Patrick Schutte
REALTOR®, CBR, e-PRO
Certifed Foreclosure
Specialist

Cell: 928-710-1717
Fax: 866-784-1717

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New Fannie Mae Rule prohibits banks from lowering commissions during preforeclosure short sales

On Tuesday, February 22nd, 2009, Fannie Mae released an announcement with updates to the Servicing Guide used by banks in the U.S. 

One of the sections that will impact REO agents nationwide is the prohibition of banks making the sale of a short sale conditional upon the lowering of commissions.

You’ve probably seen the following statement in REALTOR remarks:

COOPERATIVE COMPENSATION OFFER SUBJECT TO COURT OR LENDER APPROVAL AND MAY BE ADJUSTED.

Well now it not only violates MLS policy*, but it now also violates Fannie Mae guidelines.  

Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers

No Negotiation of Preforeclosure Sales Commission

Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in aggregate. Servicers are reminded that they must continue to obtain any approvals that may be required by interested third parties in connection with preforeclosure sales.

Link to the whole Announcement 9-03

*See related post on FAQ no Short Sales from the AAR.

This is good news for REO agents, consumers, and banks in the long run, because it removes a large impediment that some agents had showing short sales.

 

6 comments to New Fannie Mae Rule prohibits banks from lowering commissions during preforeclosure short sales

  • Thanks Patrick, You really do a nice job on your website and emails. I appreciate the updates.

    All the Best,

    Dave Conners
    Keller Williams Check Realty

  • Patrick Schutte

    You’re welcome, Dave!

    Just trying to keep everyone up to date on what’s going on in these interesting times.

    :) PS

  • Hi Patrick, thanks for the great info … my understanding is that this rule applied to instruments which are owned by Fannie Mae. Countrywide (now B of A) 2nd stage negotiator just sent me a directive to reduce our commissions by over $6,000 which is less that even a 5% rate. I went on the Fannie Mae Look-up tool to see if the property has a loan that is owned by Fannie and no match was found. It seems unlikely, because it was a conforming loan with a 1st under $400K and a HELOC under $75K. I also punched in several other addresses of like properties in the area and surrounding cities and none yielded a match … have you had any experience tracing who owns the loan with this system? I asked the servicer to comment on the ownership of the loan and sent him a copy of the Fannie March announcement and have not heard back yet. Any suggestions?

  • Patrick Schutte

    You’ve done all the things that you can do. I would continue to send the notice to asset managers who pull this crap. Perhaps they can develop some internal policies around the notice.

    Thanks for the input, Sherry! :) PS

  • Thanks Patrick … no reply from the Lender yet … but I did call Fannie and they checked and indicated that this particular loan is not owned by Fannie Mae … are we just basically out of luck or could the 09-03 Announcement still provide us with some kind of protection? :-)

  • John Ebel

    Sherry. B of A trying to pull the same trick with me. It appears to me that the announcement applies to Fannie Mae servicers and not Fannie Mae loans. Did you ever get a positive resolution?

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