John Wagner, one of our Klinge Realty agents, brought to our attention the lawsuit mentioned in the latest CAR update.
A few years back, a few realtors started tacking on additional garbage fees like the lenders do, calling them “transaction fees” or “document compliance fees”. They justified them by saying the additional paperwork requires more people and processing, etc.
Finally, somebody had enough of it, and sued:
A broker must perform a specific settlement service to charge a $149 “administrative brokerage commission” fee under the Real Estate Settlement Procedures Act (RESPA). That was the recent decision of a federal district court in Alabama in the case of Busby v. JRHBW Realty, Inc. (Case No. 2:04-CV-2799-VEH). This decision serves as a good reminder for REALTORS® to refrain from charging unearned fees under RESPA.
In this case, a seller in Jefferson, Alabama agreed to pay the real estate broker a five percent commission. However, during the closing and settlement, the broker also charged the buyer a $149 “administrative brokerage commission” (ABC) fee in connection with a federally-related mortgage loan.
The buyer paid the $149 ABC fee, but then sued the broker and succeeded in obtaining class action status for over 30,000 consumers. The buyer claimed that the broker performed no services for the $149 ABC fee. According to HUD, RESPA prohibits an unearned fee, such as when a “service provider charges the consumer a fee where no, nominal, or duplicative work is done.”
In response to the buyer’s claim, the broker argued that the ABC fee was for an array of services, including overhead expenses, regulatory compliance, technological enhancements, and additional commission. The court, however, agreed with the buyer. The court observed that the array of services listed by the broker were not settlement services because they did not occur at or before the closing, and any direct benefit to the buyer was negligible. The court also pointed out that, as additional commission, the $149 ABC fee would be a duplication of the percentage commission already charged.
John mentioned that he has heard of agents charging $300 to $1,000 in extra fees, and their unknowing clients having to pony up, usually right at the finish line with no notice. It is wrong, and it won’t happen at Klinge Realty.
The lenders have received numerous requests for loan modifications.
But many borrowers don’t qualify, for various reasons:
1. Too far underwater.
2. Lousy financial package (make too much $$, make too little $$, incomplete pkg., etc.).
3. Not primary residence.
4. Not a qualified loan program (not Fannie/Freddie, etc.).
The lenders/servicers are having to review each package, order appraisals, and make a decision.
If the borrower is denied, they are faced with either keeping their word and making their existing payments, or throwing in the towel. The second choice means ride out the free rent while getting foreclosed, or try for a short sale.
Both options will be costly to the lender.
The lenders have the loan mod package in front of them. If denied, should they just go ahead and pre-approve the short sale?
On one hand, if they were proactive and offered a pre-approved short sale, they could efficiently resolve the case.
If part of the package included a demand that the seller had to vacate, the short sales could compete with REOs – right now the REOs are pummeling the short sales in selling efficiency.
Selling these homes faster and easier should mean more net proceeds to the sellers.
On the other hand, wouldn’t more borrowers take advantage of the system?
I think there are lenders out there that are contemplating this very question.
“Economists and real-estate agents are counting on homeowner affordability to stabilize California’s housing market mess, but Bruce Norris couldn’t disagree more. Owner of The Norris Group, a Riverside-based real-estate investor and financial broker for other real-estate investors, Norris says it’s not what a home shopper ‘can afford to pay’ that’s key in turning this market around – it’s what they’re ‘willing to pay.’”
“He’s bucking the popular belief that a 5 percent or 10 percent price drop on Inland Empire home values will usher in the market’s bottom. Think 20 percent or maybe more, he said. ‘It’s because of the 1004 MC form,’ Norris said. ‘It’s very dangerous.’”
“This ‘market conditions addendum’ for appraisers to use – enforced April 1 by the mostly government-owned mortgage investors Fannie Mae and Freddie Mac and loan insurer Federal Housing Administration – might thrust the economy’s fragile mortgage system from its depressed state to something much worse, Norris argues.”
“The new addendum says a house must be appraised at the neighborhood’s median home value instead of market value, as long as the home is located in a downward market and as long as the mortgage is a Fannie Mae, Freddie Mac or an FHA-backed loan. Median home values in certain neighborhoods are taking a beating these days because their prices are skewed by dozens of foreclosures – which means nonforeclosed homes are slated to get hit by a double-whammy price-depreciation phenomenon.”
“Norris has already seen values stated on local home appraisals drop 20 percent in the past 3 1/2 weeks. ‘If this plays out, things will get much worse,’ Norris said. ‘We’re going to devalue the loan portfolios of almost every lender in the state of California. This could crash the system – it really could.’”
CAMBRIDGE, Mass. – The nation’s housing market may begin to recover this year, ahead of the general economy, but only if a lot of “ifs” go the right way, according to a co-author of one of the most-watched housing indexes.
Karl “Chip” Case, who helped create the Standard & Poor’s/Case-Shiller Housing Market Index, struck a guardedly upbeat tone yesterday at a conference at the Lincoln Institute of Land Policy.
“I’m optimistic,” said Case, an economics professor at Wellesley College in Massachusetts. “I think we’ll see housing turn around before other people do. I think we’ll see it turn up this year or next” before the rest of the economy improves.
The conference focused on the future of cities after the recession, and the advent of the Obama administration in Washington.
Case said various indicators point to stabilizing prices, particularly at the starter-home end. If that happens, he said, the rest of the economy is likely to respond similarly.
But Case couched his sunny outlook against a cloudy set of preconditions that must be met for the housing slump to end: rising housing starts, removal of the “toxic assets” weighing down lenders and investors, and renewed trust in banks’ balance sheets.
If housing does not recover, he warned, a general economic upswing “could take a very long time happening.”
Case also said the national housing picture is somewhat distorted by conditions in what he dubbed “Flocazn” – Florida, California, Arizona and Nevada – where more than 50 percent of all resales involve auctions of foreclosure properties, versus about 12 percent in the other 46 states.
He took particular delight in needling Californians for their undying belief in ever-rising home prices. But this faith is understandable, he said, because downturns in the 1980s and ’90s were followed by robust price recoveries and the 2000-01 recession did not result in any price declines.
“People in California know it’ll come back,” Case said.
This California article of faith is shared by many outside the Golden State. He cited an economist friend who complained that he had not sold his house even after two years on the market. Case gently reminded him that if he lowered the price, it might sell.
Let’s examine the Case-Shiller Index methodology with the March sales in Carlsbad.
They only use SFRs, so the condos, mobiles, and multi-families are omitted, which is good.
Last month there were 43 MLS sales in Carlsbad, but only 20 of them would count towards the Case-Shiller Index.
The 23 that wouldn’t count:
11 – REOs
9 – Previous sale was brand new
2 – Recent sale was brand new
1 – No previous record
23 – Total
Here is the breakdown of the remaining 20 March sales:
The Case-Shiller method uses an algorithm for downweighting the older sales, which, if I’m reading it right, adjusts the data based on how far away each sale is from the first. It gives a lot of weight to the short sales and other highly motivated sellers, and discounts the how the long-timers did, but if all they want to do is measure off-peak pricing, it’s probably as good as any.
I like things simple, so I’ll just say that Carlsbad is around 2003 pricing.
Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor.
When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since.
We decided to sell and move to AZ at Thanksgiving. Dec. 1st we met with Jim to sell our home. We closed today (29 days later). Jim orchestrated a feeding frenzy -- we had 25 showings in 2-1/2 days, multiple offers, and sold for well over asking price. I'd say he earned his commission! We have owned and sold homes in 5 different States always using experienced, productive, full-time realtors. Jim outshines them all.
You don't decide to sell and close 29 days later over Christmas (with COVID lockdown) without some miracles. Donna was amazing at performing lots of those miracles and ensuring that everything was done right and on time. They are a terrific team with a very responsive and professional network.
Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. Basically we just approved what they suggested and Donna handled literally everything. We placed our house on the market and within the first day we had multiple offers well above asking price! We couldn't believe it. We were overjoyed! Jim countered the offers to weed through them, and everyone came back with way more. It was amazing, and we are ?? sure it was because of the staging and repairs the Klinges suggested we do.
Due to unforeseen dishonesty from the buyers lender, we hit a big hurdle when trying to close. We had already moved out of state and were shocked when three days before closing the lender dropped a bombshell on the buyers and us. However, Jim and Donna handled it like veterans, not afraid to play hard ball and represent their clients. After a few phone calls with us, and several between Donna and the lender, they had a plan B-Z to make sure we were taken care of. In the end we closed with even more money than we ever thought possible and with very little work from us. The Klinges handled this entire "2020" worthy event with the utmost professionalism and did everything in their power to not only make this as smooth as possible for us, but we also walked away with more money from the sale of the house than we ever hoped for. After working with Jim and Donna, you don't ever use anyone else. They are hands down the best team to represent you in any scenario.
Working with Klinge Realty Group was a great experience! They are very responsive, professional and knowledgable about the real estate market! I would definitely recommend Klinge Realty Group.
Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. We had a few challenges with our property and they were able to coordinate the resolution to everything, including items that I would not think would ordinarily be their responsibility to handle. They made the whole process effortless on our part. They are folks with high integrity and we cannot recommend them highly enough.
Review for Member: Donna Klinge
I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in about 15 years. On the buy side, Jim is the PERFECT combo of: completely digitally savvy (he will pull data all day long until you feel comfortable with your chosen house, area, school district, anticipated appreciation rate...anything!), he's super well respected and known in the area by other agents, an amazingly cool but strategic negotiator, is totally devoid of desperation for a sale/commission, and more.
Then once you get into contract phase, Donna literally handles every last and final detail in a concierge-like manner -- totally shielding you from the daily back and forth, noodling and annoyances of the buyer's requests. She solves it ALL; it's miraculous what that woman accomplishes over and above what is even expected in a buy/sell transaction.
On the sell side, Jim and Donna do the same, but even moreso. Donna in particular truly takes everything off your plate: she'll manage getting the house painted, the carpets replaced, she'll go on site (as she Jim both did for me when selling our rental properties) to work with the renters and make sure the house is ready to show -- freeing me to have to take time off of work to do so. They work with A+ integrity, too, so you know you are serving all parties fairly and lawfully throughout.
A home purchase/sale is the most considered you'll ever make. HIRE A SAVVY AGENT, not a friend!, and get what you need out of the transaction. Jim and Donna are our agents for life.
Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community. Jim's vast experience means he has worked with several realtors and knows the market all over north county. Donna is AMAZING in processing everything in the transaction. She scheduled trades people to work on the house in preparation for the sale as well as the repairs needed before closing. She communicated clearly every step of the way about what would be happening. She took the weight off my shoulders for the whole process. I will always use Jim and Donna for my future real estate needs and I whole heartedly recommend them to anyone buying or selling a home.
Jim and the team at Klinge Reality are without a doubt the best in the business! Not only was Jim helpful and extremely knowledgeable, he was patient and determined to help me find my first home. Jim and his team have been in the business for many years, and it shows. Jim is a wealth of knowledge and was my biggest proponent despite the temperature of the competitive market. I ended up getting the perfect property in my dream neighborhood all thanks to Jim. From the day my offer was accepted, Donna was a real lifesaver. She was extremely helpful, responsive, and knowledgeable when it came to every minute detail, and held my hand through the process. As a first time home buyer I had no idea what the process would entail, but Donna curtailed every concern I came across and made the escrow process feel seamless. Jim and Donna provided me the best home buying experience, and I am very grateful for all they did for me. It was truly a pleasure to work with Jim and Donna and I am already looking forward to the next time we work together!
Review for Member: Richard Morgan
Richard is an amazing realtor! He has high integrity and genuinely cares about his clients and their needs. Richard paid close attention to what I was seeking in a home and was very patient in our search to find it. I would highly recommend Richard and will use him for future transactions. Truly a different kind of realtor experience!
Could not be happier with my experience with Jim and his team. He helped me sell a very unique and challenging property. Throughout the entire process he was always available, honest, transparent, trustworthy, and always put my interests as a seller first. A (rare) true professional! During close of escrow Jim went above and beyond to complete the deal. It would not have been possible without his experience, fantastic team, and pure dedication. Highly recommended!
Thanks Jim and Donna Klinge!