MBA Breaking Advocacy Update: GSEs Confirm Existing Policy on Interested Party Contributions
Yesterday morning, and in response to MBA’s ongoing advocacy on this issue, Fannie Mae and Freddie Mac (GSEs) each released notices that confirmed that their policies will continue to exclude seller or listing agent payment of buyer agents’ commission from interested party contributions (IPCs). If a seller or seller’s real estate agent continues to pay the buyer’s real estate agent commission in accordance with local common and customary practices, the amounts are not required to be counted towards the IPC limits.
• The GSEs also noted that they will continue to evaluate their requirements on real estate agent commissions to determine any necessary changes that may be needed in the future.
Go deeper: MBA has called on the GSEs, Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA) to identify possible guideline clarifications or changes that may be needed because of new real estate agent compensation arrangements that may arise from the National Association of Realtors (NAR) commissions litigation and the recently announced settlement.
• Following the details of the settlement announced in March, MBA sent a joint letter with NAR to leadership at FHA, FHFA, and the GSEs that asked for confirmation that their policies will continue to exclude seller or listing agent payment of buyer agents’ commission from IPCs.
• FHA last month also confirmed that “under existing FHA policy, if sellers continue to pay buyer-side real estate agent commissions and fees as a matter of state or local law or local custom, and if the commissions and fees are reasonable in amount, existing policy would not treat those payments as interested party contributions provided all other requirements are met.”
What’s next: MBA will continue its advocacy on this issue with the VA and Rural Housing Service.
• In addition, MBA urged the VA in an April 3 letter to expedite regulatory changes to its rule that prohibits Veterans and active-duty service members from paying any portion of brokerage commission when purchasing a home with a VA mortgage. Failure to do so would put VA buyers at a significant disadvantage – especially in today’s tight inventory market.
• MBA is also assessing other changes that may be needed in agency guides and Consumer Financial Protection Bureau (CFPB) rules to ensure any new agent compensation arrangements do not limit access or raise the cost of mortgages.
For more information, please contact Pete Mills at (202) 557-2878 or Justin Wiseman at (202)557- 2854.
