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NOTE that this law went into effect March 1st and applies ONLY to loans backed by Fannie Mae.  From the C.A.R. Newsline issue emailed on 04 March 2009:

"NO MORE COMMISSION REDUCTIONS FOR FANNIE MAE SHORT SALES
Fannie Mae loan servicers no longer can require real estate brokers to reduce their commissions as a condition to a short sale approval. The new policy was effective March 1. According to Fannie Mae, the closing of a pre-foreclosure sale cannot be conditioned upon a reduction of the real estate commission to a level below what the listing agent and borrower negotiated. An exception applies if the total commission is more than 6 percent of the sales price.

"This good news may be tempered by the difficulty for REALTORS® to ascertain whether the underlying loan in a short sale transaction is a Fannie Mae loan. REALTORS® may wish to ask the lender or loan servicer whether the loan is a Fannie Mae loan, and to consider submitting the Fannie Mae Announcement to the lender with the short sale package.

"For a copy of Fannie Mae's Announcement 09-03 (Servicing Guide, Part VII, section 504.02), go to https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0903.pdf. For a list of Fannie Mae lender partners in California, go to http://www.fanniemae.com/flApplication/fanniemae/findLender.jsp?p=Find+a+Lender+Search/."

SELLERS & AGENTS:  If you want to find out if your mortgage loan is backed by Fannie Mae call 1-800-7FANNIE (732-6643) from 8am to 8pm EST.  For Freddie Mac info call 1-800-FREDDIE (373-3343).

Sellers, if you want to sell your home instead of letting the bank forclose on your mortgage loan, please contact me and I can guide you in the right direction.  I can educate you about the short sale process and recommend a great agent in your area!

Join my new AR group and post your blog at http://activerain.com/groups/virtualoffice

Regina P. Brown
Broker, Realtor®, e-Pro
Author of eBook "Stop Foreclosure Fast: Solutions to Save your House"

Text copyright © 2009 R.P. Brown, All Rights Reserved 

Regina P. Brown
Broker, Realtor®, e-Pro
California DRE # 00983670
Join & post to my NEW ActiveRain group at http://activerain.com/groups/virtualoffice

www.CalCoastCountry.com

   

www.RealtyProAcademy.com

             

Text copyright © 2011 R.P. Brown, All Rights Reserved

Page copy protected against web site content infringement by Copyscape  

 

36 Comments on Short Sale Lenders CANNOT reduce Realtor® or Agent's Commission - New LAW

MAR
09
2009
1 Featured Post Outside Blog

Good stuff Regina. Thanks for posting this up. I have seen commissions cut many a time. Good luck in all you do
1:09am • #1
777,571 Points 53 Featured Posts Outside Blog Called Shot Master

Regina:  Lenders have cut Realtors commissions just before closing on so many of these short sales... that many Realtors refuse to show these homes.  They feel they do not want to "waste" a good buyer... and only get partially paid for what would probably be three times the work... at least.  So... this new regulation is a great thing.
1:22am • #2
1,254,469 Points 242 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Regina- We rarely have our commission cut and when we do it is not very much. The great thing is that Chase who always cuts their Fannie Mae shorts down to 5% will no longer be able to do so! YEAH!

 
1:29am • #3
228,471 Points 10 Featured Posts Localism Sponsor

Careful, everyone, this is ONLY on Fannie-Mae backed loans.  Many of the jumbo, non-conforming, non-conventional loans that were made in CA will not qualify for this new law.  But hopefully the lenders will follow suit anyway...
1:37am • #4
227,064 Points 25 Featured Posts

Very Informative Post - I hadn't previously seen the FannieMae Circular.  Thanks for posting this timely information.
2:24am • #5
183,708 Points 2 Featured Posts Outside Blog Attended Rain Camp

Hi Regina, thanks for providing a link to the actual Fannie Mae Announcement... I heard about it through the grapevine, but hadn't seen it with my own eyes. 
3:27am • #6
1,016,767 Points 25 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Great information , thanks for sharing it
5:09am • #7
228,471 Points 10 Featured Posts Localism Sponsor

Note that real estate agents may have to provide a copy of this new law to the lender, who may not have all the details yet.
11:51am • #8

Thank for the info Regina.
12:24pm • #9
381,618 Points 7 Featured Posts Outside Blog Called Shot Master

Regina,

Thanks for keeping us updated on this topic.  It is hard enough in the current market without having our fees cut.

Mary
4:43pm • #10

I did not know that.  I wish all of the bank would get the picture.  They might get a lot more homes sold if they quit cutting commisions.  I wish you the best and hope you have a great week.
9:22pm • #11
228,471 Points 10 Featured Posts Localism Sponsor

Yes, short sale transactions are often about 3 times more time, effort, & work than regular transactions.  So it's good to see real estate agents get compensated for all their time & effort.
11:35pm • #12
MAR
10
2009
228,471 Points 10 Featured Posts Localism Sponsor

I'm curious to find out if anyone has had lenders respond to this new law?
12:56pm • #13
MAR
11
2009

Wow Regina, you are FULL of wonderful and interesting facts! Thanks for the info.
6:29pm • #14
MAR
28
2009
671,545 Points 69 Featured Posts Outside Blog Attended Rain Camp

It's a cool law and hopfully others will follow suit. But, unfortunately, not all clients have Fannie Mae loans. For those others, the lenders do get a little agressive in the commission-cutting business.  Thanks for the post.
3:07pm • #15
228,471 Points 10 Featured Posts Localism Sponsor

Melissa, I agree, when anyone or any company sees potential money, they want to grab a piece of it for themselves!  Can sellers give themselves a 1.5% referral fee?  That's what I call greed.
8:00pm • #16
MAY
05
2009

Sorry to rain on your parade, but many major lenders including WAMU and Bank of America refuse to follow the Fannie Mae guidelines.  Unless you are prepared to sue, theres not much to do about it.  B of A will now only pay 4%!  Tortious interferance in a business contract (listing agreement) is illegal, but lenders can and do whatever they want.

www.short_sale_expert.activerain.com
10:44pm • #17
OCT
05
2009

I received a short sale approval letter today from Bank of America and they cut the commission down to 4%.  I sent the negotiator a copy of the Fannie Mae guidelines, and the negotiator said "it's not a law, and commissions are always negotiable".  Negotiable?  I don't remember them doing any negotiating at all.  The negotiator is telling me what they will pay.  It makes me not want to sell any homes where Bank of America is involved.
Marti Rundus (Elite Realty)
9:47pm • #19
DEC
08
2009

I am a Realtor purchasing my own home in St. Pete, FL and Regions Bank is asking me to sign a form waiving my commission.  Has anyone ever heard of this?
10:29am • #20
JAN
09
2010
228,471 Points 10 Featured Posts Localism Sponsor

Joseph, you're right, it is illegal, but it won't stop the banks.  They are too powerful to be held accountable to the law, or so they think.

Marti, some of the banks think that they don't have to follow guidelines (or the law) if they don't want to. 

Peter, I have never heard of that before.  I wouldn't mind waiving my commission, but I would want the purchase price reduced to compensate.

Regina P. Brown
10:21pm • #21
FEB
07
2010

Does anyone have a recent update on dealing with BOA on commission reductions?  I have one ready to close and, of course, they want to reduce the commission to 5%.  This, on the same day they indicted their CEO (Feb. 4. 2010) for fraud.  Their executives are thieves and have committed fraud and misreporting to the SEC, their attorney fees to defend these jerks is through the roof, yet they want to take it out on the backs of the people that are willing to sell their toxic assets.

 
Bonnie Cox
6:23pm • #22
FEB
09
2010
228,471 Points 10 Featured Posts Localism Sponsor

Hi Bonnie, I can't speak to your specific situation but I have noticed that some of the banks don't think they have to follow any rules.  There is NO accountability for gigantic corporations.  Very sad.
1:14am • #23

My company just had BofA do a commissionectomy down to 5%.  It is not a Fannie Mae loan unfortunately.
11:09am • #24
228,471 Points 10 Featured Posts Localism Sponsor

Bank of America has developed a reputation for cutting commissions.... even on Fannie Mae loans!  I've heard that from multiple agents.
11:35am • #25
MAR
24
2010

If the Seller signs and Exclusive Right to Sell and agrees to pay a commission of say 6%, then doesn't the seller have to pay the difference between that and what BOA cuts commission to?  I don't understand why we only follow part of our agreements with the seller to do the short sale for them.   Some of these Sellers are walking away from huge debt obligations.
TK
7:40am • #26
MAR
25
2010
228,471 Points 10 Featured Posts Localism Sponsor

TK, that is a good point.  If the sellers had to cough up cash out of pocket, many would choose to walk away and allow a foreclosure instead.
10:21pm • #27
APR
28
2010

I did send the Fannie Mae guidelines to BOA during negotiations as I was both the listing and selling agent.  They wanted me to reduce my commission to 3% instead of 6%.  After that, the offer was approved to send to PMI company at 6% commission.  I should have the approval letter this time next week!!!
12:50pm • #28
MAY
07
2010
228,471 Points 10 Featured Posts Localism Sponsor

Joel, great job!  BOA does know the guidelines... sometimes they choose not to follow them.  Great job holding their feet to the fire!
1:52am • #29
MAY
17
2010
728,376 Points 164 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Regina - it turns out (according to a local short-sale attorney) that this is NOT a law... just a suggestion, regarding fannie mae propertoes... there is no rule or law out there saying they can't require us to reduce our commission...

and they CAN (and are required to have it reduce) if/when our commission is over 6%.
1:39pm • #30
SEP
26
2010

Regina, I am currently in a fight with Wells Fargo on a commission reduction...below is a series of emails...


Broker:

   I noticed that Wells Fargo cut my commission to 4%. When the listing agreement was signed, the seller and I negotiated 6%. Attached is the Fannie Mae ruling on Realtor commissions, the listing agreement, Preliminary HUD1, WF demand letter. Did something change since Fannie Mae issued these orders?


 Wells Fargo:

My guess would be that commissions needed to be cut due to the fact that the offer did not meet either mi or investor minimum net requirements as both entities did approve the offer while still under their minimum net requirements.

 You really have two options here, one, proceed with the offer as is, or two, raise the offer by $5,000 and have Derek resubmit the offer to both the mortgage insurance company and the investor for reapproval.

 Regards, XXX


 Broker:

the buyer sent his best and final and will not give any more. I will contact Fannie Mae at the number provided to see if they can remedy it..

thanks


 Wells Fargo:

 You will need to notify XXX of any changes that Fannie Mae makes, any changes to the approval as it stands will require a new approval from the mortgage insurance company, Fannie Mae states that the offer needs to be sent to the mortgage insurance company first as without their approval, you do not have a valid short sale.


 My question is...the difference in commission is $3200. Why is he asking me to get my buyer to resubmit an offer that is $5000 more?
2:02am • #31
SEP
30
2010
228,471 Points 10 Featured Posts Localism Sponsor

Darryl, my experience with these banks is that real estate transactions are being negotiated by clerks, and that is always bad news!  The clerks do not understand the complexity of real estate transactions and they are used to working for a large red-tape corporation....  Plus, the banks don't have anyone to supervise them so there's no accountability!
8:13pm • #32

This was a supervisor that I was corresponding with..
8:39pm • #33
NOV
11
2010

If you look on the Fannie or Freddie website they have a number to call and see if they back the loan. You just input the APN number.
4:10pm • #34
NOV
13
2010

 

Only one thing is necessary to avoid reducing brokerage fees at the request of a 3rd party.  Just say no.  

This should go for the listing agent and the buyer's agent but in the case of the buyers agent they have no contract relationship with the seller and should have negotiated their fee upfront with the buyer.  Ignore the MLS 'offer' as it is (or should be) meaningless.  

The lenders may take a hit and get less than they are owed but they took on that risk when they lent the money.  The Realtors did not.  Just say no.  

Could that lose you the deal.  Yes. Could that give you standing to file suit against the lender for tortuous interference with your contract? maybe     I'm surprised there aren't some attorneys out there trying to make a buck off this issue.  There should be, there can be a lot of money in class actions.   

In any case,  the lender can't "make" you cut your commission.  They can only ask. You get to say either 'yes' you can have my money or 'no' you can't have my money. 
7:56am • #35
AUG
24

Is an APN number the same as a Min number?  See #34 above
Deann Rex
3:38pm • #36
AUG
26
228,471 Points 10 Featured Posts Localism Sponsor

Deann, APN is the tax ID for that parcel number.  All properties in the U.S. have parcel #'s which are filed with the local county tax assessor's office.  In some states, especially the South, it's called something different than APN.  MLS listings will include the tax ID # in the listing, and often it is linked to the public county tax records, where you can click and see the owner of record, etc.  Hope that helps you answer your question!

Regina P. Brown
12:36pm • #37

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