WASHINGTON (Associated Press) - The Federal Reserve has adopted a new plan intended to curb shady lending practices that sent home foreclosure rates to record highs.

The plan will:

• prevent loans made without documentation of borrower's income;
• require lenders to escrow money to pay taxes and insurance for risky borrowers;
• limit - and, in some cases, ban - prepayment penalties;
• prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value;
• require mortgage advertising to contain information about rates, monthly payments and other features of the loan;
• require that lenders credit a mortgage payment to a homeowner's account on the day it is received; and
• forbid brokers and others from "coercing or encouraging" an appraiser to misrepresent the value of a home.

Most of the rules take effect Oct. 1. Escrow requirements will take effect April 1, 2010.

I began my business career as a real estate loan officer. It was 1962. This is essentially how we were required to underwrite loans back then. We also required the borrowers to have an equity position of their own -- not 0%, not 3%, not 5%, not 10%, but at least 20%!

I can't believe these people have finally admitted we knew what we were doing --- that our way was better than theirs. Will real equity be next?

WHAT NOW?

Texas real property taxpayers appear to have little understanding of the logic behind our Central Appraisal District system. And I've concluded that at least some of the Chief Appraisers of CADs don't understand them either.

I wrote a voluminous piece on this some time back. Here it is for review.

That piece has brought any number of telephone calls and emails from taxpayers who went before the Appraisal Review Board at their Central Appraisal District to protest the new appraisal of their home. Each lost as a result of the smoke and mirrors presentation of the CAD's appraiser that he/she presented to the ARB.

The taxpayer didn't know how to argue against it, and the ARB members, interestingly, rabidly showed they had no understanding of how the Texas Central Appraisal system works.

In each case, the appraisal district's appraiser used as his/her evidence for raising the value of the protester's property, a handful of current sales in the neighborhood. Current sales are only evidence if every other like property's value was likewise raised equally.

More often than not, the district will try to use current sales to show why the protesting taxpayer's argument is invalid. Most of the time, this "evidence" isn't applicable because the neighbors' appraisals were not also raised. This is the smoke and mirror's presentation I mentioned.

NOTE THIS: The appraisal district has only one function, and it has two parts. Part one is to, through research, determine the fair value of every piece of property in the county, and then to assign them. Part two is to make sure that the value assigned to each taxpayer's property follows the logic of the values assigned to the property of his neighbors.

EXAMPLE: So if everyone on your block lives in a similar home, and those homes are all on the tax rolls at $100,000, then one of your neighbors sells his for $135,000, the Central Appraisal District cannot raise the value of yours to $135,000 without raising the value of the homes of everyone of your neighbors'.

And further, and interestingly, it is illegal for the CAD to immediately raise the value of the home that just sold for $135,000 to $135,000. That violation is known as "chasing the sale." Our state doesn't allow that.

So what should you do if you protest and the appraiser brings out current sales as his evidence? You point out that it is immaterial to the issue. Your protest is that your house has been assigned a value that cannot be justified when compared to those assigned your neighbors. Then you give your reasons.

If the ARB rules against you, and you have a great course of appeal. The state Comptroller's office has trained and appointed several hundred Arbitrators. You can find the list and their qualifications on the Comptroller's web site.

You can file for Arbitration. The fee cannot exceed $500. The arbitrator will hear your case and rule. The arbitrator's ruling is final and cannot be challenged. If you, the taxpayer, win, the CAD must pay the entire fee.

I am one of those originally appointed arbitrators. Prior to that, I served two terms on an ARB. That's why I have a pretty good knowledge of the ins and outs of appraisal district mechanics. But my purpose here is not to solicit arbitrations. My purpose is to give readers a dependable piece on how the CAD system works.

If you are going before one of the ARBs to protest your appraisal, print this out and hand it to the chairman before you begin your presentation. If there is disagreement to methodology, stay to complete your hearing, but be prepared to file for arbitration.

Copyright 2008 - William S. Cherry

All rights reserved.

WILLIAM S. CHERRY, REALTORS

DALLAS

1 800-314-7110

Lenders are foreclosing homes right and left, and the ownership of many of those pass to FHA or one of the other governmental secondary market lenders for them to dispose of.

That's because the loans were sold to them by the originating lender or mortgage broker.

As a result, an opportunist industry has developed. You see, rather than dole out the listings of these properties to licensed real estate brokers and agents on a lottery system, through some magic, only certain agents have gotten the majority of the listings.

This is yet another case where the National Association of Realtors didn't bother to step in and assist the governmental lenders and underwriters in developing an honorable, fair system.

There are any numbers of those specially treated agents in Dallas; the ones whose primary business is listing foreclosed homes.

I am familiar with three companies that have "teams" (a euphemism for a business within a business) composed of about six people, each whose major part of the real estate business is listing and managing foreclosed properties for the government.

One has so many of these listings that they don't bother to answer or return the phone calls of buyers. The signs in the front yards with the agent's rider and number at the bottom are of no value to obtaining and handling buyer inquiries.

The listing agent does not answer or return calls.

The agent expects the buyer to make inquiries and issue contracts on his listings through one of the other agents in the city. The problem is that the client has no way to know that's the rules he's expected to play by.

Just think, when some 14,000 agents in the Dallas and Ft. Worth area and where many are scratching to make a living, our government is consciously making a select few rich.

And there's no way to lose one of those listings because it will eventually sell at some price.

And if that isn't bad enough, it is obvious that the government has no audit procedure in place to see that these listings and sales are handled on the up and up. Many aren't.

I was involved as a co-op broker in one such listing. My client's contract was not accepted even though my client offered full price and immediate closing.

Why? It was obvious to me that before the listing hit the MLS, the listing agent had already cut a side deal as to whose contract would be accepted.

Real estate brokerage has had a propensity for dishonest dealings since the beginning of time. It's most certainly been going on since I entered the business forty-three years ago.

(Remind me to tell you about the time, representing a buyer, as trustee I bought a $3 million building for $711,000. It was because of the total incompetence of the government's selection of a real estate broker to represernt them in that sale.)

And as it has so many times in the past, the government is once again fanning the flames of deceit.

BILL CHERRY, REALTORS DALLAS

1 800 314-7110

www.billcherryrealtors.com

One part of Dallas where the more expensive homes are located, has developed the most arrogant approach to sales. I wonder where these people's heads are.

The MLS listing instructions more frequently than not read like this: Listing agent must accompany all showings. Appointments must be made 24 hours in advance. Owner's baby naps between 2 and 4 so no showings can be scheduled then. Please do not request showings on weekends or before 11 AM or after 4 PM.

I see these listings expire and renew over and over for months. No one seems willing to grasp that it could easily be because they are not accommodating the prospective buyer, and quite frankly, in sales, the one with the money to buy is the one who is supposed to trump.

So what useful purpose accrues by expecting the guy with the prospect to deal with the schedule of the listing agent as well as the unreasonable demands of the seller?

Exactly what does the listing agent accomplish by being at the showing other than 1) getting in the way 2) offering a subtle but obvious insult to the showing agent and the client that the listing agent is there to keep them from stealing or breaking something and 3) interfering with the rhythm of the showing agent's sales presentation?

So to reevaluate this scheme, let's do this. When Mr. Sewell initiates a similar plan in the sales departments at Sewell Lexus, Sewell Infinity, Sewell Cadillac and Sewell Hummer, go for it.

Until then, the way the million buck home should be presented and sold is no different than the way the Century 21 agent presents and sells the hundred thousand buck home.

BILL CHERRY, REALTORS

DALLAS

Our 43rd Year Selling Texas

214 503-8563

On the Web

THE GALEN JETER JAZZ ORCHESTRA

As the sun was going down Sunday, Patty and I met our friends (our minister and his wife) Clif and Gig Gardner and (famed radio man) Bud Buschardt at the Village Country Club on Southwestern near Skillman, for the barbeque buffet and three hours of music by the famous twenty piece Galen Jeter Orchestra.

Galen is a retired biology teacher from the Garland ISD, but he's had one big jazz orchestra or another for thirty-five years. And while he won't tell you this I will: He was with the famed Woody Herman Band along the way.

And he and his guys have played at the Village Country Club most Sunday nights for more than ten years.

Galen Jeter, 2nd from left

This is the real McCoy. It's a Kenton-style orchestra -- 5 saxes, 5 trumpets, 5 trombones and 5 rhythm pieces. And all of the members are highly trained and talented musicians, not the kid down the street who's just learning, or his dad who played in the high school marching band.

This coming Sunday night -- June 29th between 7 and 10 -- the Galen Jeter Orchestra will play original arrangements from the Stan Kenton book. If you like big bands, love Kenton, and long to hear a full orchestra play, here's your chance.

The tickets are 7 bucks a person. The buffet is 5 bucks. Drinks cost whatever drinks costs. (I spent $100 for the five of us, and that included admission, food, drinks and the tip.)

Get there no later than 6:30 so you'll have a good seat because the place fills up to SRO the closer it gets to 7 PM. We'll see you there.

BILL CHERRY, REALTORS

DALLAS

Our 43rd Year Selling Texas

214 503-8563

Lake Highlands in Dallas is really a wonderful place to live.

Because I have spent the majority of my life living in large Victorian homes, moving into a neighborhood that has houses that are primarily 25 to 30 years old is a new experience for me. But I'm growing to like it very much. Pretty much the late beginning of an Ozzie and Harriet life-style.

The other day the doorbell rang. I was here and getting ready to leave to meet a client at the title company. I went to the door, and there stood a small fellow -- a grown-up --- but an urchin of a man in a khaki uniform that was a bit on the too large side. He had a huge smile on his face. I mean huge and sincere. It makes me smile just thinking about it.

I answered the door, and he told me that he was Charles Dangprasert. He was cold calling our neighborhood for ACRI Factory to You Windows. He went on to tell me that almost all of the homes in our neighborhood could stand to have their windows replaced. I knew he was right...single pane windows in weather-pitted aluminum frames.

He gave me a flyer, and pointed me to the back page. It was a page full of references. "Call any of them," he said, "But don't call them until after you've called the Dallas Better Business Bureau. You'll find that not only are we members, but they don't have one black mark against us, and we've been in business here for years."

I told Charles that we weren't ready for new windows here at our house, but that we would be in a few months. And I told him we'd call him for a bid.

Real estate people know what it's like to cold call a neighborhood. Charles did it with such aplumb that I couldn't resist telling you about him and his company. If you're in Dallas and you need new windows, call Charles Dangprasert at ACR Factory to You Windows. You can reach him direct at 214 916-7870 or at his office at 214 550-0419.

Buy from the guy who's doing what you and I hate to do...cold calling a neighborhood.

BILL CHERRY, REALTORS

DALLAS

214 503-8563

For as long as I've been in the real estate bidniz, and that's now going on 44 years, I've had people ask me this question:

"How long after my listing contract expires must I wait before I am no longer contractually obligated to pay the agent for a sale to one of his clients that he brought by."

And I note that it is one of the most frequently asked questions at the Active Rain consumer Question and Answer site.

You see, for some reason, a lot of potential buyers like to go around their agent. They call the property owner without the agent's knowledge, and here's what they say: "What if I buy your house after the listing expires? You won't have to pay the commission, and we can split your savings."

Sellers make the same calls.

Listing contracts usually address those who are tempted to go that route, by saying, for an example, that any sale that results from a showing during the term of the contract will accrue the commission if the agreement is made within 90 days of the contract's expiration.

But why have we as a society let ourselves be led to believe that our legal obligations and moral obligations are one and the same?

I simply don't understand or accept that rational.

If your work results in a benefit for me, I need to pay you for it. It is corrupt logic for me to attempt to figure out how I can "legally" get out of doing it.

And I'll bet in your heart that you know that the same goes for you.

BILL CHERRY, REALTOR

DALLAS

214 503-8563

There are some components of a real estate transaction that separate it from so many of the others:

• A listing agent who knows what he's doing
• A seller who rabidly does exactly what his listing broker instructs
• A buyer's agent who knows what he's doing
• A buyer who rabidly does exactly what his buyer's agent instructs

Yesterday, Dallas agent, 20-year Keller-Williams veteran Cindy Huitt and I completed our representation of our respective clients in what was an extremely complicated deal from beginning to end. Without going into the details, we sold and closed my listing to her clients for full price. Very few agents could have replicated our success, I'll promise you.

And that happened in a neighborhood of other for-sale homes that have remained unnoticed by potential buyers during the two months my client's home was listed until it sold and closed.

Ironically, for the heck of it I went to one of Craig Proctor's free real estate sales seminars last week. The leader of our group told us and then reinforced many times throughout the seminar, "It doesn't matter whether you like Craig's wording of this ad. We know the ad works. Why would you change it?" And so it goes with the mechanics of a real estate transaction.

And that's what came to my mind yesterday as my client, Miss Dorothy and I completed our visit to the title company. From the day she and I met for the first time, the day that I gave her my listing presentation, until yesterday when she got her check, she had done exactly what I had asked her to do. Exactly. Some complaining, I'll admit, but nevertheless, she let me win every time.

Yesterday the reward and how we got it was apparent. Miss Dorothy had let me do my job, and Cindy Huitt's clients had let her do her job. Neither interfered. Simple. A formula I always recommend to anyone planning to sell or buy a home.

"A Realtors's Secret Weapons" is an hour-long CD of a radio question and answer program I did with KAAM-AM's famed Money Doctor, W. Neil Gallagher. We send copies with our compliments to anyone in the U.S. and Canada. It tells you exactly what you should expect from your Realtor and how to work with him. Email or phone for your copy.

BILL CHERRY, REALTORS

Our 43^rd Year Selling Texas

Dallas

214 503-8563

Real estate training great, Petey Parker, has joined Stephen Covey, Ken Blanchard, Mark Leader, Joy Ohayia, Jim Gottfurcht, Wally Hauck and a handful of others to total 14.

The book, Blueprint for Success is a series of pointed interviews regarding what it takes to succeed in business in this new century.

Petey sent me a copy last week and I've just finished reading it. You'll want to, too.

Petey still has the poise of the airline hostess she was when she first entered the business world, but the business experiences that followed found her as a sought after trainer for major corporations.

You see, Petey was a major force as an executive with Ebby Halliday Realtors. She's got a lot to say, especially how to market to the new adults - the ones she calls the YLs...the "Young Lions.

The book is 19.95. In addition to bookstores and Amazon.com, you can order your copy from

Petey Parker

Parker & Associates

1717 Arts Plaza, Suite 1907

Dallas, Texas 75201

Petey is the perfect keynote speaker for state real estate conventions and a perfect trainer for real estate companies.

BILL CHERRY, REALTORS

Dallas

Our 43rd Year Selling Texas

214 503-8563

One of the major paradoxes of real estate brokerage is rarely, if ever, mentioned. Yet, it seems to haunt every agent and every real estate company. It especially bonds and hangs onto those who work the hardest; those who are the most creative in marketing themselves.

You see what most of us do is to take the conventional marketing wisdom - sending out cards and newsletters, cold calling neighborhoods, even putting expensive ads in magazines - and tinker with it. A splash of door hangers here, a mailing out of football schedules there, becoming very active in Rotary and the church and the PTA and the Junior League, and on and on. The things that are guaranteed to put you in the public's eye.

Lo and behold, one inch at a time our real estate prospects began to increase, our business seems to be on its way to gaining the momentum it needs to satisfy our goal. And darned if we don't soon get to the point where we are riding high. Some of us even fall into the trap of bragging to the public that we are at the top. No other agent is Up There with us.

"My hard work paid off. My tinkering with the formula of the conventional marketing wisdom has put me on top. I deserve it." That's what we smugly say to ourselves.

And then, although we are continuing to follow our hybrid of The Conventional Marketing Wisdom Formula, our number of sales and listings begin to diminish. Not only do they diminish, but we realize that another agent, another company has risen to take our place.

What happened and why?

In the Old Testament, God is referred to as YHWH. His name is thought to be representative of the sound of the wind. But since it can't be pronounced in English because it lacks vowels, the Masoretic bible spells it Yahweh.

And in the Old Testament, as Yahweh is trying out different ideas of how to get along with man, and how to teach man to get along with Him, often times an individual or group finds itself having spurts of Yahweh's favor followed by his disfavor.

So I've chalked my own bouts of real estate good favor and real estate bad favor to the will of Yahweh, not the result of my own doings. I think His purpose may be to help me keep my feet on the ground and understand the importance of being humble.

Because if I remain patient, soon I begin rising toward the top once again.

Copyright 2002 - William S. Cherry

www.billcherrybroker.com