Marketing Service Agreements face more scrutiny

The Consumer Financial Protection Bureau (CFPB) is actively seeking enforcement actions against Marketing Service Agreement (MSA) participants. 

Their latest enforcement action occurred last week against Lighthouse Title, a Michigan title company,  resulting in a $200,000 civil penalty,  forcing Lighthouse Title to cancel all existing MSAs and prohibiting them from entering into future MSAs. 

If your brokerage currently participates in MSAs, your broker would be well served to carefully review the findings issued by the CFPB in this order

Perhaps the most weighted finding by the CFPB stated that Lighthouse Title violated federal law by entering into MSAs with the understanding that, in exchange, the brokerages would refer closings and title insurance business to the title company and, further, by paying those brokerages fees with the understanding that in exchange the brokerages would refer business. 

It’s important to note that the CFPB didn’t state that the "understanding" to refer business had to be in the written agreement. 

One of the key factors to identifying an "understanding for the referral of business" was a determination that brokerages referred significantly more transactions to the title company when they had an MSA with the title company than when they did not.

Why else would a title company enter into an MSA and pay fees to a brokerage if not for the referral of business?  Otherwise, the title company would simply hire a marketing/advertising firm to "market" its services — right?

By its ruling and findings, the CFPB is effectively saying that if MSAs are premised on an understanding that the brokerage will refer business to the paying title company, then the MSA is in violation of federal law.

MRIS to offer custom, specially licensed version of Close It! to members through partnership with Federal Title

MRIS, the industry-leading Mid-Atlantic Multiple Listing Service (MLS), and Federal Title & Escrow Co. today announced they have launched MRIS Close It!, a desktop and mobile app that provides quick and concise closing cost estimates.

"MRIS Close It! accurately answers questions real estate agents commonly hear such as 'how much cash do I need to close?' and 'how much can I expect to net from the sale of my home'," said Andrew Strauch, Vice President of Product Innovation at MRIS. "Through this new core product, our customers now have the ability to quickly and easily answer these questions for homebuyers and sellers on the fly."

Through the partnership, MRIS, which facilitates nearly $125 million a day in real estate transactions, now offers a custom, specially licensed version of Close It! to calculate total cash-to-close and net proceeds for real estate transactions. MRIS Close It! allows users to instantly create, edit and share HUD-1 Settlement Statements and net sales sheets.

"I am going on 37 years in this business and MRIS Close It! is as easy as it gets to calculating closing costs for buyers and sellers," said Scott Miller, MRIS customer and Associate Broker at RE/MAX 100. "My clients and I can rely on MRIS Close It! for quick and helpful closing cost estimates."

Federal Title, a technology pioneer in the title industry, initially launched the consumer-facing Close It! app in May 2013 to simplify homebuying costs. The app, along with the MRIS version, can compare costs in different jurisdictions and show the difference in closing on the first of the month compared to at the end of the month. Many features are customizable including the mortgage rate and down payment amount and allow the user to differentiate between FHA, VA loans and cash purchases.

"We created the most accurate app on the market that simplifies the closing process," said Federal Title founder Todd Ewing. "It removes the guesswork from the equation and is the ultimate closing costs calculator."

The app is a new core product for MRIS customers and is included in their MRIS subscription at no additional charge. To learn more about MRIS Close It! and to download the app for iPhone/iPad, please visit http://www.mris.com/CloseIt.

ABOUT MRIS 

MRIS is Real Estate in Real Time™. We’re a leading provider of real estate information technology and services, and are frequently ranked among the most productive Multiple Listing Services (MLS) in the nation, facilitating over $45 billion in system wide sales in 2013. In its core market, MRIS supports over 45,000 real estate professionals spanning the Mid-Atlantic region, including Maryland, Northern Virginia, Washington, D.C. and parts of Pennsylvania, Delaware and West Virginia. MRIS provides a portfolio of technology solutions and proprietary databases for real estate professionals, as well as broker and agent software products and an industry-leading consumer portal, MRIShomes.com (formerly HomesDatabase). In addition, the CURE Solutions Group, a subsidiary of MRIS, provides proprietary back-end technology to other MLS systems, serving nearly 180,000 customers each day. Visit MRIS at MRIS.com and our web based TV station, mrisTV.com. “Like” us on Facebook/MRISonFB, follow us on Twitter, @MRIS_REal_News and be sure to visit MRISblog.com for real-time news and company updates.

About Federal Title & Escrow Company 

Federal Title & Escrow Company is the largest independently owned title company in Washington, D.C. – innovators within the title industry, trend setters who leverage technology to streamline the closing process, pioneers of a business model that has saved homebuyers more than $8 million in closing costs. Their innovative app Close It!, has over 10,000 downloads to date. It was nominated for a Tabby Award in October 2013 and has been featured in the Washington Post, Title Report and Washington and Baltimore business journals. To find out how this unique company is changing the way homebuyers and sellers think about title companies, visit federaltitle.com.

.realtor coming in October

All you tech-savvy real estate agents out there who wish to further distinguish yourselves online will be able to register a .realtor domain name by Halloween, says the National Association of Realtors

If this is something that interests you, make sure to jump on the band wagon early since NAR is offering a year's worth of free hosting to the first 500,000 people who register. And if you have an existing profile at Realtor.com, you'll be able to transition it into a stand-alone site with your name on it. 

The .realtor domain name, in the works since 2012, is NAR's latest attempt to close the gap between the number of buyers who find their real estate agent online (about 9 percent) and the number of buyers who search for homes online (about 89 percent). They've tried other approaches in the past that didn't pan out so well. 

NAR initially applied for the .realtor domain name to help its Realtors® stand out from other real estate professionals and to help consumers distinguish between websites operated by industry professionals from sites maintained by third parties, according to an earlier report from Inman News

How can real estate agents protect against Internet security threats?

Thanks to the Internet, small businesses are better able to compete with their bigger competitors. Most boutique real estate agencies are hip to the importance and value of maintaining a website with an active blog and social network, as are top-producing agents in many of the big brokerages.

A solid Web marketing strategy can be a boon to business of any size, but it can also make a business more vulnerable to cyber attacks if proper precautions are not taken. Two recent security breach incidents – the Heartbleed bug and Internet Explorer security flaw – have prompted me to take a closer look at security for Federal Title's website.

Real estate agents out there who manage their own websites and social networks, may want to do the same. This post highlights a few of the issues I've been dealing with.

What is Heartbleed?

This story broke during the second week of April. For a bit of background, read "Why Heartbleed is the Ultimate Web Nightmare," a nice article from Mashable that explains what's at the crux of the matter: OpenSSL.

In short, OpenSSL makes it possible to send private information between two computers by encrypting the message. It's like passing a note in a cryptex from The Da Vinci Code. Only those with the key can unlock it.

For example, let's say you want to log into Facebook. You enter your private password and press enter. The password is then encrypted as the data is sent to the server at Facebook, where the private information is unlocked so you can log in safely. It's the same thing for making purchases on Amazon or sending email through Google.

Heartbleed is a flaw in OpenSSL that makes it possible for someone else to gain access to that secret, private information by intercepting the key, which is especially bad because about 66% of the Web uses OpenSSL to send encrypted messages.

What's most interesting (and scary) about Heartbleed is that it went undetected for two years, so there's no telling how many people knew about the flaw – and how many bad guys exploited the flaw.

A patch was introduced to eradicate the threat, but as precaution you should change your passwords if you have not done so already. Here is a comprehensive list of Heartbleed-affected websites that advise you to change your password. Among those listed are Facebook, Google, Amazon, GoDaddy, YouTube, Instagram, Wordpress, Dropbox and more.

Why are you still using Internet Explorer?

I've been telling our office for years that IE is the worst. Anyone who develops and/or maintains websites, including our own IT vendors, tends to agree with me. (Read "Why do so many geeks hate Internet Explorer?")

Microsoft's browser is buggy. It doesn't adhere to Web standards – much to the chagrin of developers – which is why websites look great in every other browser and require special code fixes to render properly in IE. And as a news story that broke over the weekend illustrates, Internet Explorer remains susceptible to security breaches.

In case you missed it, IE versions 6 through 11 are affected and users running the no-longer-supported Windows XP are particularly vulnerable because there will be no security patch for them.

The flaw has the federal government on high alert because the bug could potentially give data thieves using a network computer the same level of access as a legit user, and at least 10 percent of federal government computers are running in this vulnerable configuration.

The best way to protect yourself and your business from IE security breaches is to stop using IE!

What is a brute force attack?

"How I became a password cracker" is a pretty interesting blog post from a guy who had never cracked a password before his "experiment" but was able to crack 8,000 passwords in one day. It sheds light on the technical side of how brute force attacks work.

In a brute force attack the hacker typically uses a software tool called a password cracker, which enters usernames and passwords over and over again until it gains access. (This is why you're not supposed to use passwords like "123456," and why it's best to avoid usernames like "admin.")

This threat hit particularly close to home for me a few weeks ago when I received a call from my Web host alerting me to a high number of login attempts – the call sign of a brute force attack. Our content and website were safe because the username and password were strong, but the incident led me to install additional security features on our site.

All websites with login forms are susceptible to brute force attacks, including Wordpress used by many real estate agents. Wordpress is a popular content management system and therefore a common target. Another popular target is the content management system Joomla, which is what I use to run our website.

Both the Wordpress and Joomla communities have developed several methods for preventing brute force attacks beyond the basics of creating a unique username and complicated password. Many of the solutions are free and easy to install so there's really no reason not to install login protection to your website.

5 safety tips for real estate agents

A female real estate agent who was preparing to show a vacant property in New Carrollton, MD was robbed on Monday, according to news reports. It appears the attacker took her purse and some personal items, but the woman will be O.K.

While rare, attacks on real estate agents do happen from time to time and (sadly) women in particular are vulnerable. In light of this recent event, I thought it'd be good to explore the topic and offer some safety tips for real estate agents.

Stranger danger! Verify customer information

In addition to getting your new client's full name and phone number, find out what where he works. Ask for an email address. Ask for multiple telephone numbers. Google is your best friend. While some might consider it creepy to Google an individual before a first date, it's totally acceptable to Google a potential client in the name of personal safety. What's more, you might learn a thing or two about your new client that you can use to help him find the perfect property.

Use the buddy system. Tell someone in your office where you're going

If you're out in the field, let people know. Ideally you shouldn't host public open houses or show vacant property alone. Bring a friend. But since that isn't always practical, at minimum it's a good idea to tell a co-worker and perhaps a personal contact, too, where you're going to be and when you expect to return.

Have new clients meet you in your office or another public place whenever possible. In those situations where you must meet a new client one-on-one, remember Google is your friend. (See the first tip.)

Carry your cell phone and keep it in your hands

Since you've already told your buddy that you will be showing houses or meeting a new client, why not pre-program that contact into your phone in case you need to make a quick call? Bonus points for downloading one of those personal safety apps. Some basic personal safety apps are free while fancier ones cost money. Of course, your phone will be useless in a pocket or purse, so keep it in your hands as much as you can. In the event you have to send a distress call, you can make it quickly and then throw your phone at the perp's face (just kidding).

Familiarize yourself with your surroundings

Take a drive around the neighborhood and keep an eye out for safety concerns. Do a quick Internet search before you go to look up crime reports and other information about the neighborhood. At the property, survey the exits and make sure you're able to get out easily in the event you have to make a quick escape.

Likewise, if you're in a property with your client, make sure you know where he is. Keep your client in sight, ideally in front of you and at a safe distance. Let him enter a room first while you linger by the doorway. You don't have to be weird or obvious about it, but keep your guard up. One of the best ways to avoid a compromising situation is to not allow yourself to get into a vulnerable position where a would-be attacker can take advantage.

Trust your gut

If something doesn't feel right, get out of there. Or don't meet the client one-on-one. It's that simple. Don't discount the lessons taught to us in kindergarten about stranger danger and the buddy system. Take extra steps to ensure your personal safety.

While it's unfortunate to hear about what happened with the female agent at the vacant house in New Carrollton, hopefully her experience will remind others of the inherent dangers of working with the public as a real estate agent. Stay safe out there!
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