In This Issue
Data Privacy and Security
NAR Publishes FAQ Sheet on FTC Safeguards Rule
Valuation Issues Update
NAR and Coalition Urge Tidewater-Like ROV Process
NAR Responds to RFI on Reconsiderations of Value
Worker Classification (independent contractor v. employee)
NAR Supports New Legislation Protecting Independent Contractor Status
Data Privacy and Security
NAR Publishes FAQ Sheet on FTC Safeguards Rule
On September 18, 2023, NAR published a Frequently Asked Questions (FAQs) sheet about recent updates to the Federal Trade Commission’s (FTC) Safeguards Rule, which took effect on June 9, 2023.
In an earlier Washington Report, NAR provided more general information about the Rule, which has been in effect since 2003. Recently, some members have asked more specific questions about the 2021 amendments to the Rule, including one expanding the definition of “financial institution" to include “finders” who bring together buyers and sellers of a financial service or product. NAR's FAQ sheet answers the questions, including 'Is a real estate brokerage now subject to this rule?'
Most real estate brokerages are unlikely to be subject to the Rule so long as they remain engaged in traditional real estate activities. Please review the FAQs and consult an attorney if your brokerage is considering offering financial services or products, or you have specific questions about compliance with FTC's or other rules.
Read NAR's FAQ sheet.
Austin Perez, aperez@nar.realtor, 202-383-1046
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Valuation Issues Update
NAR and Coalition Urge Tidewater-Like ROV Process
Earlier this week, NAR joined a coalition letter to the Consumer Financial Protection Bureau (CFPB) and bank regulators urging them to consider benefits of certain aspects of the Veteran Affairs' (VA) Tidewater process for reconsiderations of value (ROVs).
NAR’s ROV policy recommends regulators adopt the limitations in Tidewater that focus reconsiderations on bona fide issues, such as missing data or comparables and sets limits around those. It also emphasizes communication between appraisers and consumers in advance of the final report.
Ken Fears, kfears@nar.realtor, 202-383-1066
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Valuation Issues Update
NAR Responds to RFI on Reconsiderations of Value
NAR submitted comments the CFPB and the bank regulators on their request for input (RFI) proposing some improvements to the reconsideration of value (ROV) process.
The ROV process is critical for consumers to raise questions about potential errors or omissions in an appraisal and fundamental to confidence in the process.
NAR’s response:
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Recognizes the need for reforms and thanks the regulators,
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Agrees with the regulators that communication between the appraiser and consumer before the appraisal in critical,
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Emphasizes the need for the FHA and FHFA to be included in the process,
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The VA’s Tidewater process is a good model as it includes a minimum threshold and standards to request an ROV, and
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Competency of the appraiser is critical, and the industry needs to do a better job of training, attracting, and retaining the best appraisers to keep errors and bias low.
Ken Fears, kfears@nar.realtor, 202-383-1066
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Worker Classification (independent contractor v. employee)
NAR Supports New Legislation Protecting Independent Contractor Status
On September 12, 2023, the “Direct Seller and Real Estate Agent Harmonization Act,” (H.R. 5419) was introduced by Reps. Walberg (R-MI), Cuellar (D-TX), Cardenas (D-CA), and Moore (R-UT), on behalf of the millions of direct sellers and real estate agents around the country who are classified as independent contractors.
Qualified real estate agents and direct sellers have been defined as independent contractors under the Internal Revenue Code (“IRC”) for federal tax purposes since 1982. This language demonstrates the federal government’s long-standing recognition of the unique nature of the direct selling and real estate industries. Of the 1.5 million members of NAR practicing across the country, approximately 87 percent are classified as independent contractors. This important legislation would harmonize the Fair Labor Standards Act (“FLSA”) with the IRC so that direct sellers and qualified real estate agents are consistently defined as independent contractors across both statutes.
While the ability to work as an independent contractor is recognized and protected under the IRC and many state laws, class action and wage and hour lawsuits, new state legislation, and new federal rules expanding the definition of employee, continue to threaten a workers’ ability to be classified as an independent contractor. The United States Department of Labor is currently finalizing a rule on independent contractor status under the FLSA, which may result in unnecessary classification confusion. Aligning the FLSA with the IRC would ensure professionals in the real estate and direct selling industries can continue to operate their businesses and support economic growth with legal certainty.
NAR, alongside members of the Direct Selling Association (DSA), advocated for this legislation that supports the ability to work as an independent contractor in these industries, empowering entrepreneurship for more Americans. Read the joint thank you letter and REALTOR® magazine article for more information. Stay tuned to nar.realtor for the latest updates.
Christie DeSanctis, CDeSanctis@nar.realtor, 202-383-1102
Nia Duggins, nduggins@nar.realtor, 202-383-1085
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