News from the NAR Annual Convention

by Mike Barr

The 2010 NAR Convention was held from Nov. 3 – 8^th in New Orleans, and was attended by GRRA President Bill Guill, President-Elect Kathleen Sullivan, our RCA Vice-Chair Travis Carter, Board member Kelly Marks, NCAR Region 5 Regional Vice President Kevin Green, Immediate Past NCAR President Sandra O’Connor and GRRA staff member Glen Baity. The major issues which were discussed continue to be about the REALTOR® Property Resource (RPR), REALTOR® University, bank lending practices, tax reform and ‘going on the offense’ in support of homeownership.

News from the NAR Board of Directors Meeting:

Article 10: Equal Rights Amendment Passes

Code of Ethics Amended

The NAR Delegate Body approved an amendment to Article 10 of the Code of Ethics to prohibit discrimination on the basis of sexual orientation. In a roll-call vote, more than 93 percent of the Delegate Body voted in favor of the amendment. The Delegate Body decision confirms a vote by the Board of Directors in May.

New: Center for Specialized REALTOR® Education

The Board of Directors changed the name and scope of the Real Estate Buyers Agent Council to sharpen NAR’s leadership in professional education. Under the changes, REBAC is now the Center for Specialized REALTOR® Education, and its scope is expanded to include oversight of e-PRO, REALTOR® University, the GREEN Council, the Senior Real Estate Specialist (SRES) designation, and the Short Sales and Foreclosure Resource (SFR) certification.

Commercial Accounting Rule Opposed

Directors adopted a policy opposing lease accounting standard changes proposed by the Financial Accounting Standards Boards (FASB) and the International Accounting Standards Board (IASB) that would treat an income-producing real estate business as a financing business on company balance sheets.

A comment period on the lease rules runs through Dec. 15. Should the rules take effect, tenants would have to carry the value of their leased assets on their balance sheets, reducing the amount of money they can borrow. As a result, tenants will want less space and shorter-term leases without renewal options or contingent rents, which will decrease cash flow for property owners. Shorter-term rents will likely reduce the borrowing capacity of property owners, because they rely on leases and the value of the property as collateral to obtain financing.

IDX Policy Amended to Benefit Franchisors

Directors voted to expand NAR’s IDX policy to allow MLS participants to provide IDX data to real estate franchise organizations to index and display on their websites. The amendment comes with conditions, such as the need to promptly correct inaccurate or incomplete information and a prohibition on advertising on pages displaying the IDX information.

Evolving the Profession

The Directors made several changes in the professional standards arena:

• Approved a new Statement of Professional Standards to clarify NAR’s longstanding policy that the Case Interpretations of the Code of Ethics are official expressions of NAR policy that can be cited by complainants in support of alleged violations of specific Articles of the Code and by hearing panels in support of their decisions.
• Amended Standard of Practice 12-5 to let members who are advertising their service or a listing in certain electronic communications (micro-blogging on Twitter, for example) to disclose the name of their broker and other required information through a link rather than in the electronic communication itself, because such formats don’t allow enough space for making the disclosures.
• Amended Standard of Practice 3-7 to clarify that the requirement to disclose your relationship to your client to another NAR member when you’re seeking information about a property applies even if you’re not representing that client but rather are acting in another capacity, such as conducting an appraisal.
• Amended Article 15, and Standards of Practice 15-2 and 15-3 to establish that even in cases where a real estate professional isn’t the competitor of another NAR member, the duty to refrain from knowingly or recklessly making false or misleading statements still applies. For instance, an NAR member engaging in appraisal might not be the competitor of a member engaging in property management but would still be barred from knowingly or recklessly making false or misleading statements about the other. This amendment and related standards require Delegate Body approval in November 2011.
• Approved a new Standard of Practice related to Article 3 to provide a more visible explanation of what “cooperation” means in the Code of Ethics and Arbitration Manual. The new Standard says cooperation relates to the obligation to share information on listed property, and to make property available to other brokers for showing to prospective purchasers/tenants when it is in the best interests of sellers/landlords.

Constitutional Clean-up

The Directors approved a constitutional amendment clarifying the process for filling vacant NAR offices. The constitutional change was approved by the NAR Delegate Body following the Board of Directors meeting.

Directors also took the following actions on committee recommendations:

• Data privacy and security. Adopted a comprehensive policy on the collection, use, and protection of client information. Under the policy, NAR members should develop their own data privacy and protection policy, restrict their collection of data to what’s permitted by law and what’s helpful to them in their business and to their clients’ needs, and put in place standards for protecting, accessing (including by third parties), and destroying data. Also under the policy, NAR supports creation of a single federal data privacy and security standard to simplify compliance.
• Telecommunications. Adopted a policy that universal, quality telecommunications service be made available at reasonable and affordable rates for all; public entities such as schools and libraries have access to telecommunication services; and that reforms not impose additional taxes on telecommunication services.
• Mobile communications. Affirmed that consumers should have access to secure and reliable network coverage for mobile communications, that the mobile industry should continue efforts to increase privacy protections, and that descriptions of mobile services should be easy to understand. The Board also amended NAR’s Network Neutrality Policy to apply its principles to mobile communications. Under that policy, Internet Service Providers should provide equal access to their networks without regard to the type of content that’s being accessed. The concern is that ISPs would charge more, or place restrictions on, certain types of content on the grounds that some types require more bandwidth than others or for other reasons.
• FHA. Supported an FHA shared-equity pilot program, under which FHA borrowers could partner with an FHA-qualified third party investor who would contribute capital for the home purchase to buy down the principal on the mortgage. This capital is provided at no interest; instead, the investor gets a share of any future equity.
• Lender policy. Urged mortgage lenders, FHA, Fannie Mae and Freddie Mac, and federal regulators to amend their credit policies to increase lending to qualified home buyers. NAR’s Conventional Finance and Lending Committee has developed recommended credit policies around specific issues, including education and research, use of credit scores, the impact of adverse credit events, loan modifications, and strategic defaults.
• Membership policy. Amended Interpretation No. 39 of the NAR Bylaws to prohibit member boards from scheduling any function at a place or in a facility that isn’t accessible to members with disabilities when such members indicate that they will be in attendance.
• Legal action. Approved $123,250 to fund seven legal cases, including a challenge, under Section 8(b) of the Real Estate Settlement Procedures Act (RESPA), to a $199 administrative fee charged by a broker.

In addition, Directors renewed the association’s professional liability insurance policy for the year 2011, with the addition of patent infringement coverage for software, technology, or other intellectual property acquired or licensed from other parties.

Reports to the Board

• NAR financials. Treasurer Jim Helsel gave NAR directors positive financial news, reporting that membership stood at 1,109,500, more than 50,000 above the 1.06-million figure that NAR had projected for 2010. For 2011, NAR is once again forecasting a membership base of 1.06 million. Helsel said the association has $189 million in cash and investments on hand and a $3.1 million positive annual budget rather than the $4.5 million negative balance it had projected last year. 
• Political advocacy. The REALTOR® Party achieved significant victories in the 2010 national elections, according to RPAC Political Fundraising Liaison Chris Polychron. Out of 11 independent expenditure races, NAR backed eight of the winners; NAR achieved wins on both sides of the aisle. 

At the heart of the REALTOR® Party’s success this year was a successful fund-raising drive for the REALTORS® Political Action Committee. Even with membership down slightly from last year, REALTORS® contributed $6.2 million, achieving 122 percent of NAR’s fair-share goal.

The number of RPAC Major Donors—who contribute at least $1,000 a year to RPAC—and President’s Circle members—who contribute an additional $2,000 directly to candidates rather than to RPAC—increased significantly over last year, said Major Donor Liaison John Smaby.
 
Political participation among members increased as well, fueled in large measure by growth of the association’s Broker Involvement Program, said Member Mobilization Liaison Robert McMillan. More than 6,700 brokers now participate, a 170 percent increase over last year and well over the ambitious participation goal set by President Vicki Cox Golder at the start of her term. More than 40 percent of Call for Action responses this year came from NAR members whose brokers participate in the program, up from 25 percent last year. 

• REALTORS® Property Resource. CEO Dale Ross reported that RPR now has more than 179,000 REALTORS® accessing it in 41 markets. It has contracted with another 135 MLSs to become partners, and 387 MLS partnerships are under contract review; that means more than 250,000 REALTORS® are slated to be on the system by year’s end. RPR is an initiative, launched last year, to make available—free and exclusively to REALTORS®—rich data on every property in the United States. The system includes a “REALTOR® Valuation Model” that Ross says is more accurate than other valuation methods because of the MLS information overlay. Ross’s goal is to have all REALTORS® on the system by the end of 2011.
• Awards. The directors recognized Joe F. Hanauer, CIPS, CRE, of Laguna Beach, Calif., and Chicago and Frederick Prassas, CPM, GRI, of La Crosse, Wis., as the 2010 Distinguished Service Award winners. FPC Meritorious Service Awards, which recognize outstanding effort by NAR Federal Political Coordinators, went to Bob Amore of San Francisco, Jim Johnston of Pocatello, Idaho, and Howard Zielke of Dallas.

NAR’S Top Challenges for 2011

1. Getting banks to open up their lending and fix their short-sale processes
2. Ensuring REALTORS®’ views are heard in the new Congress as lawmakers take up issues crucial to real estate, including tax reform and Fannie Mae and Freddie Mac reform
3. Staying on the offense in support of home ownership. “We need you to reach out to the media in your area,” she said. “Don’t wait for them to come to you. You have a positive story to tell.”

With the close of the meeting, NAR’s 2011 officers officially move into their roles. The 2011 officers are:

• President: Ronald Phipps, ABR, GRI, of Warwick, R.I.
• President-elect: Maurice “Moe” Veissi of South Miami, Fla.
• First Vice President: Gary Thomas of Aliso Viejo, Calif.
• Treasurer: William Armstrong III, GRI, of Damascas, Md.

We will continue to keep you informed about the changing times which we find ourselves in. Should you have any questions about the above, feel free to write me at mpbarr@grra.org or call at 336-854-5868.