REALTOR. Appraisal Reform Update The Light Will Shine Again: Dealing With Depression During the Recession. Main Article EL PASO

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1 EL PASO REALTOR THE VOICE FOR REAL ESTATE IN EL PASO AUGUST 09 Appraisal Reform Update The Light Will Shine Again: Dealing With Depression During the Recession Main Article

2 We ll Help Put Your Clients In The Right Home. Right Away. When it comes to providing safe and sound mortgage loans for your clients, GECU is still going strong. Just like we ve been doing for more than 50 years. We ll find the right mortgage loan that your clients can afford, and then walk them through the lending process with fast, caring service. It not only makes your clients happier, it makes your job easier, too. GECU offers your clients: GECU loans: Conventional, FHA and VA Simplified mortgage loan pre-qualification Competitive, low interest rates Lower closing costs To find out more about our services, call the Mortgage Loan Department at or log on to SmartBranch at Subject to credit approval. Anyone living or working in El Paso County or Doña Ana County not more than 25 miles from our 1500 North Resler office is eligible for GECU membership. (left to right from back) Eddie Lopez, Lorenzo Reveles, Sandra Lujan, Jose A. Avila, Jr., Terry Vargas, Pamela Herron, Araceli Aguilera, Monica Gonzalez, (front) Lettie Ramos

3 08/09 Welcome As I write this (July 1), it occurs to me that my Presidential year is already past the halfway point is speeding by; and considering all the adjustments we ve experienced in our industry over just the last few months, I know how busy most of you are just trying to keep up. We ve dealt with changes in the 1st time homebuyers tax credit, the sudden shift from almost no FHA Loans to almost all FHA Loans, and MIP appraisal reviews that can tank a deal just 24 hours away from closing. We went from having no idea what constituted a short sale to learning all about them and even attempting to complete one. Those of you who HAVE successfully completed a short sale have my highest respect. And just when we thought all we needed was an address, a cell phone and a website, along came Facebook, Active Rain blogging and tweeting. And remember when shaking hands involved some sort of manual physical contact? Through all of this, our hard working GEPAR and MLS boards and staff have worked diligently to bring all of you the tools you need to stay on the leading edge of technology and professionalism. But they can only provide you with the ability to compete at a 21st century level. It s up to you to actually take advantage of the tools available. I hope by now most of you have updated your GEPAR profile. It doesn t cost you a dime extra, and you can even have your own blog. Does all of this sound as if I m leading up to something? Well, get ready for take-off because more changes are coming. We will soon be saying goodbye to those annoying little buttons that are required to gain access to our MLS. I can almost hear your collective sigh of relief. Suzy Shewmaker Hicks President Greater El Paso Association of REALTORS Our new security will identify us by our biological imprint as we touch the keyboard of our computers. Apparently, nobody types quite like you do, and you can t even fake a different keystroke if you try. I ll admit to being a little uncomfortable when I first heard this, but the presentation made to the MLS board helped alleviate some of my concerns. We also expect to soon be paying our board and MLS bills on line or by credit card. The details are currently being worked out, but we anticipate our GEPAR members will soon be receiving their bills individually by rather than indirectly through their brokers. We are currently one of the few Associations that bill the broker rather than the individual agent. Since we are all independent contractors--much like associates in a law firm or accounting practice- -we are individually responsible for paying our own professional dues and fees. We had two outstanding Ambassador Series in May and June. Ed Archuleta gave us updates on the progress made by El Paso Water Utilities Stormwater Project, and in June we were given a great deal of specific information regarding the Ft. Bliss expansion. We learned how many troops to expect, when they re coming, and how we can best be of service in meeting their housing needs. Special thanks to Estrella Martinez, Housing Manager of the Ft. Bliss Housing Services Office and Clark McChesney, Director of the Team Bliss Base Transformation Office. In July, Bob Cook of REDCO and David Buchmueller of Paso Del Norte Group told us the latest news on El Paso s downtown development and what private individuals were doing to promote our region not only as a great place to do business, but a great place to retire as well. Association Officers Suzy Shewmaker Hicks, President Doug Hamilton, President Elect Linda Bastraw, Secretary/Treasurer Dan Olivas, Immediate Past President Sharron Ramirez, C.E.O. Association Directors Angelo Amoriello Michael Bray Roland Correa Patsy Olivas Jackie York Association Directors Al Jurado Frances Moran Yolie Stanton Elizabeth Golden Jim Howard MLS Directors Kenny Gross, President Patti Olivas, Vice-President Rick Snow, Secretary/Treasurer Bill Stanton Robert Lozano Dolores Guevara Thalia Badillo Angelo Amoriello Jesus Barraza NAR Directors Doug Hamilton Scott Kesner TAR Directors Linda Bastraw Kathleen Osowski Sonja Van Nortwick TAR Nominating Committee Kathleen Osowski TAR Regional Vice President Michael Bray TAR TREPAC Trustee Karen Porter Political Involvement Committee Jennifer Stroh Committee Chair Linda Bastraw, Budget & Finance Susan Craig, Education DJ Mora, Fair Housing/Equal Opportunity Yoli Chavez, Govermmental Affairs Martha Maldonado, TREPAC Caroline Camfield, REALTOR /Builder 3

4 Real Estate Ethics Steve Carvalho 2007 GEPAR Grievance Commitee Chairman 2008 & 2009 GEPAR New Member Ethics Instructor I remember reading an article last November in Texas REALTOR that dealt with the question of charging transaction fees and possibly violating RESPA guidelines. The author, Gabriel Lopez, is associate counsel for TAR. In his article, Lopez stated The only pattern that has arisen is that the courts will look at transactions individually. Well a lot has changed in just seven months! The United States Court of Appeals for the Eleventh Circuit has cleared the way for a class action lawsuit in regards to transaction fees, also referred to as administrative brokerage commissions. The case of Busby v. JRHBW Realty, Inc., d/b/a/ Realty South involves a buyer who was charged an administrative brokerage commission in the amount of $ in addition to the commission being charged by the brokerage firm. The brokerage charged the fee to all of its clients, regardless of whether the client was a buyer or seller. The buyer filed a lawsuit against the brokerage firm alleging that the fee was a RESPA (Real Estate Settlement Procedures Act) violation. RESPA is a federal law which was enacted in 1974 to prevent real estate consumers from paying exorbitant costs associated with a real estate transaction although its primary focus was aimed at fees charged by mortgage companies. As a result of RESPA, lenders and mortgage brokers must provide borrowers with a Good Faith Estimate that clearly discloses loan terms and closing costs. The RESPA statute under section 8 is what was used against the brokerage company. Section 8 prohibits fee splitting and receiving unearned fees for services not actually performed. The buyer claimed the fee charged violated RESPA because the brokerage company did not provide any service to support the fee. Additionally, the buyer sought to have the lawsuit certified as a class action lawsuit bringing in other buyer and seller clients who paid the fee in a transaction involving federally insured loans. While the trial court denied the motion to make this case a class action lawsuit, their decision was overturned by the United States Court of Appeals for the Eleventh Circuit. It was the unearned fee aspect of Section 8 of RESPA which allowed the class action aspect of the lawsuit, not the provision for overcharging of services. The brokerage company s defense rested on an array of services they provided to justify the additional fee but the court ruled that many of these services were covered by the commission charged by the brokerage. Laurie Janik, NAR s General Counsel, issued a statement on April 29, 2009 stating that brokers should review how they characterize their compensation. Placing separate labels on what is all compensation to the brokerage firm exposes the firm to the same claims filed by Busby. It allows the conclusion that each separately labeled charge represents a fee for a separate service. Likewise, disclosing separate components of the broker s compensation in different parts of the contract with the consumer or on different lines of the settlement statements creates risk. Finally, do not create the impression that any particular fee is for a separate service if that is not the case. An appeal in this case is likely as the proceedings have yet to be completed. Janik states that NAR sought a clarification from HUD on this matter months ago and have yet to receive a response. For a more in-depth analysis on this matter, go to where I gathered much of this information. I wanted to follow up to my previous article on Understanding the Intermediary Relationship which appeared last August. What happens when the intermediary (The Designated REALTOR ) in a firm lists and sells properties and has a transaction with an agent in his office? Can an intermediary relationship exist where the intermediary represents his/her client (let s say it is his/her listing) and the associate in the office represents the buyer/client? Absolutely NOT!!! The intermediary (Designated REALTOR ) can never be in a role other than the Intermediary. Remember that the Intermediary is required to treat both parties to the contract with fairness and impartiality. The only role that the intermediary/listing agent and the associate/buyer s agent would have would be that as transaction facilitators which would probably be in conflict with what the client was originally promised in terms of how they would be represented. This situation can be rectified by the intermediary (DR) appointing an agent in his office to represent his/her client as the listing agent, or buyer s agent, however the situation presents itself. I welcome your comments at steve@stevecarvalho.com 4

5 Guest Column Tax credit deadline Dec. 01, 2009 Hurry!!! Appraisal Reform Update Ambassador Series Chente Quintanilla Texas State Representative, District 75 As REALTORS, all of you are very much vested in an appraisal process that is complimentary to your profession. During this past session, the debate between strictly controlling the appraisal process and free markets resulted in some very interesting legislation being passed. Many of you may recall that I was appointed by former Speaker Craddick to the Select Committee of Property Tax Relief and Appraisal Reform. In the months before this past legislative session, we held many public hearings, including a very well attended one in El Paso, to listen to constituent concerns on the appraisal process. The reason for the hearings was to lay the groundwork for future legislation. Now that the 81st session is over, I would like to share with you some very important changes that we, the legislature, have put into law regarding appraisals. I joint authored House Bill 8 by John Otto (my chairman on the select committee) which focused on the comptroller's office. HB8 changes the comptroller's appraisal review cycle from every year to every two years for each appraisal district unless the comptroller finds serious deficiencies in the published appraisals. In such cases, a study would be done annually. This would increase accuracy and improve the practices and standards of appraisals done in Texas. Because fewer school districts are studied annually, the comptroller's office would produce a more focused study thereby eliminating some of the problems that have arisen in the past. Troy Ainsworth, Ph.D., a Historic Preservation Officer from the Development Services Department at the City, will present a PowerPoint titled, " El Paso Architectural Landmarks and Historic Districts" on August 21 at 1pm. He will cover key points such as: An overview of historic districts Distinctive architectural structures The value of historic preservation as an economic component. Some of the problems with appraisal district findings were related to the failure to concur with the comptroller's numbers. With more focused studies, the process will be more uniform. This should reduce the tendency of the comptroller's findings constantly pushing property values higher than the local appraisals. The other significant bill to be passed on to Governor Perry was Senate Bill 771 by Senator Williams. Basically the bill requires that the chief appraiser of a district base appraisal on all available evidence before an increase may be assessed. In other words, an appraisal may not be simply based on a nearby property. The specifics of each home must be taken into consideration. Also, the burden of proof is on the chief appraiser to substantiate the increase; no longer the responsibility of the homeowner. If a property receives a reduced appraisal, then that lower appraisal shall be the appraised value for taxation purposes. And, the property value may not be automatically increased the following year unless the chief appraiser has shown substantial evidence that the reason for the previously lowered appraisal has been corrected or changed. So often the driving force in the ever increasing appraisal of homes has been the sale of other houses in the area. Now, according the provisions of Senate Bill 771, the chief appraiser must take the specifics of your home into consideration before increasing your appraisal automatically. These are all important first steps in helping you deal with a very complicated property appraisal process. That s why we present... First Time Homeowner Seminar Innovative Mortgage Solutions That Work for You Bust the fears and replace it with facts about the truth of BUYING YOUR FIRST HOME. Know the steps in order to realize the dream of HOME OWNERSHIP Get to know your real estate team who will WORK FOR YOUR BEST INTEREST. This is the BEST TIME TO BUY a home in El Paso Presented by Al Jurado Jr. Broker/Realtor 2008 Salesman of the Year GEPAR Director President 2007 & 2008 Council of Independent Brokers and Agents Chairman Greivance Committee Texas Real Estate Political Action Committee Next seminar starting soon! Call to reserve your seat. Al Jurado Jr. (915) aljuradojr@anycasa.com

6 Main Article Dealing with Depression During a Recession The 2009 Presidential inauguration carried many different expectations. Not only was it a historical event, and one anticipated by 95% of the population, but with it came the answer to the number one question plaguing the American population: Is this really going to be the greatest recession since The Great Depression and what was the solution? We saw companies that were cornerstones to the American economy such as GM and Chrysler, financial institutions and other Fortune 500 organizations fall and become everything but extinct during the bailouts. Furthermore, the aftermath (millions of jobs cut and unemployment rates jumping higher than ever before since the 1930 s) has left us all with a feeling of displacement, confusion and helplessness. The happenstances of our current economic situation has left us all feeling anxious and depressed. Remember that old joke, what is the difference between a recession and a depression? Recession is when your neighbor loses their job; depression is when you lose your job. Unfortunately, this time it s no joke and proven to be painfully close to home. All in all everything is bitterly overwhelming. Many times we find ourselves encountering not only financial woes, but in most cases, the recession has caused a rise in depression amongst the American population. Over the last couple of months, self-help websites have increased their hits for dealing with depression, stress and anxiety, according to Sean Bennick Vice President of Get Mental Help and In fact the website has completely re-structured to assist its visitors with links to dealing with depression and stress. Recognizing depression in many cases is the first step towards solving the issue. Using our emotions to get us through both our depression and the economic recession can prove to be the best way of sorting through this whole mess, so how can we do it? Know the difference between an economic recession and an economic depression. Knowing the difference between both terms from an economist standpoint could take the fear out of the situation. According to the National Bureau of Economic Research (NBER), an economic recession is the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it is called an expansionary period. By this definition, the average recession lasts about a year. A depression is a recession that lasts longer and business activity has a larger decline. 2 Avoid becoming a hermit According to ABC news, people cope with a recession by getting out there, enjoying time with family at the park or playing baseball or football. Getting adrenaline pumping has been proven to increase a sense of well being and happiness. Concentrate on the positives in your life, and avoid getting paralyzed by self blaming; it is a national event not a private affair. Do a little therapeutic shopping Yes, that is right! The most important thing to remember is during a recession the stimulation of the economy proves to be the most important goal. And let us not forget that shopping could be the best time of therapy for a depression. It is okay to be sad. Psychologists have noted sadness is terrible and can be painful, but many times going out and making a purchase, whether it be as small as hair accessories or clothes, can stimulate not only the economy but our emotional state in a positive manner. Don t be the cowardly lion! Sociologists have found that fear only increases feelings of inadequacy and many times increases feelings of depression and sadness. True, it is hard not being frightened by risks and taking action against the nation s current situation. However, fear is the enemy of action, and many times the fearful go from pessimism to withdrawal. We must all agree that getting off the fence and buying a home would be a difficult task when financial risks are accompanied by fear. Be well informed Stimulus packages are being sent out by President Obama left and right. It may be funds to ease foreclosure in families struggling to make ends meet or funds to improve the job market. Relief is on its way but be on the loop. Wise investments can be made simply by being informed of your options. According to Smart Money, economists have opted to invest in bonds. Bond funds are a smart way to invest and earn a higher return than before. Also, a large growing trend is investing in foreclosures, which are widely available in the present economical state. Know that there are other ways of dealing with depression and help is available; you just need to ask for it. Keep yourself informed and healthy, the most important factor in survival. The recession doesn t have to be a negative imprint on our lives. It can be a way to increase the time we spend with the family or a clever way to get the biggest bang out of your buck. Remaining positive throughout the current national economic state could be the best way to combat it. So say good riddance to those economic blues and begin a self-help program to keeping you sound and healthy. The biggest investment you can make during this economic cycle is in yourself. Live. Be Happy.Stay Strong. Sources 1 Moffatt, Mike. "Recession? Depression? Whats the difference?." Web.16 Jul < 2 Barrett, Kate. "How to Conquer Recession Depression." ABC News Health (2008) Web.16 Jul < 3 Cloud, John. "Feeling Our Way out of Recession." Time Magazine (2009) Web.16 Jul < 4 Goldstein, Matthew. "How to Invest During a Recession." Smart Money Web.16 Jul <

7 Greater El Paso Association of REALTORS Announces Scout and Sentry for SAFEMLS Greater El Paso Association of REALTORS has already taken important steps to face a challenge that is prevalent in our entire industry that of data security and unauthorized account sharing by implementing Clareity Security s SAFEMLS solution. Clareity is the leading provider of identity and access management solutions to the real estate industry, and has made a substantial commitment to continue to find and develop new technologies to secure our valuable MLS data from misuse and theft. This is why we are pleased to announce the implementation of Scout and Sentry for SAFEMLS the next generation in access intelligence and identity assurance. This is both security and convenience all in a single package! You will be hearing more about this initiative in the coming weeks, but you can expect to see a slightly different log in screen in August. This new log in screen will require Adobe Flash. This is a very common program that is required by numerous sites, thus the majority of computers are already equipped with it. However, you may be prompted to download the latest version the first time you attempt to log in. In addition, you will no longer be able to save your log in ID, as this technology involves keystroke recognition and will require you to type your user ID and password with each log in. Understanding and capturing keystroke dynamics will allow you, as our respected members, the freedom of security without the addition of extra hardware such as a key fob. As this security initiative moves forward, GEPAR will provide you with more detailed information about how it will work, and how we as MLS members can appropriately protect access to the sensitive information entrusted to us. Association News Grassroots Efforts and TREPAC Help Your Business The Texas Association of REALTORS enjoyed a successful 81st legislative session, largely due to your grassroots support. The association tracked almost half of the 7,500 bills filed this session, watching those which would have affected private-property rights, homeownership, and the real estate industry. The result? When the gavel fell on June 1, the Texas Association of REALTORS had helped pass legislation that reforms the appraisal process, stops mandatory sales-price disclosure, prevents real estate transfer taxes, allows one-time filing of a tax exemption for your vehicle, defends against mortgage fraud, and prevents the 8 erosion of consumers home equity protections. Yes, we've been fortunate. We continue to prevail on our issues, and the Texas economy is stronger than most states. But our future is not secure. Unemployment in Texas rose to 7.5 % in June, even though it remained below the national rate of 9.5 %. Our sales-tax revenue is running way behind projections, and we're looking at a possible multibillion dollar deficit in Texas lawmakers will soon look for new sources of revenue, and many of them see real estate as an easy target. By investing in TREPAC now, you keep our PAC strong and send a powerful message to law- makers. When you invest in TREPAC, you are investing in your business. Through TREPAC, we are able to support legislators who share our philosophy of protecting private-property rights. If you have already made your investment this year, please consider an additional commitment. The threats to our industry and livelihoods are real, and TREPAC is the strongest tool we have to fight back. Your TREPAC investment will help keep our industry and Texas economy strong. Mike Barnett is the North Texas Field Representative for the Texas Association of REALTORS. He can be reached at mbarnett@texasrealtors.com or (512)

8 Association Events The Ambassador Series welcomed Bob Cook The Ambassador Series welcomed Bob Cook, CEO of REDCO and David Buchmueller, Chief Operating Officer for the Paso Del Norte Group, on July 17 to discuss the private initiatives planned for El Paso's development. The Paso Del Norte Group's goal of making El Paso the premiere retirement destination was also discussed. Sue and Jennifer Woo Suzy Shewmaker Hicks, David Buchmueller and Bob Cook Bob Cook Guests listening attentively to the presentation David Buchmueller and Bob Cook Using the Tax Credit Eric Pike from the Texas Department of Housing and Community Affairs hosted two sessions on using the tax credit as a down payment assistance on July 24. Eric Pike Eric Pike addresses a full room GEPAR members sit in during one of the informative sessions 9

9 Positive Emotions Increase Life Satisfaction By Building Resilience People who seed their life with frequent moments of positive emotions increase their resilience against challenges, according to a new study by a University of North Carolina at Chapel Hill psychologist and colleagues. This study shows that if happiness is something you want out of life, then focusing daily on the small moments and cultivating positive emotions is the way to go, said Barbara Fredrickson, Ph.D., Kenan Distinguished Professor of Psychology in UNC s College of Arts and Sciences and the principal investigator of the Positive Emotions and Psychophysiology Laboratory. Those small moments let positive emotions blossom, and that helps us become more open. That openness then helps us build resources that can help us rebound better from adversity and stress, ward off depression and continue to grow. In the month long study, 86 participants were asked to submit daily emotion reports, rather than answering general questions like, Over the last few months, how much joy did you feel? Getting those daily reports helped us gather more accurate recollections of feelings and allowed us to capture emotional ups and downs, said Fredrickson, a leading expert in the field of positive psychology. Building up a daily diet of positive emotions does not require banishing negative emotions, she said. The study helps show that to be happy, people do not need to adopt a Pollyanna-ish approach and deny the upsetting aspects of life. The levels of positive emotions that produced good benefits weren t extreme. Participants with average and stable levels of positive emotions still showed growth in resilience even when their days included negative emotions. Fredrickson suggested focusing on the micro-moments that can help unlock one positive emotion here or there. A lot of times we get so wrapped up in thinking about the future and the past that we are blind to the goodness we are steeped in already, whether it s the beauty outside the window or the kind things that people are doing for you, she said. The better approach is to be open and flexible, to be appreciative of whatever good you do find in your daily circumstances, rather than focusing on bigger questions, such as Will I be happy if I move to California? or Will I be happy if I get married? In addition to Fredrickson, the study authors are Michael A. Cohn, Ph.D., of the University of California San Francisco; Stephanie L. Brown, Ph.D., from the University of Michigan; Joseph A. Mikels, Ph.D., of Cornell University; and Anne M. Conway, Ph.D., of the University of Pittsburgh. 10

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11 Upcoming Events August :00 pm 1:30 pm 1:30pm 2:30 pm 11:00 am WCR Governing Board EXIT Realty CIBA Education Committee Orientation Government Affairs Committee TREPAC Committee WCR Luncheon :00am 1:30 pm 2:00 pm Success Realty TAR 12 Pack Meeting - Austin MCE EXIT Realty MCE Budget & Finance Commitee Executive Committee :00 pm Ambassador Series presents Troy Ainsworth Texas Affordable Housing Specialist Class Texas Affordable Housing Specialist Class MLS Board of Directors Board of Directors WCR Governing Board 10 E-Pro Event with Kevin Burke 20 6:00 pm TREPAC Event El Paso Rocks! September :00 pm 1:30 pm 8:30am 1:30 pm 2:30 pm EXIT Realty CIBA Education Committee Orientation WCR Breakfast, Holiday Inn Express Government Affairs Committee TREPAC Committee Labor day - Office closed :00 am 8:00am 2:00 pm TAR Fall Meeting - Dallas MCE EXIT Realty MCE Budget & Finance Commitee Executive Committee Signature Series Featuring Dr. Mark Dotzour am-5pm 9:00 pm 12:30 am Association & MLS Election MLS Board of Directors Board of Directors ERA Sellers, Buyers & Assoc 8 9 Success Realty BIC Real Estate Office Metting 18 1:00 pm Ambassador Series welcomes Allen Russell 30 BIC Real Estate Office Metting 6400 Gateway East Blvd. El Paso, TX Presorted STANDARD US POSTAGE PAID El Paso, TX PERMIT No. 142