Archive for July, 2009

Sign posts, digging, and the SCC: the FAQs

The following questions and answers are in response to concerns about the law governing real estate sign installation.  If you have further questions please contact VAR Associate Counsel Blake Hegeman at (804) 264-5033, or e-mail blake@varealtor.com.

NEW REGULATIONS OR LAW?

Were VAR’s recent communications about the need to notify Miss Utility before installing real estate signs in response to new regulations or a new law?

No.  The Virginia Underground Utility Damage Prevention Act was enacted thirty years ago to address the responsibilities of all stakeholders in preventing damage to underground utility lines.  However, recently the State Corporation Commission’s (SCC) Division of Utility and Railroad Safety staff asserts they have seen damage to utility lines caused by the installation of real estate and other signs, and have begun a campaign to educate stakeholders about the law and step-up enforcement of the law.  No new regulations have been enacted and the Act has not been revised. We regret if our previous communications gave that impression.  The SCC’s recent actions only concern education and enforcement of a long-standing statute.

REMOVE EXISTING SIGNS?

Do I have to remove signs now in place that were installed without checking with Miss Utility?

The SCC has not suggested this action to VAR or in its educational materials.  However, it is important to comply with the law going forward, unless or until it is changed.

HOMEOWNER EXEMPTION?

Are homeowners exempt from the requirements of the Act?  If so, may I inform my clients that they are permitted to install signs without calling Miss Utility, and suggest that they do so?

There is a limited exemption from notification and other requirements of this statute for the owner of the property (see excerpt below from the Code of Virginia).  We are not advising Realtors to suggest their clients place real estate signs themselves, although the Act does exempt property owners from first having to call Miss Utility before placing signs in their yards by hand.  Realtors and their clients need to realize, however, that this exemption is limited to excavations by non-mechanized tools or equipment.  Owners need to get clearance before using a back-hoe or gas-powered augur, for example.

Please keep in mind that property owners installing signs pursuant to this exemption could still face liability if they damage a utility line, and conceivably could pursue action against a Realtor who advises an owner to place the sign without first checking with Miss Utility.

§ 56-265.15:1. Exemptions; routine maintenance.
Nothing in this chapter shall apply to:
1. Any hand digging performed by an owner or occupant of a property.

DAMAGE FROM REAL ESTATE SIGNS?

Have real estate signs caused damage to underground utility lines?  Is there special danger from spiked real estate signs?

According to the SCC’s historical data since 1995 (which includes damage only to gas utility lines), on 49 reported occasions realty companies have damaged underground utility lines and on 23 reported occasions sign installation companies working for real estate companies have caused such damage.

The SCC maintains that hand-installed spike signs create special problems.  Their ease of installation makes them a preferred choice in many instances, especially when larger, more permanent signs will not be installed until later.  Many are placed at the front of properties near streets to increase visibility and are thus often located on utility easements.  Until recently, certain utility lines have not had minimum depth requirements, making them easier to strike.  Even a depth that is initially adequate may change over time as a lot is graded or erosion occurs. Also, utility lines are often fragile and can be easily pierced.

The SCC has provided VAR with the attached PowerPoint presentation to illustrate these issues. (Click to download it to your computer — about 7MB.)

WHAT’S NEXT?

VAR is in discussions with the SCC about these new enforcement actions, and has obtained an important ruling recognizing an exemption from enforcement against so-called “coat-hanger” signs.  As more issues arise (for example, how large a sign qualifies for the coat-hanger sign enforcement ruling?), we are considering all options.  However, the SCC has made clear that it has abandoned its previous lax enforcement of the Act because of the safety issues involved.  We are working to find the common ground that assures protection of life and property without undue restrictions on the ability of homeowners and Realtors to make reasonable use of signs in the marketing of property.

"Call before you dig" law affects Realtors

This urgent message is being sent to all VAR members by e-mail, but for those of you who are more inclined to read VARbuzz…

(One point of clarification from the e-mail: This isn’t a new law, but enforcement of the law has dramatically increased recently)

You may have heard about Virginia’s Underground Utility Damage Prevention Act: It requires that Realtors® (and others) call the Virginia Utility Protection Service — aka Miss Utility — before putting up any sign that involves sticking something in the dirt, other than "coat hanger" signs.

Even putting up a typical spike sign is considered "excavating," and Realtors® or their sign companies who don’t first get the go-ahead from Miss Utility face up to a $2,500 fine. In fact, the SCC’s Division of Underground Utility and Railroad Safety originally prohibited even those coat-hanger signs; VAR fought for and won at least that concession.

The SCC maintains this is for safety reasons, although the regulation has an exemption: The owner of the property doesn’t need to get permission first.

The SCC points out that utility lines aren’t always buried deep; they can be as little as two inches below the ground. (Only since July 2002 have all lines been required to be installed deeper.) And in the last two and a half years, more than 600 gas lines have been damaged within a foot of the surface.

That’s one reason we agree that Realtors® who are actually excavating — digging a hole for, say, a 4×4 post — should be required to check with Miss Utility for gas or electric lines. But we feel it’s overkill to mandate up to a three-day waiting period to erect a common steel-frame sign or information box, then impose such a steep fine, especially when the homeowner can install one without calling first.

Bottom line:

VAR is continuing to work with the SCC to determine if there is a more reasonable middle ground, and will consider working on legislation if necessary.

Until then, however, you need to be sure to obey the regulations. You can click here to read the full text of the law; here’s a summary:

For any kind of sign other than the wire "coat-hanger" variety or temporary, free-standing "tent" signs:

  • You or the sign installer needs to call Miss Utility of Virginia at 811 or (800) 552-7001 at least 48 hours before installing, excluding weekends and holidays.
  • Once you have called, you need to wait 48 hours starting at 7 a.m. the next working day to give Miss Utility a chance to mark any lines.
  • After 48 hours, if there are no marks, you have to call again, then wait three hours.
  • After those waiting periods, or if you get a call telling you it’s OK to dig, then you can install your sign.

Note that the installation approval — called a "utility ticket" — is only good for 15 working days. If you want to install another sign after 15 days, you need to start the process over in case a utility company snuck in and added a line during that time.

We will keep you informed of our work with the SCC and of any changes to the signage rules.

To learn more about these regulations, right click this link and select “Save target as…” to download a 7 MB Power Point file provided by the SCC.

New Truth in Lending requirements take effect

Starting July 30, lenders will have to comply with some new disclosure requirements under a rule change that comes out of the Mortgage Disclosure Improvement Act (MDIA).

Bottom line: Residential borrowers who are financing (or refinancing) a primary or secondary home will see some changes from their lenders and may face some additional delays. (Investors’ loans are exempt.)

Broadly speaking:

Lenders are required to give good faith estimates of mortgage loan costs within three business days after the consumer applies for a loan; it can’t collect any fees before providing that, except  to pay for a credit report.

After this early disclosure, there’s a seven-day waiting period before the sale can close, although consumers can waive this for a “bona fide personal financial emergency” if they have received an accurate TILA disclosure. (The Fed made it clear that waivers should not be used just to speed things up. Even if a consumer waives the waiting period, lenders are insulated from liability.)

And if the loan’s APR changes by more than 0.125 percent, the lender must correct the disclosure, get the new version to the borrower, and wait an additional three business days before closing the loan. (“APR” in this case includes the interest rate and  certain settlement costs. That means lenders will have to be extra careful calculating those fees, or they risk having to go through that corrected-disclosure process.)

Click here for a brief from NAR.

Click here for a summary courtesy of the Mortgage Bankers Association.

For those who like the nitty-gritty, here’s a link to the full text in the Federal Register (PDF).

This economic recovery might happen after all

First the epitome of pessimistic economists says the worst of the financial crisis is behind us, then existing home sales soar 11%, and now the perpetually gloomy Case-Schiller index shows home values improving. This has the making of a trend.

Hang on a little longer. We might yet get through this thing.

Realtors and bankers are gearing up for a battle over Arizona legislation that would allow lenders to sue homeowners for losses incurred from a foreclosure.

The change to the state’s so-called “deficiency judgment” law requires a borrower to live in the home for six months to be eligible for protection from lender-initiated lawsuits to recoup the full outstanding principal of a mortgage.

Proponents of the law, including bankers that lobbied for the change, believe it will discourage investors from walking away from properties when they can’t make a profit.

Read it here.

VaHomeownersAlliance.com’s back. This time, it means business.

If you hadn’t noticed, last week we quietly re-launched VaHomeownersAlliance.com with a new focus and a new look. Enough quiet. Today, we’re making a little noise about the new VaHomeownersAlliance.com: Check it out today!

The all-new VaHomeownersAlliance.comThis isn’t just a refresh. No, sir. We’ve totally redesigned the site, rebuilding it from scratch on a free and flexible platform that will allow us to roll out even more features in the months to come. We’ll tell you about those in a future VARbuzz post.

But for now, here are some of the new and improved site features:

  • Heavy focus on site content. You’ll see that the site content appears much further up the screen than the old site, which will make it much easier for visitors to tell at a glance what kinds of information they can expect to get from the site.
  • No more cumbersome “regions”. Formerly, users had to choose from eight large areas of the state and get their news from multiple cities and counties within that region. We felt that Virginia’s counties were big enough without grouping them with five or even 10 others, thank you very much.  So we gave every county and incorporated city its own page. Oh, and you can choose as many counties and cities as you’d like to get updates about. So for example, if you live near the borders of, say, Fredericksburg, Stafford and Spotsylvania, you can select all three localities and get news about all of them on your personalized home page.
  • News stories aren’t just copied and pasted verbatim from newspaper Web sites anymore. Now, the news stories posted to the site are reviewed by a manager who summarizes the article, provides a homeowner perspective on the story, pastes a snippet from the story, and a link to the original article.
  • The site has a master RSS feed and an RSS feed for every Locality, enabling Realtors and Virginia Homeowners Alliance members to subscribe to updates about only their chosen areas.  We’re looking into the feasibility of adding a “subscribe by e-mail” feature for news from each locality.
  • When users join the site, they instantly receive an e-mail from the site welcoming them and providing them with a link to a page that gives them seven quick ways to get the most of their Alliance membership.
  • Once members log in, they see a prominent “members-only section” on the top navigation bar that has members-only reports and articles. We’ll continue to add members-only content to this area.
  • There’s a lot of social media and viral marketing stuff built into the site. More and more homeowners are getting into it, so we thought VaHomeownersAlliance.com should too.

We’re still working on moving some of the old site content over to the new platform. Some of those features include the Kid’s Corner with information for parents on the Standards of Learning tests and the locality-specific real estate assessment information.

The new site has been live for just under a week, and we have posted about 40 stories at this point. One of the drawbacks to having a separate page for each locality (there’s over 120 of them) is that it’s much more labor-intensive to cover each locality with stories than when we had eight huge regions. Our site manager is working hard to cover 75% of the localities with at least one story by August 1. If you have a story you think VaHomeownersAlliance.com should be covering, please send it to us!

Just a couple more points. These about advertising the site:

  • We started running an advertisement on Facebook last week for the new site that targets Virginians aged 30 years and older.
  • If you use Client Direct, your next VAR-provided article will be about the redesigned site. It will look remarkably like this article.
  • We have additional direct-to-homeowner advertising plans in the works. So if you want to qualify for the incentives that we have to recruit homeowners into the alliance, be sure tell your friends, family, neighbors, and clients (both past and future) about the site. Otherwise, we may recruit them before you have a chance to.

Big home-sales jump

From MSNBC: “New home sales soar 11% in June; largest monthly increase in nearly 9 years.”

More to come as we get the details. Remember that month-to-month increases are expected from January to June; the year-to-year numbers are generally more important. However, a bigger monthly jump than expected is also very good news.

Dr. Doom says the worst of the economic crisis has passed

One of the only economists to accurately predict the severity of international economic woes, Dr. Nouriel Roubini, said in a speech last week that the worst is over.

“There is light at the end of the tunnel, there is a bottoming out of the U.S. and of the global economy. And the light at the end of the tunnel for once is not an incoming train.”

Here’s hoping.

HVCC clarification from Fannie and Freddie

There’s at lot of misinformation out there about the requirements of the Home Valuation Code of Conduct. The problem was bad enough that the good folks at NAR put some pressure on Fannie and Freddie to get them to set the record straight.

It worked. After NAR president Charles McMillan met with the New York Attorney General’s office, the Federal Housing Finance Agency, and Fannie Mae, a new bit of “guidance” came out for lenders.

“Some key items that the public should know,” it reads, and begins with perhaps the biggest issue:

Communications with appraisers – Contrary to some suggestions, the Code provides for communications with appraisers about errors, additional needed information and unprofessional conduct. Quality control personnel may communicate with appraisers and other lender personnel, outside of the loan origination function. The real bar is on communications that seek to influence the appraiser to adopt a set valuation, which is prohibited.

It also addresses some other myths and misconceptions:

Contrary to some suggestion, the Code does not favor the use of AMCs over independent or in-house appraisers.

and

The use of unqualified in-state or out-of-state appraisers, unfamiliar with local conditions, should be reported to state appraiser licensing agencies.

(Some of the others are less about correcting misinterpretations than about, well, wishful thinking. The HVCC, it says, isn’t responsible for longer turnaround times for appraisals, for example.)

Both companies have also updated the HVCC FAQs on their respective Web sites. Fannie’s is here, while Freddie’s is here.

If nothing else, the fact that Fannie and Freddie realized the need to clarify the HVCC is a heck of a victory. Kudos to McMillan and NAR for fighting the fight in Washington.

Quarterly housing report — 2Q 2009

It’s that time again — time for the quarterly housing report for Virginia.

Let’s get the bad news over with first.

While there might be a light at the end of the economic tunnel, we’re still in the tunnel. So while the long-term prospects may be positive, we’re still feeling the effects of the economic nightmare that began in mid-2007.

Unemployment is a bit over 13% nationwide. Virginia’s unemployment rate is lower than the national average; we have the 11th lowest unemployment rate in the country at around 8%.(These figures are real unemployment numbers, by the way, taken from U.S. Bureau of Labor Statistics data.)

Statewide, housing sales were down 4.4% from the second quarter of 2008, and 21 of the state’s 26 metro areas showed a drop in sales over 2008. (They were up over May, of course.)

That’s the bad news. Here’s the good stuff:

  • Home prices, overall, are dropping. Almost 3/4 of Americans (72.5%) can afford a median-priced house — the highest percentage in 18 years.
  • Sales increased from May to June. This is expected, as sales usually increase monthly for the first half of the year. But the 1Q-2Q jump was bigger than expected. In the Lynchburg area, for example, sales jumped 59% from quarter to quarter, compared to 40% from quarter to quarter last year.
  • Fredericksburg saw sales increase more than 25% over the same quarter last year (and a 35% jump from June to June); Northern Virginia’s quarterly sales were up 8.6%.
  • Interest rates remained low, the Dow has climbed (1900 points since its low in early March), and so has consumer confidence. Housing starts were up in May and June, too.
  • Best of all, more people intend to purchase a home this year than last.

You can download a copy of the 16-page report here (200K PDF); more-visual folks can click here for a 6-pager of the important charts.

Prefer the audio? We’ve got you covered with an MP3 of the summary.

And looking to see how some local papers wrote up our news conference? Check out the Richmond Times-Dispatch:

“We [probably] passed the bottom of the bad times along about Christmastime,” said John McClain, a senior fellow at George Mason University’s Center for Regional Analysis, during a media conference call about the report.

“Some of the leading economic indicators are up for a third consecutive month, indicating the beginning of a change,” McClain said.

the Lynchburg News & Advance:

Betty Kain, president of the Lynchburg Association of Realtors, said Thursday that consumer confidence has increased, and potential homebuyers are calling again and making reasonable offers for homes on the market. Other real estate agents across the state made similar observations.

WSET television

Lynchburg sales fell by 20 percent, and Roanoke fell more than eight percent. Realtors we spoke with say sales did start to turn around at the end of the quarter, with the onset of first time homebuyer incentives. But they say it might be some time before we see any significant change.

and the Fredricksburg Free Lance-Star:

Fredericksburg-area home sales had the best year-over-year growth rate in Virginia during the second quarter, according to the Virginia Association of Realtors.