In ongoing efforts to address housing policy and lending concerns surrounding the recent National Association of REALTORS®’ (NAR) settlement, NAR issued two letters this week to both the Department of Veterans Affairs (VA), GSEs and regulators. The letter to GSEs was also sent on behalf of the Mortgage Bankers Association (MBA), delivered to the Federal Housing Finance Agency, Federal Housing Authority, Fannie Mae and Freddie Mac.
In a statement regarding the VA letter, NAR said, “The National Association of REALTORS® (NAR) submitted a letter to the Department of Veterans Affairs (VA) urging them to revise its policies pertaining to fees veterans cannot pay when using their VA home loan benefit. Under VA policies, veterans using the home loan benefit are prohibited from compensating their professional representative directly. This puts VA buyers at a disadvantage in situations where offers of compensation are not offered from a seller, potentially forcing them to forego professional representation, choose a different loan product, or exit the market entirely.
“NAR wants to ensure veterans maintain their access to the VA home loan program, which has been a significant tool in helping service members achieve the American Dream of homeownership. NAR remains committed to working with the Department to create solutions for those who served our country.”
Here is NAR’s letter to the VA in full:
Dear Executive Director Bell:
On behalf of the National Association of REALTORS®’ (NAR) 1.5 million members, I write to urge the Department of Veterans Affairs (VA) to revise its policies pertaining to fees veterans cannot pay when using their VA home loan benefit. REALTORS® serve as advocates for homebuyers through the entire purchasing process, many of whom specialize in working with VA buyers. In this exceedingly competitive market, we are concerned that the VA’s current policies place veterans at a significant disadvantage compared to traditional buyers.
Under VA policies, buyers using their home loan benefit are prohibited from compensating their professional representative directly. In situations where no offer of compensation is offered from a seller, VA buyers are immediately at a disadvantage, potentially forcing them to forego professional representation, lose a property in an already limited inventory, choose a different loan product, or exit the market entirely.
From the initial home search, inspections, negotiations, and closings, REALTORS® work closely with their veteran clients to ensure their offers are seen and considered in a competitive market. Nine out of ten consumers use the service of a real estate professional. When representing veterans, REALTORS® explicitly ensure they can utilize the benefits promised to them for their service and sacrifice for our country.
The VA home loan guaranty program is a vital homeownership tool that provides veterans with a centralized, affordable, and accessible method of purchasing homes as a benefit they earned for their service to our nation. NAR wants to ensure that VA buyers remain active participants in the real estate market to achieve the American Dream of Homeownership.
Our association remains committed to working with you to create solutions for those who have served our country.
Letter to GSEs and regulators
NAR issued the following in a statement addressing the letter to GSEs and Regulators, saying, “The National Association of REALTORS® (NAR) along with the Mortgage Bankers Association (MBA) sent a letter to the Federal Housing Finance Agency, Federal Housing Authority, Fannie Mae, and Freddie Mac seeking confirmation that homebuyers will continue to have access to mortgage credit after the proposed settlement in the Burnett et al and Moehrl et al cases is complete. Specifically, NAR and MBA asked the regulators and GSEs to confirm that the custom of excluding seller’s payment of commissions for buyer’s agents will continue to be excluded from the limits on Interested Party Contributions. This confirmation is a critical piece of the post-settlement puzzle.
“This letter continues NAR’s efforts to engage the GSEs and regulators to provide near-term clarity to the market and members. This effort is one of several focused on supporting mortgage finance for buyers in the post-settlement environment.”
Here is NAR’s letter to the GSEs in full:
Dear Director Thompson, Commissioner Gordon, Ms. Almodovar, and Mr. DeVito:
Our groups write to you seeking confirmation at a critical point of change in the housing market, which accounts for nearly 20 percent of US gross national product. The National Association of REALTORS® has entered into a proposed settlement agreement, subject to court approval, in the Burnett et al and Moehrl et al cases. As a result of certain business practice changes in the settlement, we believe it is critically important for the GSEs and FHA to review the settlement and provide guidance to market participants that will ensure these new arrangements will continue to be supported by the Federal Housing Administration (FHA), Freddie Mac and Fannie Mae (the GSEs) underwriting standards.
Specifically, we seek confirmation regarding the treatment of interested party contributions (IPCs) in your guidelines. IPCs include concessions from the seller to the buyer for items that are traditionally paid by the buyer such as loan closing costs or rate buy-downs. As you are aware, under current practice, most home sellers pay the listing agent commission, who in turn pays the commission of the agent representing the buyer. Because commissions of buyers’ agents are customarily paid by the listing agent, they are excluded from caps on IPCs established by the GSEs and FHA.
Under the settlement, cooperative commission is no longer permitted to be displayed on a Multiple Listing Service (MLS), but it is not banned—listing brokers and sellers can continue to offer compensation for buyer broker services, just not through the MLS. In addition, the settlement does not prohibit home sellers from paying buyer agent commissions. Thus, the settlement creates two clear paths for sellers and buyers to negotiate to continue the custom of listing agents or sellers paying buyer agent commissions.
Consequently, once the settlement is in effect, we believe that FHA and GSE policy should continue to exclude seller or listing agent payment of buyer agents’ commission from IPCs. Confirming your policies and maintaining this practice will sustain the current flow of mortgage capital to home buyers without change or delay.
Our groups ask that you provide confirmation of the treatment of seller or listing agent-paid commissions for buyers’ agents by FHA and the GSEs as soon as possible. Home buyers and sellers are dealing with historic stresses, and it is incumbent upon us all to eliminate any confusion. The certainty we seek is needed now to prevent disruptions that may cost homebuyers and sellers money and potentially their home purchases.
