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GBAR | REALTOR(R)

The legal corner is intended to provide GBAR members with timely information about court decisions, risk management issues and ethics and arbitration matters.  We’ll regularly feature legal Q&As and short articles.

Have a legal question?  E-mail GBAR Communications Coordinator Christina Meehan at cmeehan@gbreb.com with your question and it may be featured in an upcoming issue!  Don’t forget that Designated REALTORS® and authorized Office Managers can take advantage of GBAR's Brokerage Counseling Hotline at (617) 573-5822.

NAR Claims Victory with Short Sale Commissions

NAR lobbying and educational efforts to preserve commissions resulted in Fannie Mae recently instructing all servicers NOT to cut 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 recognizes that negotiating commissions for short sales is unfair because of the extensive work required often times over many months and working with numerous buyers; and compensating real estate agents fairly benefits Fannie Mae because agents play a crucial role in short sales.  The announcement also reminded servicers that third party approvals (i.e., private mortgage insurers) may be required and can affect commissions.

According to NAR work continues 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.

For more information on Fannie Mae's announcement, visit http://www.efanniemae.com and search for "Announcement 09-03."

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0903.pdf