Fannie Mae says not to cut commissions!
Fannie Mae Instructs Its Services Not to Cut Commissions on Short SalesOn February 24, 2009, Fannie Mae sent Announcement 09-03 to its servicersinstructing them not to negotiate commissions on
below the amountnegotiated by the listing agent (unless the commission exceeds 6 percent). Therequirement took effect March 1ST, 2009. Fannie Mae recognizes that;(a) negotiating commissions for short sales is unfair because getting a shortsale to closing requires intensive work over many months, often requiring workingwith numerous buyers, and(b) compensating real estate agents fairly benefits Fannie Mae because agents playa crucial role in short sales.The Announcement reminds services that third party approvals (i.e., private mortgageinsurers) may be required and can affect commissions. NAR has asked both Fannie Maeand
to strengthen their policies against reducing short sales commissions,welcomes Fannie's announcement, and has urged Freddie to follow Fannie's lead.I believe this is the first step in solving the inventory challenge in all market.While this measure taken by Fannie Mae is an important one, the government really needs tostep up their efforts of putting pressure on lenders to do whatever is necessary to get these shortsales moved along. Whether is more staffing or better trained staffing, the problem starts andends at the banks.The announcement also reminded servicers that third party approvals like private mortgageinsurers may be required and can affect commissions.According to NAR work they are continuing to work with both Fannie Mae and Freddie Mac tostrengthen their policies against reducing short sales commissions.
NAR's next steps include continued work with Freddie Mac and other mortgage providersto enact similar regulations that will ensure that Realtors are compensated fairly.Currently, Fannie Mae's policy only applies to loans it owns and guarantees; therefore if aloan is owned or guaranteed by another lender the commission policy of Fannie Mae doesnot apply.