👋 Happy Friday! We’re thankful for our readers, clients, beneficiaries, vendors, crew members, families, friends, pets, and everyone who gives us a reason to get out of bed daily. We’ll be taking off next week to celebrate 🦃 Thanksgiving 🥧 for all of these things formally, and we wish you all a great Thanksgiving week ahead.

1 big thing: More data breach reports on the horizon

The Federal Trade Commission (FTC) recently amended its Safeguards Rule to require nonbank financial institutions to report data breaches.

Why it matters: The new protocols mean nonbank businesses offering financial services will spend more time understanding, documenting, and reporting data breaches. They may also feel pressured to invest in new security measures and surveillance technologies.

Define “nonbank financial institution”: NBFIs provide services similar to banks but don’t have a banking license. These include:

  • Mortgage brokers

  • Investment advisers

  • Loan or finance companies

  • Payday loan operations

  • Car dealerships

Because NBFIs offer credit, investment, and financing services, they fall under the authority of the Dodd-Frank Act — just like banks.

State of play: Financial institutions were already required to create, execute, and maintain comprehensive security programs to protect and keep their customers’ data confidential. Effective May 13, 2024, NBFIs will have to report data breaches that affect 500 customers or more to the FTC within 30 days.

  • Institutions must report the nature of the breach, the number of consumers affected, consumers at risk, and other information.

Transparency and accountability: Companies entrusted with “sensitive financial information” must be transparent if a customer’s financial information has been compromised, says Samuel Levine, director of FTC’s Bureau of Consumer Protection. The FTC hopes the new requirement will provide further incentive for institutions to keep their customers’ information secure.

Response to the new amendment:

  • Supporters of the new amendment claim it will allow the FTC to enforce better requirements for comprehensive and effective data security measures at financial institutions.

  • Opponents claim it duplicates existing state breach notification laws, which the FTC can access and review.

The bottom line: The new amendment will enable the FTC to track emerging data security threats more comprehensively. But it also means nonbank financial institutions must invest time and resources to comply, including ramping up technology and data security services, which can be costly.

2. The commission lawsuits’ worst case scenario

Individual and class action lawsuits over real estate broker commissions could reshape the industry. REALTORs need to prepare.

What’s happening: Since 2019, homeowners have filed a number of lawsuits against the National Association of Realtors (NAR) and prominent real estate companies like Keller Williams and Re/Max.

  • The complaints take issue with NAR requirements, which they say violate US antitrust laws.

  • One of these requirements, which says listing brokers must offer buyer brokers a commission if they want their properties to appear in the MLS, raises particular ire.

Why it matters: The outcomes of these cases could significantly reshape the real estate industry.

Real estate brokers should be concerned. Many real estate professionals believe these lawsuits could change how agents get paid for sales and, by extension, how brokerage companies and other MLS companies do business.

  • But they’re not: A 2023 survey by RealTrends Broker Pulse discovered that only 3.45% of brokers believed the outcome of these lawsuits was a “challenge or concern,” and around 60% of respondents claimed they were doing nothing to prepare for a worst-case outcome.

To prepare, buyer brokers need to figure out how buyers’ agents will be compensated. Other measures include:

  • Adding buyer representation agreements to their practices and training agents on new compensation procedures. This could mean shoring up a substantial compensation rate if the industry takes a significant hit in total gross revenues.

  • Shoring up core services. But, experts caution, only to a point. Evidence so far suggests the most efficient use of resources could mean moving away from a traditional sales-office culture.

  • Exploring alternative business models. Regardless of the fallout from the lawsuits, recessions are an ever-present danger when it comes to real estate industry commissions.

The bottom line: Given the potential impacts on real estate broker commissions, brokers must take the current spate of lawsuits seriously. Having a plan for the worst-case scenario can ease the transition to a new model — and doesn’t prevent hoping for the best.

3. Catch up fast

  1. Orlando home sales fell 5% from September to October. This is the fifth straight month of falling sales. But the median house price still increased from $370,000.00 to $377,000.00 in that month. Orlando Sentinel

  2. Weekly jobless claims increased by another 13,000, continuing claims rose by 32,000, manufacturing dropped 0.7%, and oil prices dropped by 5% — all signs that the Fed’s higher rates are cooling the economy which should lead to lower inflation. Reuters

  3. The current state of the housing market, state by state. Go Banking Rate

  4. Foreclosure starts are up by 6% since last year, but down 6% from last month. DSNews

  5. Survey of 281 Realtors provides insight on thinking about the commission lawsuits and their fallout. HousingWire

4. Pic of the day

The back of our new offices at night. The parking lot lights were too bright for the neighbors’ taste, so we’re working on that. Photo: Joe Seagle

We spent this past week moving into and unpacking the new offices.

  • We take up the first floor, which is as large as the entire building we left.

  • This allows us to serve clients and beneficiaries better in the future.

But that wasn’t the highlight of my week. Instead, on Thursday, I had the pleasure of driving an hour to Tavares to appear at a trial where I was named as the defendant.

I’ve written about this in the past, so it’s no secret it was coming. But — for those who missed that story — the short version is that a neighbor sued me individually, alleging that I had killed a tree on his property, causing it to fall.

I hadn’t been to Lake County since 2019, when I took the Christmas lights boat tour in Mount Dora.

  • But that didn’t matter in this case.

  • As the plaintiff stated in the small claims case, “Joe Seagle is the apex of the organization, so he’s to blame for anything that his company did to my tree.”

I had to refrain from grinning, but I found it ironic that he was alleging that I, an officer of a company that is the trustee of a trust that owns the property next door to his, have unfettered power to do anything I want with not only the trust property but also his property. If I only had such infinite powers …..

But I don’t. Nor do I want them.

I say I had the “pleasure” of sitting through the trial because the trust worked as it should have. I suffered the accusations being hurled at me while our beneficiary was blissfully ignorant of what was happening. I was taking my time and energy to travel the two-hour round trip to sit in a two-hour trial while our beneficiaries could continue their productive day.

The judge dismissed the case with prejudice thanks to the great work of my longtime colleague and our local attorney, Laura Hargove.

I felt bad for the plaintiff to the extent that he lost a large and beautiful tree, but it was never our fault nor our beneficiary’s fault that the tree died. Fortunately, the trust worked, and the plaintiff couldn’t drag our beneficiary through the mud as he took out his anger on me instead.

The bottom line: What a wonderful world.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

Be on the lookout for our next issue! 👋

  • Our mailing address: PO Box 547945, Orlando, FL 32854-7945

  • Our physical address: 1901 West Colonial Drive, Orlando, FL 32804

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