IN THIS ISSUE
Meet the New Commissioners
Protecting the Consumer: Foreclosure Consultants
Inactive Status or Active with a Referral Brokerage?
HELP US KEEP IN TOUCH WITH YOU
Just a quick reminder: keep your email address current in our database so you don’t miss out on any important news! Click on
Name/Address & Other Changes to update your information. While you’re at it, be sure to add email@example.com to your Contacts or safe list so your notifications from the Commission don’t end up in your Spam folder. We notify you via email when your license is about to expire, so it’s important to make sure we have your current email address.
LICENSE RENEWAL FYI
It’s tax time! If you have a lien from the Comptroller of Maryland, your real estate license cannot be renewed until that debt is satisfied or payment arrangements are made. The MREC cannot intervene on your behalf or override this policy, so make sure your taxes are in order way before it’s time for you to renew!
BACK TO SCHOOL...
Continuing education is a hot topic, and the MREC is committed to helping you make the best of your CE experience.
- Remember that Ethics courses will not be approved for CE credit unless they cover the Maryland Code of Ethics, flipping, and predatory lending. NAR Code of Ethics IS NOT acceptable for Maryland credit!
- Frequently, we’re asked if a licensee’s out-of-state CE counts toward his or her Maryland license renewal. These hours may be considered towards Maryland elective credits; submit your certificates via fax to 410.333.0023 (Attn: Out-of-State CE Approval). Be sure to include your contact info!
- Find a comprehensive list of approved CE providers
here. Make sure your desired courses are offered by an MREC-approved provider—this includes distance-learning courses! Don’t spend a day sitting through a class only to find out it wasn’t offered through an approved provider. NO CE credit will be given for a class not approved by the Commission.
Given the state of the economy and several financial institutions, it’s no surprise that many real estate professionals are concerned about their escrow accounts. While the FDIC insures your deposits, what if you’re one of the many brokers holding more than the $250,000 insured limit in escrow? First, be sure that the account is titled as escrow for a designated client; for accounts holding the funds of multiple clients, all clients’ deposits will be insured once disclosure rules are satisfied. You may also wish to open up accounts at several banks, further ensuring that your (and your clients’) money is secure. Just let the Commission know if you do add another account. For more information, contact your financial institution or
check out the FDIC’s escrow FAQs.
Stanley J. Botts, Commissioner, Occupational and Professional Licensing
Harry Loleas, Deputy Commissioner, Occupational and Professional Licensing
Katherine F. Connelly, Executive Director
Steven Long, Assistant Executive Director
Patricia Hannon, Education Administrator
Charlene Faison, Licensing Supervisor
Jennifer Grimes, Investigator
Celestine Hall, Reception/Education
Brenda Iman, Paralegal
Darchelle Lanteon, Licensing
Jack Mull, Investigator
Robert J. Oliver, Investigator
William F. Reynolds, Investigator
Lucinda Rezek, Paralegal
Patrick Richardson, Auditor
James Stoakley, Jr., Investigator
Charlotte Streat-Thornton, Complaints & Education
John West, Complaint Intake Administrator
Shannon Davis, Outreach Coordinator
John Nicholas D'Ambrosia, Chair, Industry Member, Charles County
Nancy R. Simpers, Vice Chair, Industry Member, Cecil County
Anne S. Cooke, Industry Member, Howard County
Marla Johnson, Industry Member, Frederick County
Surina A. Jordan, Consumer Member, Baltimore City
Robin Pirtle, Consumer Member, Montgomery County
Georgiana S. Tyler, Industry Member, Baltimore City
Colette P. Youngblood, Consumer Member, Prince George's County
MESSAGE FROM THE EXECUTIVE DIRECTOR
Welcome to our newsletter! We’ve been working hard here at the Maryland Real Estate Commission, and this issue of The Commission Check will let you in on some upcoming changes. From new commissioners to notes on continuing education, we’re pleased to be able to provide you with more timely news. Also, space permitting, in each issue we hope to highlight a recent case or investigation that may be of interest. We strive to be a source of current information in the ever-changing world of real estate, but we need your feedback to create a newsletter that meets your needs. What would you like to see in future issues? Email me at
firstname.lastname@example.org and I’ll be sure to address it as soon as possible. Thanks for helping us to communicate more effectively with you.
MEET THE NEW COMMISSIONERS!
The MREC is proud to welcome Commissioners Marla Johnson (Industry Member) and Robin Pirtle (Consumer Member). We hope you’ll enjoy getting to know them. Welcome, Robin and Marla!
Marla Johnson started her real estate career in 1989 after a 20-year career with the federal government. She has been broker/owner of Maryland Real Estate Group, Inc. since 1993 and also owned Fair Property Management for over 10 years. She is a certified Mediator in the State of Maryland and has completed the Maryland Mediation and Conflict Resolution Office’s Mediators’ Excellence Program; she has mediated between individuals as well as for the Maryland Association of REALTORS®. In addition, Marla serves on the Board of Directors for the Urbana Civic Association, the Board of Directors for the Fredericktowne Rotary Club and the Board of Directors for Spectrum Support in Eldersburg, an organization that supports approximately 200 individuals with developmental disabilities by assisting with job placement and coaching, family support, and residential needs.
Robin Pirtle joins us from the healthcare field. An RN in Maryland as well as DC, she has worked as an ICU nurse, a case manager for a managed care organization, and a pharmaceutical sales specialist. She is currently the Director of Care Management/Utilization Management for Health Services for Children with Special Needs, Inc. in Washington, DC. Previously, she was with Kaiser Foundation Health Plans in various capacities, most recently as Risk Management Resolution Coordinator. In her spare time, she’s an avid skier and enjoys reading.
Protecting the Consumer: Foreclosure Consultants?
In the wake of the recent subprime mortgage and foreclosure crisis has arisen a new type of business promising to help distressed consumers with loss mitigation, mortgage loan modification, foreclosure prevention, and other services. Self-described “mortgage negotiators” or “foreclosure consultants” contact homeowners directly, offering assistance in re-negotiating their delinquent loans in exchange for up-front fees. While homeowners are understandably grateful for offers of help, what are the legal considerations? Any business that offers these or similar services is most likely subject to the Maryland Credit Services Business Act, which provides important consumer protections including the following: no up-front fees, mandatory written contracts and disclosures, licensure by the Commissioner of Financial Regulation, and right of recission. These regulations, in conjunction with PHIFA, ensure that homeowners will not be victimized by unlicensed, unscrupulous persons or agencies looking to profit from the current economic crisis. PHIFA also prohibits up-front fees and explicitly defines and regulates the activities of foreclosure consultants. The Commissioner of Financial Regulation has recently published an
advisory notice on this
INACTIVE STATUS OR ACTIVE WITH A REFERRAL BROKERAGE?
Lately, we’ve been hearing a lot of questions about the differences between inactive status and referral status. Simply put, inactive status is a license category and means that you can’t perform any real estate services. Referral status is only a term, not a license category. To receive any commissions, you must have an active license. A broker who has a referral company has set up a business plan whereby an active licensee may only refer sellers and buyers while remaining on active status. Normally the broker who has set up a referral company does not allow you to negotiate real estate transactions on behalf of a client or perform any other type of real estate brokerage services, but instead refer interested buyers and sellers through the broker with whom you are affiliated. That broker in turn connects the buyer or seller to a licensee who handles the transaction (an agent who is actively performing real estate brokerage services on a daily basis). Once the sale has settled, a referral fee is sent to your broker at the referral company and you in turn receive your percentage of that referral commission. If you remain active and affiliate with a referral brokerage, you are still required to complete all of your continuing education.
In each newsletter, we’d like to feature a particular case in which we feel we have protected the interests of Maryland’s consumers and can provide you with valuable information that may prevent you from making the same mistakes. These cases are public record and either are or will be listed on the Commission’s website under Disciplinary Actions.
In 2007, the Maryland Real Estate Commission revoked the salesperson’s license of “Mr. X.” About a week later, “Mrs. X,” Mr. X’s wife, was issued a salesperson’s license. Several months later, the MREC started receiving anonymous telephone calls reporting that Mr. X was conducting real estate business without a license.
The MREC learned of a website carrying Mrs. X’s broker’s logo that featured Mr. and Mrs. X’s numerous listings. Mr. X was described as an unlicensed assistant and property consultant, yet his home and cell phone numbers were provided for contact purposes. After reviewing the website, the Commission initiated an undercover investigation. Using an alias, an MREC investigator contacted Mr. X and received a list of properties that Mr. X had supposedly listed in Prince George’s County. The investigator selected several properties to view and arranged a showing with unlicensed Mr. X.
Posing as investors, two of our investigators met Mr. X at the first property. They told Mr. X that it was too expensive and did not fit their investment plan; several weeks later, they met with him again to view more properties in Prince George’s County. They advised Mr. X that they were interested in making an offer on one of the properties. Mr. X assured them that while he would prepare the contract, Mrs. X’s (the licensee) name would be on it. Mr. X and the investigators then went to a nearby McDonald’s, where Mr. X prepared a contract. The investigators advised Mr. X that they needed to have their lawyer review it before signing. They then reported their findings to the MREC.
An MREC representative met with the owner of the property and explained the situation to her. She replied that Mr. X had told her that he had a contract purchaser for her property, but that she had never received a copy of the contract. She had also tried to contact Mr. X on numerous occasions to determine the status of the sale, but he had never returned any of her calls. As it turned out, she did not even have a signed listing agreement with Mrs. X, yet alone Mr. X, and did not know that Mr. X was not licensed. The seller was appreciative of the MREC’s investigative actions.
The MREC opened a formal complaint against Mr. and Mrs. X, noting several alleged violations of Title 17 (i.e., §17—322 and §17—B25) and with the intent of filing criminal charges against Mr. X for his violation of §17—601. Counsel for Mr. and Mrs. X contacted the MREC to discuss the possibility of a settlement.
After consulting with the Commissioners and the Office of the Attorney General, and in the Commission’s desire to expedite this case, the Commission entered into an agreement with Mr. and Mrs. X. According to the terms of the settlement, Mrs. X surrendered her license immediately and entered into a lifetime agreement to never apply for a real estate broker’s, associate broker’s or salesperson’s license. It was further decided that Mr. X would not be charged with a criminal violation unless he violated the terms of the settlement, being that neither he nor his wife would engage in any real estate transaction other than the sale or lease of their own property. Mr. X further agreed that he would never apply for a broker’s, associate broker’s or salesperson’s license. If the MREC learns that he has violated any part of the agreement, the case will be reopened and criminal charges filed against him.
By entering into this agreement, the MREC has ensured that the consumers of Maryland will hopefully not be subject to the illegal actions of Mr. and Mrs. X ever again. In addition, this allows the MREC to use its resources to continue pursuing other offenders in the best interest of the public.