Interesting letter from Fannie and Freddie concerning the NAR Settlement

Interesting letter from Fannie and Freddie concerning the NAR Settlement:

Interested party contributions:

In Guide Section 5501.5, property sellers are permitted to make financing concessions toward the Borrower’s Closing Costs in maximum amounts between 2% and 9% of the property value. Fees or costs customarily paid by the property seller according to local convention are not subject to these financing concessions limits. Buyer agent fees have historically been fees customarily paid by the property seller or property seller’s real estate agent, and, as such, they are currently excluded from these financing concession limits. If these fees continue to be customarily paid by the property seller according to local convention, they will not be subject to financing concessions limits.

It is Fannie Mae’s standard practice to continuously evaluate its requirements to determine whether updates are appropriate based on changes to the market and industry. Fannie Mae will continue to monitor and assess the impact of the proposed NAR settlement and other real estate agent commission lawsuits to determine if any updates to its requirements are necessary.

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2 Responses

  1. Bob Taylor
    CEO at Grosse Pointe Board of Realtors
    If the GSE’s had said no, would they have had to devalue the mortgages they hold and the MBS they have issued to reflect that commissions are external of value which is the theory behind the DOJ action. Of course that theory by the DOJ is wrong, but being wrong has never been an issue for government in the past, as those who support fair housing already know.

  2. Comment to Saul’s original posting
    From Deanna Wallo-Whipp
    Real Estate Consultant @ REAL | Branding, Strategy

    Saw this. Picked it apart and I’m going with the conclusion that they’ve had a lot of pressure from within the industry to make some sort of statement, so they did. And they said, “This is how it’s been, how it is today and nothing is changing right now.” Based on the facts in the statement, it sounds like they’re waiting for approval of the settlement and/or any further changes before they make any decisions about their policies.

    Kinda like the rest of us should. I keep telling agents I work with to get used to the practice of getting the buyer under a representation agreement and having a very transparent conversation about commission. CA has had a beautifully written BRBC since 2022 and 4 related docs that go with it that already, today, have us set up to do just that. All agents should use what they have today, get comfortable and confident with it, and then adjust to the few changes that will come, when they come.

    Much like the statement above, what’s in place today is how it is now. When the settlement and anything else that may apply is final, all states will issue the regulatory changes to their docs and processes as necessary.

    Until then, march on.

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