by James Stefanile, ABR, GRI, SRES, QSC, gCertified, REALTOR/Salesperson, Berkshire Hathaway Home Services …New Jersey Properties, Montclair Office
This has been a busy time for change in the real estate industry nationally, in New Jersey and in my company.
For starters, the Consumer Financial Protection Bureau, or CFPB, a new Federal agency created with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has changed and simplified the consumer based paperwork accompanying mortgage loans and closings. The CFPB integrated the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures and regulations. As of October 3rd the old Truth In Lending and HUD-1 closing forms were made obsolete, replaced, nationally, by loan disclosure and closing forms which are more readable, comprehensive and user-friendly. Also mandated are rules that lenders must provide borrowers with the final closing disclosures 3 business days before a closing. The new rules also shift the responsibility for generating the closing documents from attorneys to mortgage lenders. If the lender fails to get the forms in the hands of the borrower 3 business days before the closing or the loan product changes within the 3 business day disclosure period or if the loan percentage increases more than 1/8%, an additional 3 day period is triggered. The late addition of a mortgage pre-payment penalty will also trigger the 3 day rule but New Jersey law restricts the ability of a mortgage lender to impose a fee on a borrower upon the prepayment of a mortgage loan pursuant to the New Jersey Real Property Code, N.J.S.A. 46:10B-1 et. seq., and under its Licensed Lender Act, N.J.S.A. 17:11C-1 et. seq. Non-mortgage transactions use the same forms and procedures which were in place before October 3rd.
It’s our duty as REALTORS to make sure that the transaction stays on track, given the new notification requirements and paperwork. We have had extensive training in the new procedures as attorneys, lenders and title companies adjust to the new environment.
At the same time, the New Jersey Association of REALTORS has mandated a new standard contract of sale for use in the state. The new form is much more comprehensive and incorporates and codifies issues which, up to this point, were informal “standard practices”. For example, if a buyer needs to sell a property in order to buy the property covered by the contact, there is a provision which states a timeline and conditions for that contingency. Previously it was up to the REALTOR or attorney, if they thought of it, to suggest these conditions. The new contract also specifically covers certain environmental conditions which can be found on a property and how that would impact the transaction. The municipalities covered by the New Jersey Air Safety and Zoning Act of 1983 are listed and disclosures, if applicable, are included in the new form. There is also a second, earlier final walk-through mandated in order to facilitate closings, given the new CFPB rules. Electronic signatures are specifically addressed in the new contract as this is becoming more and more prevalent. These are just a few of the enhancements in the new agreement and there has been additional rounds of training so that we REALTORS can assist our clients with the new contract.
Our company has launched a new, online transaction system called SkySlope starting in October. This is a system only in use, locally, by Berkshire Hathaway Home Services NJ Properties, With this system, all the requisite paperwork is generated, stored and submitted online. This will fulfill and streamline our required document handling and compliance. Other objectives are to make us more responsive to clients, generate forms and documents in a more timely fashion and to increase convenience to our clients. The DigiSign feature incorporated in SkySlope will go a long way toward convenience. Documents can be electronically signed with the ease of an email and is in compliance with the Electronic Signatures in Global and National Commerce Act.
Naturally, there’s been a pretty steep learning curve associated with the implementation of SkySlope. It’s a radical departure (and improvement) on how we, as REALTORS, handled all the forms and disclosures required in a transaction and how we manage the forward motion of the deal. There’s been A LOT of training and some weeping and gnashing of teeth as the new system was launched and all the mountains of paper eliminated. The ease with which I obtained signatures on my last contract (over a matter of minutes vs. a matter of days) has certainly proved the worth of this systemic improvement.
And, just for fun, the multiple listing services we deal with have mandated a new generation of keyboxes, rendering all the boxes on our listings obsolete and un-useable. The new boxes are both infra-red and Bluetooth compatible (the old were only infra-red). All brokerages have had to gather up all their old keyboxes and swap them, all at once, for the new.
When I entered the business, computer technology in real estate procedures was fairly new and only about 50% of buyers looked for properties online. That figure is now close to 100% and this information is on all the newest mobile platforms. Back in the day, marketing was mostly newspaper ads and anything generated in print (flyers, postcards, door hangers, etc.). Marketing today is greatly enhanced by online opportunities (there was no Facebook or Twitter when I got in to the business – can you imagine!?) For those REALTORS in the business just a bit longer than me, listings were print-published in books by the multiple listing services which were available on a schedule. There were no online listings.
In my previous career as a television producer I ran my company with an IBM Selectric typewriter and a land-line phone. Fax machines were new, the size of a garage and $3,000. What few computers existed were also huge, very expensive, slow and not connected to any Internet service – there was no internet. There were no laptops, tablets, cell phones or smart phones. Talk about the Stone Age! The difference in how I do business today versus, even, 10 years ago is striking.
It’s inevitable that there is resistance to change. At a recent REALTOR board meeting, members who have 40 years service were acknowledged. Can you imagine the discipline it takes to change practices honed over 40 years? I see some “deer in the headlights” looks among some of my colleagues in response to all these new conditions. All the changes I mentioned were implemented, all at once, in October.
As with most things, it’s a brave new world, a world getting younger by the day and us old dogs have to learn new tricks to keep up.
Can’t get enough of my opinions? Take heart. I have another (non-real estate) blog called:
“The World At Large By Jim Stefanile: Thoughts On Everything Else”
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