Feb. 22
for the UAR’s annual REALTOR® Day at the Legislature
event. The day started with speeches
from Utah Gov. Gary R. Herbert, U.S.
Rep. Rob Bishop and U.S. Sen. Mike
Lee. Other highlights included a caucus
night update from Utah’s Republican
and Democratic Party chairs and an issues briefing on current legislation.
One particularly significant bill reduced the amount of time banks have to
go after a deficiency judgment following
a short sale. REALTORS® talked about
this issue and others upon gathering at
the Capitol Rotunda to lobby their state
legislators. To learn more about the real
estate-related issues that came up this
legislative session, see the government
affairs update on page 16.
Washington County REALTORS® mingle before
REALTOR® Day. Front row: Vardell Curtis, left,
Lonnie Thamert and Cindy Campbell. Back row:
Rand McCullough, left, Larry Thamert, Jack Scott
and Lori Chapman.
Rep. Tim Cosgrove, left, talks to UAR Vice President Rick Southwick.
Lisa Jungemann, left, Sandy Day, Sharon Spratley
and Bill Heiner stand in the Utah Capitol Rotunda.
Former UAR President Kenny Parcell, left, and Gov.
Gary R. Herbert, right, present Dan Simons Sr. with
the 2011 REALTOR® Active in Politics award.
4
Northern Wasatch REALTORS® stand on the steps in the Utah Capitol during REALTOR® Day at the
Legislature.
Scott Quinney, left, Shawn Janke, Martell Dansie, Gary Madsen and Ed Tugaw at REALTOR® Day at the
Legislature.
REALTOR
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REALTOR® Joan Taylor, left, talks with Sen. Pat Jones
in the Capitol Rotunda during REALTOR® Day.
®
REALTOR
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happenings
UTAH
REALTOR® Happenings
2011 National Association of REALTORS®
President Ron Phipps, right, presents the
President’s Cup to Kenny Parcell, representing
Utah, Ronda Tompers, representing Montana, and
Lorna Johnston, representing South Dakota.
UAR wins
awards
The Utah Association of REALTORS® ended 2011 on a high note,
winning awards for both the Association’s advocacy and communication.
The first award was the President’s
Cup from the National Association
of REALTORS®. Only three states
earned the honor, which required
associations to meet three advocacy
and three RPAC fundraising goals.
Utah was the first state to reach the
goals, followed by Montana and South
Dakota. The trophy was presented to
2011 UAR President Kenny Parcell
during a prestigious ceremony at the
National Association of REALTORS®
convention in November.
The second award was for the
UAR’s Podcast Connection. The
Greater Salt Lake and Utah County
chapters of the Public Relations Society of America gave the Golden Spike
Award for the UAR’s video newsletter
series that was launched in 2011.
Save
the
date
UTAH
REALTOR
®
The UAR’s production team films one of the
commercials used in the UAR’s ad campaign.
Right: UAR President Lori Chapman made an
appearance on ABC 4’s "Good Things Utah"
in March. Chapman, who is seated on the left
side of the table, talked about why now is a
good time to buy a home.
UAR launches
TV ad campaign
T
he Utah Association of REALTORS® has launched a series
of TV commercials to educate
consumers about the positive changes in Utah’s housing market.
The five commercials feature a spokeswoman who emphasizes the unique
attributes of Northern Utah, Wasatch
Front, Utah Valley, Wasatch Back and
Southern Utah real estate.
“The goal of the campaign is to create
confidence in Utah home-buying,” said
UAR President Lori Chapman. “We
wanted to emphasize the positive things
that are happening locally and differentiate our markets from the negative national picture that we always hear about.”
Plan now to attend two can’t-miss UAR events:
the Rally Ride for RPAC and the annual convention.
From June 6-8, members who donate $1,000
or more to the REALTORS® Political Action
Committee are invited to participate in a motorcycle tour of Utah. Participants will drive through
Utah’s scenic country, including Zion and Bryce
Canyon national parks, while meeting new con-
The TV ads, which have coverage
statewide, launched during the Super
Bowl and have continued through
April. The ads are estimated to reach
99 percent of Utah adults ages 25-64
an average of eight times. The ads also
appeared during the Academy Awards,
local news and prime time.
The campaign website is UtahHousingTracker.com. The site includes
videos of the ads that are available for
download, a housing news blog and
updated real estate statistics. As part
of the campaign, the UAR has also
focused on media outreach, with UAR
President Lori Chapman appearing on
several news programs.
tacts. This is a great way to network while supporting a critically important cause. Participants
are welcome to ride on a motorcycle or in a car.
REALTORS® will also want to keep Sept. 11-14
open for the annual convention. This year’s event
will take place at the Dixie Center in St. George
and will feature education on topics relevant
to the current market. Keep watching for more
information at UtahRealtors.com.
REALTOR
®
UTAH
happenings
Local Associations on the Move
Local associations install 2012 presidents
The Utah Association of REALTORS® congratulates the newly installed 2012 presidents of the 14 local REALTOR® boards and
associations in Utah.
Brigham
Tremonton:
Gary Madsen, Coldwell
Banker Tugaw
REALTORS®, Tremonton
Park City:
Tami Whisker,
Prudential Utah Real
Estate, Park City
Cache/Rich:
Carbon/Emery:
Ben Brown, Cornerstone
Real Estate, Logan
Deloris Markakis, Etzel
Realty, Price
Salt Lake:
Tooele County:
Donna Pozzuoli,
Prudential Utah Real
Estate, North Salt Lake
Melodie Waldron,
RE/MAX Metro, Bountiful
Central Utah:
Brayden Gardner, ERA
Brokers Consolidated,
Richfield
Uintah Basin:
Caro Norton, Busy Bee
Realty, Vernal
Grand/San Juan:
Iron County:
Joe Kingsley, Arches
Realty, Moab
Dave Taylor, ERA Realty
Center, Cedar City
Utah County:
Wasatch County:
Stephanie Vincent,
Prudential Utah Elite,
Orem
Lisa Christen, Century 21
Davis/Coleman,
Heber City
Northern
Wasatch:
Shawn Janke, Keller
Williams Success Realty,
South Ogden
Washington
County:
Cindy Campbell, ERA
Brokers, St. George
Cache/Rich Association of REALTORS®
Salt Lake Board of REALTORS®
On Jan. 18, the Salt Lake Board held
its annual Forecast Breakfast at the
Little America Hotel in downtown Salt
Lake City. James Wood, director of the
University of Utah’s Bureau of Economic and Business Research, predicted that
Salt Lake County home sales in 2012
would rise 15 percent to 20 percent
compared to levels in 2011.
6
He also pointed out that continued
foreclosures and short sales would weaken home prices by another 3 percent to
5 percent. However, Wood said prices
should stabilize by the second half of
the year. The Utah economy, he said,
showed clear signs of recovery, which
should give a boost to the real estate
market in 2012.
REALTOR
UTAH
Pictured from left: Dave Frederickson, president-elect of the Salt
Lake Board of REALTORS®; Donna Pozzuoli, president of the
Salt Lake Board of REALTORS®; James Wood, director of the
University of Utah’s Bureau of Economic and Business Research;
and Kim Casaday, president of Zions Mortgage Co.
To start off the new year doing something new, the Cache/Rich Association
of REALTORS® held its first-ever
Affiliate Trade Show. Forty of the Association’s affiliate members participated in the event, which was held during
the January Business Meeting at the
Riverwoods Conference Center. The purpose of the trade show was to
connect all members of the Association
and give affiliates the chance to promote their businesses. Because CRAR
added 15 new affiliates during 2011,
the face-to-face meeting was valuable
so REALTORS® could learn about
the services these diverse companies
provide.
Everyone enjoyed a fabulous lunch,
played some games and entered prize
drawings. CRAR looks forward to making this an annual event!
®
REALTOR
UTAH
®
happenings
Washington County Board
of REALTORS®
T
here was no shortage of energy
or excitement in Southern
Utah as REALTORS® bade
farewell to 2011. October was
the first quarter of the fiscal year and the
Board’s newly installed officers jumped
right in to start their terms. Elected
officers and recently appointed committee chairs met at the Ledges Resort for
orientation and training. President Cindy
Campbell stressed her theme, “We Are
Family,” as everyone learned how each of
the committees could work together and
support each other.
The monthly board luncheons continued during the fourth quarter. October
featured Dixie Regional Medical Centers CEO Terri Kane while November
featured a soils expert from Rosenberg
& Associates who taught the importance
of due diligence relative to soils testing.
In December, the board had an old-
fashioned Country Christmas, which
featured recording star Eric Dodge.
Washington County REALTORS®
wrapped up the year in December with
two days of educational instruction by
Linda Leavitt, featuring the Division of
Real Estate’s new member course. Although 2011 has concluded, the Board
is ramped up and ready to go for 2012.
Park City Board of
REALTORS®
Lori Chapman, UAR president, attended the Park City Board of REALTORS® January luncheon and installed
the 2012 officers and board of directors. Tami Whisker is the new president and Jeff Spencer is presidentelect. Additional officers and directors
included Heather Peterson, secretary;
Marcie Davis, treasurer; Patrick
Giblin, past president; Marc Coulam,
director; and Deb Hartley, director.
During the luncheon, the Philanthropic Foundation made a donation
to the Children’s Justice Center of Wasatch County from the proceeds of the
Philanthropic Golf Tournament. The
home-like facility, which helps children feel safe while being interviewed
about alleged abuse, received $23,500.
Peace House, a charitable organization
dedicated to ending family violence
and abuse, received $113,780 from
proceeds of the Luxury Home Tour
and Auction.
Tooele County
Association of
REALTORS®
Utah County Association of REALTORS®
If you are looking for REALTOR®
pride, look no further than the agents
in Utah County. The 2012 theme for
the Utah County Association of REALTORS® is “Proud to be a REALTOR®,”
which was selected by 2012 President
Stephanie Vincent.
“One of the main things REALTORS® do is protect personal property
rights,” Vincent said. “Being involved
politically on the local, state and national levels translates into thousands
of dollars of savings each year for every
UTAH
REALTOR
®
property owner. I’m proud to be part
of that!”
Take a look at what other UCAR
members are proud of by viewing the
“Proud to be a REALTOR®” video at
tinyurl.com/ProudRealtors.
UCAR REALTORS® and affiliates
have been proudly wearing buttons
showing their support. This year’s RPAC
supporters also have the opportunity
to earn “Proud to be a REALTOR®” or
“Proud to Support the REALTORS®”
t-shirts, polos and jackets.
Pictured from left: Marta Johnson, DeAnn
Christiansen, Mike Warner, Jeff England, Bo
Wilkinson, Heather McClatchey, Chris Ferguson, Melodie Waldron, Michelle Warner, Dori
Warner, Kristy Gustafson and Laney Riegel.
Members of the Tooele County Association of REALTORS® got together
in December to spread holiday cheer
at the Heritage Path and Clark Clove
communities in Grantsville. Wreaths
were donated and hung on each door
along with Christmas lights.
The Association also welcomes new
office administrator Tamara Cafe.
Thank you to Diane Bevan who previously served in this position.
REALTOR
®
UTAH
economic
economic
Utah foreclosure
rate heads down
T
loans was also lower than the national
rate, with 5 percent of Utah mortgages
more than 90 days late compared to 7.2
percent for the U.S.
The findings were similar to a separate
report from LPS Applied Analytics. In
that study, 2.1 percent of Utah loans
were in foreclosure and 6.3 percent
were seriously delinquent at the end of
February. Again, the national rates were
higher at 4.1 percent for foreclosures
and 7.6 percent for delinquencies.
At 8.4 percent, Utah had the 13thlowest percentage of non-current loans
compared to other states, according
to LPS. Utah’s combined foreclosure
and delinquency rate fell more than 14
percent from the prior February. That
rate peaked in February 2010 when 10.6
percent of Utah loans outstanding were
not current.
he foreclosure situation in
Utah is improving. That’s
according to two new reports
that show a decline in the
state’s rate of problem loans.
Among states, Utah had the 14th-lowest percentage of loans in the foreclosure process, according to a CoreLogic
report on February 2012 data.
At that time, 1.8 percent of Utah
homes with a mortgage were in the
foreclosure inventory compared to 3.4
percent nationally. CoreLogic, a data
and analytics company, defines foreclosure inventory as the stock of homes in
the foreclosure process.
Compared to a year ago, Utah’s foreclosure inventory declined 0.8 percent. Nationwide, the decrease wasn’t as large, with
foreclosure inventory down 0.2 percent.
Utah’s share of seriously delinquent
8
The St. George and Provo metropolitan areas have been added to a
list that tracks housing markets on the
upswing. The National Association of
Home Builders has included the cities
on its April Improving Markets Index,
which identifies metropolitan areas
that have had increases in housing
permits, employment and house prices
for at least six consecutive months. Since the trough in March 2009, the
index says St. George home-building
permits have grown 3.9 percent. The
index also says home prices have increased 3.5 percent since their trough
in May 2011. Finally, St. George employment has grown 1.5 percent from
its trough in December 2009.
The Provo statistics also signaled
improvement. From their trough,
building permits have grown 5
percent, prices have increased about
1 percent and employment has risen
5.1 percent.
The Home Builders Association
analyzes independent monthly data
to track the improvements. The
organization uses employment figures
from the Bureau of Labor Statistics,
house price appreciation information
from Freddie Mac and single-family
housing permit growth from the U.S.
Census Bureau.
Seventy-two percent of American homeowners say they are
satisfied with owning a home. Seventy-six percent say price
appreciation is not their primary reason for being satisfied.
ª
Source: HomeGain 2012 Homeownership Satisfaction Survey
REALTOR
UTAH
Fast
Fact
st. George and Provo make national
list of improving
housing markets
®
REALTOR
UTAH
®
economic
c
Housing
Top remodeling projects
affordability for resale value
continues to
set records
W
Housing affordability in the U.S.
has reached new highs, says the National Association of Home Builders
and Wells Fargo. The groups report
affordability in the fourth quarter
was at its highest level on records
going back 20 years.
The Housing Opportunity Index
shows nearly 76 percent of all new
and existing homes sold in fourth
quarter 2011 were affordable to
families earning the U.S. median
income.
The story was similar in Utah,
where most metropolitan areas enjoyed even higher affordability.
In Salt Lake, 81 percent of all
homes sold were affordable to
families making the median income
of $70,400. The only time housing
has been more in reach was in 1993
when the indicator went as high as
83 percent.
In the Provo-Orem metro, affordability was the same. Eighty-one
percent of homes sold were affordable to families making the median
income of $66,200.
Ogden-Clearfield had the state’s
highest affordability. During the
fourth quarter, nearly 89 percent of
all homes sold were affordable to
families making $70,600.
In St. George, the final Utah metro
area covered, about 76 percent of
homes sold during the final three
months of 2011 were considered affordable based on a median income
of $56,300.
The affordability figures are in
stark contrast to those during the
housing boom. Five years ago, only
about 30 percent of homes sold were
affordable to a Salt Lake-area family
making the median income. UTAH
REALTOR
®
hen it comes to selling a
home, curb appeal really
does make a difference,
according to a survey from
Remodeling and REALTOR® magazines. For the fourth year in a row, the
Cost vs. Value Report found that exterior remodeling projects tended to have
the greatest percentage of their costs
recouped upon sale of the home.
The 2011-2012 report looked at 35
midrange and upscale remodeling projects in 80 U.S. cities, with REALTORS®
providing information about local markets and homebuyer preferences.
Like in previous years, the most profitable projects were exterior replacements.
In Salt Lake, seven of the top 10 costeffective projects dealt with
siding, garages, windows
and doors.
The No. 1 remodeling
project in Utah’s capital
was a midrange garage
door replacement, which
recouped nearly 72 percent of its $1,380
cost. The only other project to recoup
70 percent or more was a midrange
vinyl siding replacement, with a price
tag of $10,197.
Coming in third was an upscale
fiber-cement siding replacement that
recouped more than 68 percent of its
$13,230 cost.
Project No. 4 was an exception to the
exterior trend, with a minor kitchen
remodel receiving more than 66 percent
of its $18,732 cost upon sale. Rounding
out the top five was a steel entry door
replacement that brought back nearly
66 percent of its $1,099 cost.
The least cost-effective project in Salt
Lake was the installation of a back-up
power generator. Only about 33
percent of the $13,729 cost
would come back. Another
project that ranked low was
a sunroom addition, with
only about 35 percent of the
$69,468 cost recouped.
c
Fiserv: Prices to increase by end of summer
While home prices remained weak in
2011, reduced supply and increased demand suggest that trend will not continue.
A report based on the Fiserv Case-Shiller
Indexes predicts Utah home prices will
have increased by the end of summer,
with the state having the seventh-highest
appreciation in the country.
The organization says from third
quarter 2011 to third quarter 2012,
Utah home prices will have increased
1.5 percent. During that same period
from 2012 to 2013, Fiserv says values
will be up 7.4 percent.
Local areas have varying forecasts.
Fiserv says St. George will have the
state’s strongest growth. By July, prices
are expected to increase 4 percent from
the previous year. Coming in second is
the Logan metro area at 2.3 percent. In
Ogden-Clearfield, Provo-Orem and Salt
Lake, prices are expected to see slight
increases, with no major Utah metro
area forecasted to have a price decline.
REALTOR
Utah home sales rise for
ninth consecutive month
U
tah home sales rose for the
ninth consecutive month
in February, according to a
new report from the Utah
Association of REALTORS®. Closed
sales were up 17.5 percent compared to
last year. Utah REALTORS® sold 2,342
homes, making this the strongest February since 2007.
Since the beginning of the year,
REALTORS® have sold about 500 more
homes than they did last year during
January and February — an increase of
13 percent.
Contracts signed to buy properties
also signaled a strong start to the spring
buying season. Pending sales increased
34.1 percent, which should result in
sales gains in March and April. With
3,257 contracts signed, this was the
highest number of February pending
sales in five years.
Meanwhile, the inventory of available
homes dropped sharply. The number
of homes on the market fell nearly 25
percent. With 19,891 homes available
for sale at the end of February, that put
®
UTAH
economic
ª
Realtor.com
recently named Salt Lake City
as the sixth best market
in the country to invest in real
estate.
inventory under the 20,000 mark for the
first time in five years.
That amounted to seven month’s supply of inventory, down about 33 percent.
Last year, it would have taken 10.4
months to sell all existing inventory. The
last time homes were absorbed this fast
was in June 2007.
Study
Best day to
list is Friday
Friday is the clear winner for the
best day to put a home on the market, according to real estate brokerage Redfin. The company study said
homes listed on Friday are 12 percent
more likely to sell in 90 days and are
toured 19 percent more.
Friday is likely the best day to list
because buyers typically tour homes
during the weekend. Redfin said
Saturdays and Sundays have 2.5 times
the number of tours compared to
weekdays. As buyers make weekend
plans, it seems the newly listed homes
are fresh on their minds, the company
said.
The study found that 28.9 percent
of homes listed on a Friday sold in 90
days or less. The second-best day was
Thursday, which had 27.9 percent of
listings sell within that timeframe. The
worst day was Sunday, followed by
Saturday, with 21.9 and 23.9 percent of
listings sold within 90 days.
Utah home values see
signs of stabilization
10
While the U.S. saw home
prices drop 2 percent in
February 2012, Utah
prices were up 2.4
percent compared to the
same month a year prior.
CoreLogic’s February Home Price Index
the fourth highest appreciation in the
country. For the U.S., prices were down
0.8 percent when distressed sales
were excluded.
“The continued strength of sales
activity and tightening inventories in
many markets are early and hopeful signs that prices will continue to
stabilize and improve in the coming
months,” said Anand Nallathambi,
president and CEO of CoreLogic.
The report measures changes in
single-family attached and detached
home values. The index looks at repeat
sales and tracks increases and decreases in sales prices for the same homes
over time.
REALTOR
UTAH
T
here was good news in February for statewide home
prices. While the U.S. saw
home prices drop 2 percent in
February 2012, Utah prices were up 2.4
percent compared to the same month a
year prior, according to CoreLogic’s February Home Price Index. Compared to
other states, Utah had the 10th highest
appreciation.
Excluding distressed sales, such as
foreclosures and short sales, the situation was even better. Utah home prices
were up nearly 4 percent in February
compared to last February, giving Utah
®
REALTOR
UTAH
®
Legal
Even if a seller hasn’t lived in a
property, pertinent disclosures need
to be provided to the buyer.
Where’s the Nonoccupant Addendum?
What to do when a seller hasn’t lived in the property
BY Curtis A. Bullock, J.D. · Salt Lake Board of REALTORS® chief executive officer
M
any years ago, the Utah
Association of REALTORS® Forms Committee adopted the Nonoccupant of Property Addendum to
the Real Estate Purchase Contract. At
that time, the committee designed the
form to be used in a very narrow set of
circumstances.
One example would be a seller who
recently inherited a home and decided
to sell it. The seller would likely not
have any knowledge concerning the
condition of the property because the
UTAH
REALTOR
®
seller had never lived in it. In this situation, the seller would provide the buyer with
a copy of the Non-occupant Addendum.
In that addendum, the seller contractually removes her obligation to provide the
buyer with a copy of the Seller’s Property Condition Disclosure form as required in
Section 7(a) of the REPC. The committee intended the Non-occupant Addendum
to be used in cases like this.
Over the years, the use of this form slowly deteriorated into something that was
not anticipated. Many listing agents misunderstood the form, which lead to its frequent misapplication.
As a result, the UAR Forms Committee became concerned about the potential
liability for members and their clients resulting from the improper use of this addendum in today’s real estate market.
Let’s review one of the most basic principles of disclosure law here in Utah. If you
read Section 10.3(a) of the standard REPC, you will see a statement that concisely
REALTOR
(
Legal Hotline
12
1
Sellers used the
Non-occupant
Addendum too
frequently
The first thing I’ve noticed
over the years is that sellers would often
mistakenly believe they could hide behind the Non-occupant Addendum and
thereby not provide any disclosures if the
seller had simply not lived in the property
or hadn’t lived in the property for a short
period of time.
A common example was when an investor purchased a property, fixed it up and
then listed it for sale. In that scenario,
the seller would often incorrectly use
the Non-occupant Addendum and not
provide any disclosures to the buyer. The
listing agent would believe that because
the investor had not lived in the property,
the Non-occupant Addendum was appropriate. This is not correct, because the
seller, by fixing up the property, surely had
knowledge of its condition.
Another common misuse of the form
was in the case of a landlord who was selling his rental property. The listing agent
would gravitate toward using the Non-occupant Addendum because the seller had
not lived in the property. But again, this is
not the right situation in which to use the
form. Even though the seller had not lived
in the property, he may have been aware
of its condition.
Whether the seller has lived in the
property is not the question to ask. The
important question is whether the seller
has knowledge concerning the condition of the property. If the seller has any
knowledge about the condition of the
property, then the SPCD form should be
provided to the buyer. (See Sections 7(a)
and 10.3(a) of the standard REPC.)
In other words, even if a seller has not
lived in the property, the seller is not off
the hook from providing an SPCD form
to the buyer. The seller should simply fill
If the seller is aware of
a defect on the property
that the buyer would not
be able to reasonably
discover when doing
her inspection, then the
seller must disclose the
defect.
out the SPCD to the best of his or her
knowledge.
2
Sellers weren’t
providing other
required
disclosures
The other problem that
came up with use of the Non-occupant
Addendum was the seller would
believe that by using that form none
of the disclosures listed in Section 7 of
the REPC were required.
Again, this isn’t correct. The Nonoccupant Addendum only removed the
seller’s obligation to provide an SPCD
form to the buyer as referenced in
Section 7(a). But what about Section 7
(b), (c), (d), (e), (f), (g) and (h) of the
REPC?
Sellers would often forget to provide these other important disclosures
to the buyer (e.g., the Commitment
for Title Insurance and a copy of any
existing leases on the property). These
items should always be provided to the
buyer.
With all that in mind, the Forms
Committee voted to remove the Nonoccupant Addendum from the UAR
forms library because of its frequent
misuse. The reasoning was that in 90
percent of transactions, an SPCD form
should be provided.
Call the UAR Legal Hotline
for more information on
real estate-related legal issues
801-676-5211
Hours: 8:30 a.m. – 4:30 p.m. Monday, Wednesday and Friday
REALTOR
UTAH
describes what is required of sellers. It
reads, “Seller agrees to disclose in writing
to Buyer defects in the Property known
to Seller that materially affect the value
of the Property that cannot be discovered
by a reasonable inspection by an ordinary
prudent Buyer.”
The law on this topic is quite simple.
If the seller is aware of a defect on the
property that the buyer would not be able
to reasonably discover when doing her
inspection, then the seller must disclose
the defect.
There is nothing that talks about
whether the seller has occupied or lived in
the property. Whether the seller has lived
in the property may largely be irrelevant.
The more important question is whether
the seller has knowledge about the condition of the property.
With that legal principle in mind, let’s
consider how the Non-occupant Addendum has been misused.
®
UTAH
LEgal
®
REALTOR
UTAH
®
But what should be done in the other
transactions? What happens when a
seller hasn’t lived in the property and really does not have any knowledge about
its condition, such as in the case of an
REO property or an inheritance?
The answer is simple. In those rare
circumstances, all you will need to do is
counter the buyer’s offer. Include on the
counteroffer form a simple statement
that says something to this effect, “Seller
will not provide a Seller’s Property Condition Disclosure form because Seller
legal
has not occupied the Property and does
not have sufficient personal knowledge
about its condition.”
If you are dealing with an REO property, you will notice that most banks
already include similar language in their
own bank addendum.
In summary, remember that in the
majority of your transactions, your seller
will need to fill out the SPCD form,
regardless of whether the seller has lived
in the property or not.
Across the country, real estate litiga-
tion often involves this issue. The best
way to avoid having your client named
a defendant is to advise him or her to
accurately fill out the SPCD form for
the buyer. On occasion, you will run into
an exception to this general rule, but in
those cases the solution is very simple as
explained above.
If you keep these basic principles in
mind as you represent your clients, you
will minimize risk and ensure that your
client participates in a trouble-free transaction.
Proper function of
referral-only brokerages
BY Brad Baldwin · UtahRealEstate.com legal counsel
R
EALTOR® members pay
board dues based on the
number of licensed agents
affiliated with their office.
Membership includes many privileges
including the rights to MLS membership, the key box program, education,
government involvement, legal resources (including forms and contracts)
and enforcement of the REALTOR®
Code of Ethics.
During the past couple of years,
many REALTOR® members have organized separately owned “referral-only
brokerages” that are owned directly or
indirectly by the REALTOR® member.
The purpose is to provide an opportunity for licensed real estate agents who
are not active in the business to maintain an active license with the state of
Utah and to affiliate with a licensed
broker. The referral-only brokerage
provides a source of referrals to the
REALTOR® member.
The referral-only brokerage is not a
member of a REALTOR® board, and
the referral brokerage and its agents
do not sign the Code of Ethics or pay
REALTOR® dues. These agents cannot
join or benefit from MLS membership.
REALTOR®-owned, referral-only
brokerages are allowed under the
UTAH
REALTOR
®
REALTOR® bylaws. The member does
not pay board or MLS dues for agents
in the referral-only brokerage since
these agents only refer business to the
REALTOR® member.
Agents in the referral brokerage
may be paid a referral fee due to their
licensed status; however, NAR bylaws
say, “agents in the referral brokerage owned by a REALTOR® member
may not be engaged in listing, selling,
managing, counseling or appraising real
property.”
Referral-only agents may not use
UAR copyrighted forms and contracts,
may not use the NAR GRI designation or REALTOR® “R” trademark in
advertising, and may not proclaim to be
a REALTOR®. The referral-only agent
also does not have access to the many
other services provided by the MLS
and local, state and national REALTOR® associations.
If these agents are doing more than
referring, the REALTOR® member
may be billed for them because they
are actively engaged in real estate and
will be deemed part of the REALTOR®
member’s office.
In addition, agents in referral-only
brokerages are not allowed to join
the MLS. Their contact information
cannot be included in any MLS listing
since the MLS serves only REALTOR®
members and referral-only agents do
not pay to help operate the MLS.
There is a legitimate business reason
for a REALTOR® member to own a
separate referral brokerage. It allows
agents to keep their license and refer
business to the REALTOR®. It is not
legitimate, however, for agents in a
member-owned, referral-only brokerage to actively list and sell properties
or represent buyers while at the same
time avoiding board or MLS dues.
They do not help support the board or
the MLS, and they are not subject to
the REALTOR® Code of Ethics.
If you are involved in a transaction
with an agent who is licensed with a
member-owned, referral-only brokerage, and the referral-only agent is actively working on the transaction (e.g.,
taking the listing, having signage on the
property, using key box access, negotiating, advising, preparing documents,
etc.), please contact your local board
or the MLS. We want to accommodate
legitimate REALTOR®-owned referral
brokerages while preventing abuse of
these rules for the members who pay
to operate the various REALTOR®
membership services.
REALTOR
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UTAH
ethics/legal
be careful with
consumer
communications
New FTC rule applies to advertising of mortgage products
BY Peter J. Christensen, J.D. · UAR legal counsel
T
he Federal Trade Commission has a new rule that
affects the way real estate
professionals do business.
The FTC’s new rule is known as MAP:
“Mortgage Acts and Practices – Advertising.”
The MAP rule was designed to regulate unfair or deceptive practices in the
advertisement of mortgage products.
It is not, however, limited to mortgage
licensees. Any professional who advertises mortgage credit products to a
consumer must comply with this rule,
including real estate agents.
The rule applies to any “commercial
communications” about mortgage
credit products. This includes any oral
or written statement designed to create an interest in purchasing a mortgage credit product. That is any form
of credit offered to a consumer and
secured by the consumer’s dwelling.
Among other things, the rule prohibits
misrepresentations and introduces a
record-keeping requirement.
What’s Covered?
code of ethics cycle ends this year
REALTORS® should be aware that 2012 is the last year of the National Association of REALTORS®’ four-year ethics
training cycle. That means if you have not taken an approved ethics course in the last four years, you will need to do
so by the end of the year. If you haven’t already satisfied this requirement, check with your local board for class times.
Don’t wait until the last minute when classes are likely to fill up quickly.
REALTOR
UTAH
14
®
REALTOR
UTAH
®
ethics/legal
The MAP rule was designed to regulate unfair or
deceptive practices in the advertisement of
mortgage products. It is not, however, limited
to mortgage licensees.
The rule applies to real estate professionals whenever they give a consumer any
information about the terms or details of a specific mortgage product. Something as
simple as providing a consumer with a rate sheet or application from a lender would
fall under this rule. That’s because rate sheets show rates for specific loans while
applications are specific to a particular loan.
However, general information is not covered under this rule. For example, a real
estate professional would not need to comply with the rule’s requirements when
providing information about current market rates or types of loan products on the
market.
Just keep in mind that the communication must be general. If it includes information about specific mortgage products from particular lenders, this rule will apply.
MAP Requirements
If a communication does fall under the MAP rule, there are a couple requirements to follow.
First, the communication must not contain any misrepresentations. The FTC has
indicated that providing a disclaimer in any commercial communication may help
correct any misleading impressions, but only if it is prominently displayed and sufficiently clear.
The National Association of REALTORS® has provided the following generic
disclaimer that could be included with any commercial communication covered by
MAP:
“This communication is provided to
you for informational purposes only
and should not be relied upon by you.
{Name of brokerage} is not a mortgage
lender so you should contact {entity
providing mortgage product(s) indentified} directly to learn more about its
mortgage products and your eligibility
for such products.”
A disclaimer like this should be
customized and added to any communication that could fall under the MAP
rule. The FTC has said the disclaimer
must be prominently displayed and
should be separated from the rest of
the text in the communication.
The second piece of the MAP rule
is a record-retention requirement. All
covered communication should be
kept for two years from the date it was
made to the consumer. This means all
covered communications should be
put in writing and added to the office’s
record-retention policy.
Following these tips should help
you stay in compliance with the FTC’s
MAP rule.
To learn more about this rule, go to
ftc.gov.
Most common ethics violations
Article 1 was the most commonly violated section of the
Code of Ethics in 2011. Article 1 says REALTORS® must
protect and promote the interests of their client and must
treat all parties honestly. It is probably fair to say that
Article 1 is the catchall article: If any unethical behavior
took place in a transaction, it is probably covered under
Article 1. For that reason, Article 1 is nearly always the
most violated article every year.
Article 16 of the Code of Ethics was the second-most
violated article last year. Article 16 says REALTORS®
shall not interfere with the exclusive brokerage relationships of other REALTORS®. Too many agents are not
asking enough questions of their prospective clients to
make sure they are not already contracted with another
REALTOR®.
Articles 3, 11, 15 and 17 of the Code of Ethics were the
other articles violated in 2011. These deal with broker
cooperation, field of competence, statements about other
real estate professionals, and mediation and arbitration
requirements.
UTAH
REALTOR
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REALTOR
®
UTAH
GOVERNMENT AFFAIRS
The UAR’s Legislative Committee
analyzed more than 50 real estaterelated bills during the Utah
Legislature’s 2012 general session.
Legislative session recap
Banks must pursue deficiency judgments within
three months of a short sale
BY christopher j. kyler, j.d. · UAR chief executive officer
16
“I think most [homeowners] out there who accept[ed] short sales had no idea that
[they were] subject to a deficiency judgment for up to six years,” said Sen. Wayne
Niederhauser, the bill’s sponsor. “And what we’ve done with this bill is bring that
down to 90 days.”
Under the new legislation, the state’s short sale requirements will match up with
existing Utah foreclosure laws, which already limit pursuit of deficiency judgments
to three months.
Niederhauser said the bill is important because the issue of whether a deficiency
judgment will be pursued will be discussed upfront, rather than putting a borrower
at risk for six years.
The bill applies to single-family residential homes, including condos and townhomes. The only exclusions specifically mentioned are multi-family and commercial
properties.
REALTOR
UTAH
A
newly passed bill will make
short sales more attractive
to Utah homeowners facing
foreclosure. During the
recently concluded session, the Utah
Legislature passed Senate Bill 42, a
bill that places a three-month limit on
lenders who want to pursue a deficiency judgment following a short sale.
Prior to the bill’s enactment, lenders
could wait up to six years before going
after borrowers for any unpaid mortgage balances.
®
REALTOR
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®
The bill took effect immediately after Gov. Gary R. Herbert signed it March 15
and applies to transactions finalized after that date.
REALTORS® should keep in mind that this bill does not limit their ability to negotiate different terms with the bank. In the lender’s approval language, the bank
may agree to completely forgive the unpaid debt or, on the flip side, may require
more than 90 days to pursue the deficiency judgment. The new three-month limit
from SB 42 applies to situations where the deficiency issue is not addressed in the
short sale approval documents.
Ultimately, the goal of the bill is to make short sales more attractive to banks and
consumers. With this objective, home prices will face less downward pressure, and
borrowers will likely be able to repair their credit faster so they can reenter the
market.
The bill also reduces REALTORS®’ risk of being sued since the deficiency issue
will either be addressed in the approval process or within three months — as opposed to six years under the previous law.
Defeated bills
The Utah Association of REALTORS® defeated several harmful bills during
this year’s legislative session.
One defeated bill would have negatively affected anyone who owns a rental
property. Had it passed, House Bill 110 would have required landlords to
return “all deposits paid by the renter” upon termination of the rental agreement — even if the renter had damaged the property. The bill also would have
given the renter the ability to sue the property owner for “mental suffering or
anguish.” This would have discouraged people from buying and renting out
properties.
Another defeated bill would have created burdensome reporting requirements for REALTORS®. Under House Bill 234, any REALTOR® who loaned
money to a client would have been required to report that client’s payment
history to the national credit bureaus on a quarterly basis. The bill would have
put an extra burden on REALTORS® and was quickly defeated.
Another problematic bill would have created higher costs for homeowners. Under House Bill 56, each condominium association would have been
required to register with an additional state agency and would have had to pay
a fee for each unit within the association. The assessment would have been
imposed each year, creating a significant expense for condo associations and
ultimately homeowners. Had the bill passed, the government would also have
had the power to impose late fees and other costs on homeowner associations.
One concept that never became a bill would have required every existing
home to undergo energy efficiency testing before it could be sold. This would
have delayed home sales since Utah does not have enough qualified inspectors
to keep up with this type of demand.
Also problematic was the fact that it would have created a precedent for
state-mandated inspections and home scores. This could lead to other mandatory pre-sale requirements such as soil inspections, traffic flow studies, environmental hazards testing, seismic inspections, drinking water studies, surveys,
etc. — thus creating a situation where it would be very expensive to buy and
sell real estate.
These are just a few of the real estate bills that were not passed this session.
Other defeated bills would have increased property taxes, impact fees and
REALTOR® exposure to lawsuits. As the summer interim session approaches,
the Utah Association of REALTORS® will continue its vigilance in monitoring
and defeating similar bills that could harm REALTORS® and homeowners.
UTAH
REALTOR
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Government affairs
Bill cuts red
tape for
REALTORS®
The governor has signed a bill that
makes a number of changes that will
make it easier for REALTORS® to
conduct their businesses.
First, House Bill 191 clarifies that
REALTORS® working in short sales
are not required to abide by several
burdensome regulations designed
for foreclosure rescue companies.
Specifically, REALTORS® will not
have restrictions on their fees and
payment schedules, and will not be
required to offer a three-day cancellation period after a client signs a listing
agreement.
“Basically, it allows REALTORS® to
do business on behalf of their clients
that we do every day and do that in a
professional manner without undue
pressure from government,” said bill
sponsor Rep. Gage Froerer.
Second, the bill allows real estate
licensees to report Class A and B
misdemeanors at the time of license
renewal rather than within 10 days,
as long as the misdemeanors did
not involve “financial services or a
financial-services-related business,
fraud, a false statement or omission,
theft or wrongful taking of property,
bribery, perjury, forgery, counterfeiting or extortion.”
“We’re no longer under the burden
of that 10-day requirement, unless it
has to do with fraud,” said Froerer,
who is also a REALTOR®. “It allows us
to do what we do best which is sell and
list real estate.”
Finally, the bill supports accurate
appraisals by amending several requirements related to appraisal management companies, including creating a bonding requirement. It also
clarifies that appraisers with multiple
licenses (e.g., real estate, mortgage)
may only act in one capacity during a
transaction. The overall goal of these
changes is to improve the quality of
appraisals.
REALTOR
The Utah Legislature has passed a
bill that will make it easier for property managers to keep their properties
in compliance with city ordinances.
House Bill 302, which Gov. Gary R.
Herbert has signed, requires municipalities to notify the owner each
time a property is in violation of an
ordinance. The bill also requires cities
to give reasonable time for property
owners to correct the problem before
a fee is assessed.
This is important because some cities
were issuing one notice and intending
it to cover any violation, explained the
bill’s sponsor, Rep. Michael Morley.
Months after the notice — and after
the owner had taken care of the cited
problem — the city would issue immediate fines for separate, unrelated
issues.
“I think [the bill would] be great for
property managers just so they’re not
just getting fines willy nilly without
any notification,” Morley said. “The
concern is we don’t want a notification
sent out at the beginning of the year
which intends to cover the entire year
for any possible infraction.”
Under HB 302, the cities must issue
a notice for each separate infraction
and give the owner “a reasonable
opportunity to cure [the] noticed violation.”
The bill also includes a provision that
allows a property owner to designate
an agent to receive the violation notices. This lets property managers know
about the problems so they can correct
them. Previously, property managers
did not have access to these notices.
18
Bill requires one point of
contact prior to foreclosure
A new law may make it easier for
homeowners facing foreclosure to coordinate a short sale or other foreclosure
relief.
House Bill 164 requires lenders to
appoint a single point of contact when
an owner-occupied residential property
is in default. The single point of contact
is designed to ensure effective communication takes place during the preforeclosure period and the homeowner
receives information regarding any
foreclosure relief the bank may offer.
“It just requires the lenders as an
element of good faith during the 90-day
foreclosure period to identify who their
authorized representative is,” said sponsor LaVar Christensen when explaining
the bill on the House floor.
Christensen said homeowners facing
foreclosure are often directed from one
call center to another, often in multiple
states, trying to find someone who has
the authority to talk about their options
to avoid foreclosure.
“You can’t find a live human being that
you can talk to during that critical 90day period and just ask them what relief
might exist,” he said.
Under HB 164, lenders must establish
the single point of contact before a notice of default can be filed. The contact
must “undertake reasonable and good
faith efforts” to consider the borrower
for foreclosure relief and provide information regarding the lender’s decision.
While the bank must designate someone to communicate with the borrower,
the lender keeps all foreclosure rights.
The bill also says that if the lender decides to postpone a foreclosure sale but
relief doesn’t work out, the institution
does not need to file a new notice of
default and restart the process.
“It will protect and preserve the
integrity of the foreclosure process …”
Christensen said. “It’s a win-win for
homeowners, and we’ve worked closely
with the financial institutions to make
sure it’s fair and balanced.”
Bills protect property
owners from civil liability
Several newly signed bills protect property owners from civil liability if someone
is hurt while on private property.
Under House Bill 129, a person cannot enter someone’s house with criminal
intent and then sue the owner if the
person is hurt while in the home.
“What the bill does is in a situation
where you have an intruder or someone
coming onto your property and you have
to use force to protect your property,
it just about makes it impossible for an
assailant to collect civil damages,” said
Rep. Patrick Painter, the bill’s sponsor.
“As odd as that seems, in cases around
the country, criminals have been able
to sue a property owner and get damages from their own intrusion onto other
people’s property … [The bill] simply
upholds our respect and reverence for
property rights.”
House Bill 208 is another newly
signed bill that protects private property
owners. Under this bill, real estate owners will have protection from lawsuits if
someone is hurt while using their land
for recreational purposes. The Legislature has expanded this protection to
include recreation involving aircraft
operations.
Another common-sense property
rights bill will likely be considered next
session. It will clarify that landowners
are not liable in cases where someone is
hurt while trespassing on their property.
“All of us who own property should
care about this, whether we have a
house and a yard or whether we’re in
real estate in general or whether we own
rental property,” said Rep. Brad Wilson.
“It’s something that will help protect the
rights we have as property owners.”
REALTOR
UTAH
Notification
required
before
ordinance
violation
fees can be
assessed
®
UTAH
GOVERNMENT AFFAIRS
®
REALTOR
UTAH
®
FEATURE
Utah Housing Corporation’s 100
percent financing programs are no
longer limited to first-time buyers.
expand your clients'
mortage options
Utah Housing grows programs to include repeat
buyers and those with low FICO scores
BY deanna devey · UAR communications director
U
tah Housing Corporation has good news for
homebuyers and REALTORS®: It is expanding its
loan programs to include options for
both repeat buyers and those with low
credit scores. The change is significant
because it will provide a 100 percent
financing option to groups that previously had little or no access to down
UTAH
REALTOR
®
payment and closing cost assistance.
“A lot of this was listening to the public,” said Deon Spilker, director of mortgage
banking for Utah Housing Corporation. “[We asked,] ‘What is the key to housing
that is missing in the state of Utah?’ These two items were the items that were listed
the most as homebuyers not being served.”
Utah Housing has long had mortgage programs and down payment assistance that
catered to low- and moderate-income buyers; however, these were limited to firsttime homebuyers, single parents and veterans. On April 9, however, UHC debuted
the HomeAgain program for repeat buyers and Score Loan for low-credit-score
borrowers.
REALTOR
®
UTAH
FEATURE
Not only are the programs helpful
for those who haven’t saved enough
for a down payment and closing costs,
but the 100 percent financing will also
allow buyers to preserve their savings
for emergencies, Spilker said. With a
traditional loan, borrowers must make
a minimum 3.5 percent down payment.
HomeAgain
Under HomeAgain, a homebuyer
can receive a low-interest Federal
Housing Administration-insured mortgage with the option of getting a second mortgage for up to 6 percent of the first mortgage amount. Spilker said 3.5 percent can
be financed for a down payment, and 2.5 percent can be loaned for closing costs.
The second loan is amortized over 30 years and does not require a balloon payment.
Spilker said this program is designed to help borrowers who need to move but
lack the cash reserves needed to get into a new house.
“It was for borrowers who needed to move up into a home, either by an increase
in family size or jobs were relocating them or they were moving from one city to
another city, and they didn’t have any equity or sufficient equity to purchase another
home,” she said.
In contrast to Utah Housing’s traditional program, HomeAgain expands both the
income and purchase price limits. Unlike FirstHome, which may have lower household income limits, HomeAgain goes up to $81,000 for all borrowers. The purchase
Utah Housing Corporation Loan Programs
FirstHome Loan
HomeAgain Loan
Score Loan
Must be first-time homebuyer?
Yes (Exceptions for veterans and single parents)
No
No
Annual income limits
$67,500 - $81,000
$81,000
$81,000
Interest rate
Current FirstHome rate
1/4% to 1/2% higher
than FirstHome
1/2%-3/4% higher than
FirstHome with second
mortgage; 3/8% to 5/8%
higher without second
Purchase price limits
$250,000
$320,000
$250,000
Second mortgage for down
payment/closing costs
Yes; capped at 6%
Yes; capped at 6%
Yes; capped at 4%
FICO score
660 or above
660 or above
FICO from 620-659
No alternate credit
None
None
1% of first mortgage
Ratios
Use automated or traditional
underwrite
Use automated or
traditional underwrite
Total debt-to-income ratio
<45%
Co-signer
Co-signer does not take title; cosigner debt ratio not to exceed 41%
Not allowed
Not allowed
Second kitchen
Property must be zoned SFR;
ineligible if property has two
meters; more than one unit
properties are ineligible
Same
Same
Rental prohibition
No portion of the property can be
rented throughout the term of the
UHC mortgage
Same
Same
Rate lock extensions
Maximum one, 30-day extension,
subject to extension fees
Same
Same
REALTOR
UTAH
20
Points
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REALTOR
UTAH
®
Recapture does not apply to these three
programs now that Utah Housing is no
longer using tax-exempt bonds as its
funding source.
price limit is higher as well at $320,000 rather than $250,000.
The trade-off, however, is that repeat buyers will have a quarter to a half percent
higher interest rate. Borrowers are also required to have a minimum 660 FICO
score.
Score Loan
The second program, Score Loan, offers similar features, but caters to those with
credit scores between 620 and 659. Borrowers can qualify for both a first and a
second loan; however, the requirements are stricter than those for HomeAgain due
to the low credit score.
For example, rather than allowing 6 percent of the first mortgage amount to be
financed for a down payment and closing costs, Utah Housing has reduced the
maximum to 4 percent. That means the borrower may need to put some money
down or arrange for the seller to pay for various closing costs to get to 100 percent
financing.
The Score Loan interest rate is also higher, and the borrower’s total debt must be
lower. Nevertheless, the program may be a viable loan option for someone who has
previously struggled to qualify for mortgage financing.
“It seemed to be that the range between 620 and 660 borrowers were not being
able to find the mortgage product or the down payment assistance,” Spilker said.
Like the HomeAgain program, Score Loan is available to those who close loans on
or after April 9. First-time and repeat buyers will be eligible for the product.
When asked whether there was concern about lending to buyers with low credit
scores, Spilker said the loans are 100 percent FHA-insured and Utah Housing
works closely with borrowers on loss mitigation should problems arise. She also
added that people must be good borrowers who have a job and a history of being
able to repay their debts.
“Utah Housing loans, even though they’re 100 percent financing, did not get into
the bubble of bad loans,” Spilker said. “Why our loans have gone delinquent hasn’t
been because of the type of loan but because of the market, with homebuyers losing their jobs and not being able to find another one.”
FirstHome
Although there will be new offerings, the FirstHome program for first-time buyers, veterans and single parents will remain in place. It is similar to HomeAgain but
will offer the lowest interest rates.
Other differences include a lower purchase limit at $250,000 and a lower annual
household income capped between $67,500 and $81,000. Co-signers are also allowed on FirstHome loans, unlike the other programs.
FEATURE
Simplified Requirements
UHC has also simplified the requirements for all programs. Prior to the
changes, for example, homes with
second kitchens would not qualify for
loans. Now, a property with a second
kitchen is accepted as long as there
is only one meter and it’s a one-unit,
single-family home.
“That was a big issue with REALTORS® because they were limited on
what they could show,” Spilker said.
“But that’s taken care of.”
UHC has also resolved funding and
recapture issues. Spilker said some
agents still believe Utah Housing
periodically runs out of money, but she
said that is no longer the case. There’s
also a misconception that borrowers
will be subject to an IRS recapture tax.
However, Spilker said that does not
apply to these three programs now that
Utah Housing is no longer using taxexempt bonds as its funding source.
“That’s something that’s going away,”
she said.
In fact, the funding change is what
allowed Utah Housing to expand the
program beyond first-time buyers.
Under the tax-exempt bonds, the loans
were only available to a narrowly defined pool of borrowers, she said.
Buyers looking to take advantage of
the changes can secure one of these
mortgages through an approved Utah
Housing lender. Although the lender
can overlay additional qualification
requirements to participate in the
programs, Spilker said that is unlikely
since Utah Housing will be purchasing
the loans.
Utah Housing has a list of participating lenders available at UtahHousingCorp.org. REALTORS® can also
schedule continuing education trainings to learn more about the programs.
“I honestly believe the real estate
agent is the key in the success of this
whole program,” Spilker said.
Down Payment assistance second mortgage
The second mortgage interest rate is 2 percent higher than the first mortgage. The
second mortgage has a 30-year term with no balloon payment.
UTAH
REALTOR
®
REALTOR
UTAH
®
2012 RPAC Major Contributors as of March 15, 2012
jim bringhurst
$25,000 in lifetime contributions
Gary Cannon
John Harr Jr.
Butch Dailey
Al Mansell
Jeff Jonas
David Mansell
Dan c. simons sr.
charlotte
thomas
CRYSTAL R
GOLDEN R
Stefanie
Tugaw-madsen
max thompson
kyle ashworth
spring
bengtzen
2012
h. blaine walker
2012 PRESIDENT’S CIRCLE
ron jeffs
robert bolar
2006-07, 2009,
2011-12
2007, 2009-12
STERLING R
chris kyler
kenny parcell
2007-12, Sterling
R 2006
2012, Sterling R 2008
O. randall
woodbury
paris anderton
2007-12, Sterling R
2002-06
lori chapman
brian davis
gary hancock
shawn janke
russ booth
1996-98, 2000-03,
2007-12
stephanie
vincent
2012
2007-12
2012
2002-12
2006-08, 2010-12
2011 president's
circle - golden r
sue lipsman
scott lalli
2002-07, 2010-12
2009-12, Crystal R
sharee bigler
2010-12
CRAIG HAWKER
travis nokes
2012
2006-12
2012
sonja norton
2011-12
sharon
spratley
steve vincent
2012
2004-12
sue wilkerson
jim bringhurst
2006, 2009, 2012,
Crystal R 2011
2011 president's circle - golden r
CRYSTAL R STERLING R
Jeff Jonas
chris kyler
chris nichols
h. blaine
walker
kenny parcell
thomas
wright
Rebecca
jensen
2011 PRESIDENT’S
CIRCLE
justin allen
2011 PRESIDENT’S
CIRCLE
vardell
curtis
2011 PRESIDENT’S
CIRCLE
rand
mccullough
2011 PRESIDENT’S
CIRCLE
taylor
olroyd
2011 PRESIDENT’S
CIRCLE
Your target ideal
market
from cover to cover
27-28 and Sept.
3-5
E R S
B U I L D
E R N
N O R T H
C H
W A S A T
H O M E
REALTOR
N
I A T I O
A S S O C
es
Parade of Hom2011
®
OFFICIAL MAGAZINE
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REALTORS® in conjunction with Bennett Communications.
For advertising and subscription information, call (801) 802-0200
REALTOR
UTAH
Aug. 20-21, Aug.
UTAH
HALL OF FAME
RPAC
®
REALTOR
UTAH
®
QUIZ
In a situation where the owner of
a property has died, REALTORS®
should make sure the person
signing the REPC actually has
authority to transfer ownership.
Answers
1. False. Unless there were provisions in
place to avoid probate, a child does not
have the right to list a home, hire a real
estate agent or put the house under contract
until the court has appointed a personal
representative of the estate. If the court
names the child as the personal representative, then the child has full authority to sell
the home.
2. True. Unless specified in the court
paperwork, the court-appointed personal
representative has the same authority over
the home’s title as the deceased did.
3. False. This would have been the case
if the couple had held the property as joint
tenants with rights of survivorship. In other
words, the home would have automatically
passed to the surviving tenant after the
death of the other tenant. However, because
they were tenants in common, owning their
own separate interests in the property, probate would likely be needed. In that case,
only the court-appointed personal representative could sell the deceased’s interest in
the property.
4. False. In Utah, a power of attorney is
only valid while a person is still living. That
means a child holding a power of attorney of behalf of his parent no longer has
authority to transact affairs after the parent’s
death. The only person with power to sell
the house is the court-appointed personal
representative.
5. True. Property can be transferred
outside of probate when there is a built-in
transfer mechanism. Examples include real
estate owned as joints tenants with rights
of survivorship and property held in a trust.
On the other hand, probate is needed when
the deceased owned assets, like real estate,
that were solely titled under the deceased
person’s name. During the probate process,
the court will appoint a personal representative who will then have full authority to sell
any property that is part of the estate.
Editor’s Note: This article is for general information purposes only and is not intended to
represent specific legal advice.
Sources: “A few things every real estate
agent should know about probate,” Jennifer
Decker; “The truth about probate in Utah,”
Armstrong Law Offices, P.C.; “Wills & Probate Q&A,” Utah State Bar
UTAH
REALTOR
®
Probate and
real estate
Who has authority to sell a deceased
person’s home?
A
lthough getting a signed purchase contract is a great achievement,
there are many issues that can still derail a deal before the transaction closes. Often, it’s as simple as not having the right signatures
on the Real Estate Purchase Contract. Maybe the wife signed the
purchase contract, but only her husband’s name is on the title so the REPC isn’t
valid. Or perhaps a divorcé signed the REPC, but his ex-wife needs to sign it as
well before the contract is binding.
Getting a preliminary title report early on is one way to verify that the seller
actually owns the property and has authority to transfer ownership. But what happens in cases where the person on title has died? Who then has authority to sell
the property?
In this quiz, test your knowledge of Utah’s probate process and how the affairs
of the deceased are settled.
1. True or False? A child of the deceased can list the parent’s home immediately after the death.
2. True or False? The person appointed
to administer a deceased person’s estate
has authority to sign real estate contracts.
3. True or False? If a couple owned the
home as tenants in common, the surviving spouse would immediately have full
authority to sell the entire home upon the
death of his or her partner.
4. True or False? A power of attorney is
valid upon someone’s death.
5. True or False? The probate process is
not always needed to transfer a deceased
person’s property.
Tr u s t A x i o m t o G e t Yo u r C l i e n t s H o m e
T h e r e i s n o s u b s t i t u t e for experience combined with personalized care.
Axiom Financial is a full-service mortgage lender with experienced professionals who
have the training and expertise to meet your clients’ needs. Because our consultants
personally manage your clients’ loans, you can be confident that your transactions
can be closed on time without any surprises. 888.656.LEND | www.axiomfinancial.com
©A xiom Financial, LLC. All services rendered by A xiom Financial are to assist in providing mortgage loans. A xiom is an Equal Housing Lender.

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