Ask George & Chuck: Questions From Consumers - January 11, 2005
by George Stephens & Chuck Jacobus
Dear Ask George: A Massachusetts mortgage company is offering me a marketing fee to assist them in marketing their services to individuals who want to sell their homes, and to assist buyers who don't fit normal circumstances in acquiring conventional financing because of unverifiable income, challenged credit, etc. They state that I can assist individuals in filling out loan applications and running credit reports. Is this legal in Texas? I thought one had to have a loan officer's license in Texas to do this through a brokerage company. – Analytical Dear Analytical: There are certain loan-related services that a Texas real estate broker may provide for a consumer and receive compensation (See the Texas Saving and Loan Department website). However, the Texas real estate broker must make adequate disclosure, and the Massachusetts Mortgage Broker must be licensed as a mortgage broker (or registered as a Mortgage Banker) in Texas. Those services are identified as subparts (a), (d), (e), (f), (g), (h), (k), (l), (m) and (n), as per the following: In making the determination of whether compensable services that are performed require a license from the TSLD, the following may be useful: (a). Taking information from the borrower(s) and filling out the loan application in itself does not require a license, BUT when combined with (b), (c), (i), (j) or (o), it does require licensing. (b). Analyzing the prospective borrower's income and debt and pre-qualifying the prospective borrower(s) in itself does not require a license, BUT when combined with (a), (c), (i), (j) or (o), it does require licensing. (c). Educating the prospective borrower(s) in the home-buying and/or financing process, advising the prospective borrower(s) of the different types of loan products available and demonstrating how closing costs and monthly payments could vary under each product does require licensing. (d). Collecting financial information (tax returns, bank statements, etc.) and other evidence/documents related to the loan application process does not in itself require a license, BUT when combined with (c), (j) or (o), it does require licensing. (e). Initiating/ordering VOEs (verifications of employment) and VODs (verifications of deposit) in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (f). Initiating/ordering requests for mortgage and all other loan verifications in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (g). Initiating/ordering appraisals in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (h). Initiating/ordering inspections, surveys or engineering reports in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (i). Providing disclosures (truth in lending, good faith estimate, others) to the borrower(s) does require licensing. (j). Assisting the borrower(s) in understanding and clearing credit problems does require licensing. (k). Maintaining regular contact with the borrower(s), realtor(s), lender(s), between the initial application taking and closing to appraise them of the status of the application and gather any additional information as needed in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (l). Ordering legal documents in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (m). Determining whether the property was located in a flood zone or ordering such service in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (n). Participating in the loan closing in itself does not require a license, BUT when combined with (c), (j) or (o), it does require licensing. (o). Deciding where the loan is to be placed does require licensing.
You must verify through the TSLD that the Massachusetts company is either licensed if it is a mortgage brokerage or registered if it is a mortgage banker. Dear Ask George: Can I get a list of government homes that are foreclosures and/or tax repos in California? – Wanting Answers Dear Wanting: Using your favorite search engine, enter "Government+Foreclosures" in the search bar. I used Google.com and the search returned 1,130,000 results. Some are county/state specific, but many cover all states. For example, the Department of Housing and Urban Development (HUD) shows all states and all (or nearly all) federal government (or related entities) owned homes and multi-family properties for sale. Dear Ask George: My wife and I have purchased a new home in North Dallas. We would like to keep our existing home (also in North Dallas) as an investment property which my wife's parents will live in when they retire in 1-1/2 years. The fair market value of our existing house is more than my wife's parents could afford. While we could afford two mortgages, we would prefer to only have one. Is it possible to sell 49 percent of a house and be co-owners of the property? In effect, that would pay off the balance of the mortgage of the existing home. What type of tax implications might be lurking out there? Did I mention we would rent the house for the 1-1/2 years until they retire? – On Thin Ice in Dallas Dear Thin Ice: Yes, you can sell a 49 percent co-ownership interest in your existing home in Texas. Some common ways in which two or more parties can co-own a piece of property in Texas are joint tenancy, tenancy in common, and community property. Your tax question, however, is a different matter. You and your wife's parents should seek professional tax help from a CPA, tax attorney, an attorney with estate planning experience and/or competencies, or other qualified person. Also, for your consideration, would it better serve the needs of your wife's parents to purchase a 49 percent co-ownership interest (under a written contract or agreement) in your existing property, or to remain in their own property under a reverse-mortgage? A co-ownership agreement or "contract" should address a number of questions that need to be answered by both of the "co-owners." Questions such as the following: - Why only 49 percent of the co-ownership interest?
- What happens if one of the co-owners disagrees with the majority owners?
- Do you plan to convey the co-ownership then rent out the home, or wait until your wife's parents retire?
- And, a multitude of many more such questions.
Finally, an alternative to selling a co-tenancy position to her parents in your existing Dallas home would be to lease the home to them. Her parents can move in and pay off your mortgage balance in lieu of rent and by so doing not create the long term problem of co-tenancy. If her parents die or are otherwise incapacitated, you and your wife could be in for an expensive legal proceeding. Dear Ask George: I am a co-owner in a single-family home in Fremont, California. My roommate (co-owner) has moved out and purchased another property. Neither of us is interested in selling the house. However, she is not interested in creating any debt by taking out a loan on the equity. I, on the other hand, would like to exercise my half of the equity to pay off existing debt and put a down payment on a car. I am told I have a right to my half of the equity. Are there loan companies out there that would lend me money on my half of the equity without her name on the loan? – Hoping Dear Hoping: Probably not. This is the risk of co-ownership that few people recognize when they go into the venture. When one party changes focus, the sum of the parts does not equal the whole. For example, if a lender were to make a loan on one half and subsequently forecloses on it, the bank now owns half but with an unknown entity who owns the other half. The result could very well be the same problems you currently have. No lender would want that risk. There are too many other loans out there that don't involve the risk. If co-owners cannot agree on the use, sale, or possession of a piece of California property, they may have to go to court to resolve the matter in a partition action. In a partition action a joint tenant or tenant in common asks the court to split the property in a fair and just manner. Real property may be difficult to divide and partial interests may be difficult to sell, so a court will usually order that the property be sold and proceeds from the sale distributed to the co-owners in relation to their interests. Dear Ask George: I am a REALTOR® in Georgia. I am contemplating moving to the Orange, Texas area. What are the steps I need to take to gain my Texas real estate license? – Contemplative Dear Contemplative: Your first step will be to request an educational evaluation from the Texas Real Estate Commission (TREC). Download and complete the Request for Evaluation of Education Documents. Additionally, you may wish to review the requirements for Texas licensure under the Real Estate Broker Requirements link. | 
