Bill Jansen's Weekly Practice Tip: Fannie Mae Commissions in Short Sales

BROKER RISK MANAGEMENT

 

WEEKLY PRACTICE TIP

 

Fannie Mae Not Cutting Broker Commissions in Short Sales

 

 

It is common knowledge that sellers’ lenders in short sales routinely insist on cutting the commission amount to the brokers below the amount agreed to by the seller in the listing agreement.  The brokers have little choice but to go along. 

 

Worse, this usually comes after extremely long escrows where the agents have done much more work than in an ordinary escrow, and where a substantial percentage of the short sale escrows fail to close at all.

 

With pressure from the National Association of REALTORS® (“NAR”), Fannie Mae recently sent an announcement to its servicers stating that, as of March 1, 2009, negotiations on short sales commissions below the amount established by the listing agent is prohibited unless the commission exceeds 6 percent.  See:  Fannie Mae Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers

 

Currently, Fannie Mae's policy only applies to loans it owns and guarantees, therefore, if a loan is owned or guaranteed by another lender, the commission policy of Fannie Mae does not apply.

 

In order to find out if Fannie Mae is servicing a loan that you are working on in a short sale transaction, you can:

 

1.  Call and ask your seller’s lender; or,

 

2.  Simply, go to:   http://www.fanniemae.com/index.jhtml and click on:

            “Does Fannie Mae Own Your Mortgage?”

 

 

NAR's next task is to work with Freddie Mac and other mortgage providers to enact similar regulations that will ensure that REALTORS® are compensated fairly on short sales.

 

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This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.