Fannie Mae stops cutting real estate commissions in a short sale
WASHINGTON – March 2, 2009 – Real estate commissions are now protected in some short-sale transactions. In response to Realtor concerns, Fannie Mae announced that “preforeclosure sales may not be conditioned upon a reduction of the total (real estate) commission,” providing the total commission does not exceed 6 percent. The policy became effective March 1.
The move affects only short sales where Fannie Mae backs the mortgage, but experts hope Freddie Mac and other government-sponsored enterprises (GSEs) will soon follow suit. Currently, Fannie Mae and Freddie Mac back over half the mortgages in the U.S.
The change seeks to solve a problem encountered by many Realtors. After putting together a short-sale package and submitting it to the lender for approval, Realtors report that lenders would often counteroffer with a cut in commission. Realtors then found themselves working twice as hard on a short sale for less money.
In November during the National Association of Realtors’ (NAR) Legal Seminar, Fannie Mae officials turned to Realtors and asked what could be done to expedite the short-sale process. Among other things, attendees took Fannie Mae to task for their commission policies. The recently announced change is Fannie Mae’s response.
Fannie Mae’s announcement appeared as a short notice in a “Miscellaneous Servicing Policy Changes” announcement. It says:
Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers
Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in the aggregate. Servicers are reminded that they must continue to obtain any approvals that may be required by interested third parties in connection with preforeclosure sales.
The original document can be downloaded from Fannie Mae’s Web site at: https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp?referrer=frpromo
© 2009 FLORIDA ASSOCIATION OF REALTORS®
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