Town Hall Notes


Realtors® Get Clarification on Buyer Financing and Treatment of Compensation by GSEs


The National Association of REALTORS® (NAR), along with the Mortgage Bankers Association (MBA), recently 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. 

In a win for the Realtors®, both Fannie Mae and Freddie Mac along with the Federal Housing Authority have published explicit confirmations that buyers whose agent is compensated by the seller will continue to have access to financing through those institutions. 

Fannie Mae Policy:  

Selling Guide B3-4.1-02, Interested Party Contributions (IPCs) permits interested parties (including property sellers) to make contributions to the borrower’s closing costs subject to maximum limits ranging between 2% and 9% of the property value. Typical fees and/or closing costs paid by a seller in accordance with local custom, known as common and customary fees or costs, are not subject to the IPC limits described in Selling Guide B3-4.1-03, Types of Interested Party Contributions (IPCs). If a seller or seller’s real estate agent continues to pay the buyer’s real estate agent commission in accordance with local common and customary practices, these amounts are not required to be counted towards the IPC limits for the transaction.  

Freddie Mac Policy: 

Guide Section 5501.5, property sellers are permitted to make financing concessions toward the Borrower’s Closing Costs in maximum amounts between 2% and 9% of the property value. Fees or costs customarily paid by the property seller according to local convention are not subject to these financing concessions limits. Buyer agent fees have historically been fees customarily paid by the property seller or property seller’s real estate agent, and, as such, they are currently excluded from these financing concession limits. If these fees continue to be customarily paid by the property seller according to local convention, they will not be subject to financing concessions limits. 

Federal Housing Administration (FHA) Policy: 

Under existing FHA policy, if sellers continue to pay buyer-side real estate agent commissions and fees as a manner of state and local law or custom, and if the commissions and fees are reasonable in amount, existing policy would not treat those payments as interested party contributions provided all other requirements are met. 

NAR, NVAR and your Realtor® Advocacy team will continue to press for access to affordable financing options and keep you up to date on any changes. 

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