5 to Watch: March 2010

News and trends that we're keeping an eye on this month.

March 1, 2010

1. Texting While Driving

Nineteen states, plus the District of Columbia and Guam, now ban text messaging for drivers. Congress is trying to get into the act, too; last year Sen. Charles Schumer (D-N.Y.) introduced a bill that would strip states of some of their federal Highway Trust Fund money if they don’t take action on the problem.

AAA says distracted driving accounts for up to 8,000 accidents a day, though it doesn’t break out figures for texting and other distractions. "It’s clearly a safety issue," says Scott Louser, CRB, CRS®, vice chair of NAR’s Risk Management Committee, but it may also be a risk management issue for brokers, since their salespeople tend to be on the road. "I’d have a concern if an agent were texting while driving a buyer around and got in an accident."

2. MLSs Define Green Features

In an effort to put rigor behind use of the term "green" in describing homes listed for sale, a number of MLSs are adding data fields so buyers can know with certainty what in a listing makes it green. With these new fields providing data on a wide range of green features—from energy-efficient appliances to electric carports—claims that a house is green are "verifiable, understandable, and certifiable," says Don Klein, CEO of the Greater Nashville (Tenn.) Association of REALTORS®, which rolled out green data fields a little more than a year ago.

NAR’s Green Resource Council estimates that as many as 50 MLSs have added some version of green data fields. The Council will be releasing a tool kit in 2010 on best practices for greening the MLS.

3. Lead-safe Remodeling

U.S. Environmental Protection Agency rules taking effect April 22 require remodeling work on homes built before 1978 to be undertaken only by contractors certified by the agency in lead-safe practices. (An EPA-certified contractor isn’t necessary if the work doesn’t disturb the paint, but that can be hard to know up front.)

The National Association of the Remodeling Industry recommends that home owners assume lead is present if their home was built before 1978 unless they’ve had it tested and found it lead-free. Certified remodelers are required to display their EPA-certified training certificate to home owners.

For a compliance guide, search for "lead paint renovation rule" at REALTOR.org.

4. Securities-Based Loans

Getting sales closed today might require buyers to look at options other than traditional mortgages. Buyers with significant stock investments, for example, might look into a product that’s underwritten based not on the property they want to buy but on the stocks they own. Securities-based loans aren’t new, but lenders in the past year have started offering them up for home purchases, says Steve Gordon, a mortgage broker in Dillon, Colo.

The loans are viable for households that have at least a modestly high net worth, says Gordon. Borrowers get a nonrecourse loan with an advantageous fixed interest rate (ranging from 2.5 percent to 4.5 percent in early 2010) with none of the underwriting and credit scoring issues of a mortgage loan, because the collateral isn’t the house but the stocks.

Among the drawbacks: the loans can’t be prepaid, and if the stock value declines to less than the loan amount, the borrowers have to make up the gap. "That’s why you want borrowers who are astute about managing their money," says Gordon.

5. Corporate Largesse

The U.S. Supreme Court in late January swept away a long-standing prohibition on direct political spending by corporations, but it will take time before the full force of the ruling is clear, say NAR attorneys.

Under Citizens United v. Federal Election Commission, corporations can spend without limit on ads for or against candidates during an election as long as their efforts are undertaken independently of political campaigns. Before the ruling, corporations were prohibited from using corporate treasury funds for political communications and were required to set up separate political funds using only personal contributions from corporate employees.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.