Recent lobbying by the National Association of Realtors (NAR) and more than likely other online prominent educational postings at such places like Active Rain to preserve commissions led Fannie Mae to recently instruct all servicers NOT to reduce Real Estate commissions on short sales.
Fannie Mae 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.
Fannie Mae has recognized that negotiating commissions for short sales is unfair because of the extensive work required in many occasions that occur over many months and working with numerous buyers. Paying real estate agents fairly benefits Fannie Mae because Realtors play a crucial role in short sales. The fact that many banks would turn around after a foreclosure and offer commissions much higher did not make much sense.
So as a home seller considering a short sale you may be thinking why do I care if the Realtor gets paid a certain amount of commission? The answer is real simple. When selling your home as a short sale there have been a couple of major issues that continue to plague the industry.
Reason number one is short sales take in many instances an exceptionally long time to get approved. There are times where it takes up to six months just to get a yes or no answer on whether or not the lender will even accept the short sale!
Reason number two is that everything has been open to negotiation up until this point. As a Realtor working with an excellent buyer, the last thing you want to hear on top of waiting months and months is that your commission is being significantly cut.
In a challenging market, a Realtor is your best friend. Banks shouldn't be alienating the party who is an alie in getting the sale accomplished. While it is always in a Realtors best interest to work on their clients behalf, can you see why a Realtor would begin to get a complex and instruct their buyers to stay clear of a short sale?
While this measure taken by Fannie Mae is an important one, the government really needs to step up their efforts of putting pressure on lenders to do whatever is necessary to get these short sales moved along. Whether is more staffing or better trained staffing, the problem starts and ends at the banks.
The announcement also reminded servicers that third party approvals like private mortgage insurers may be required and can affect commissions.
According to NAR work they are continuing to work with both Fannie Mae and Freddie Mac to strengthen their policies against reducing short sales commissions.
NAR's next steps include continued work with Freddie Mac and other mortgage providers to 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 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 your loan you can either call and ask your lender or if they are not forthcoming with the information you can get in contact with Fannie Mae by filling out the Fannie Mae mortgage request form.
If you live in the Metrowest Massachusetts area and are considering a short sale I would welcome the opportunity to answer any questions you may have. I have been successfully closing short sales and work with a local Real Estate attorney to accomplish this goal. So far I am batting 1000% and have not had a short sale rejected.
Here are a few articles I have written that you may offer you some additional insight about short sales:
About the Author: The above Real Estate information on Fannie Mae short sale commissions no longer cut was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at firstname.lastname@example.org or by phone at 508-435-5356.
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