08/01/2024
***Update on the NAR settlement and our lending requirements. Please take time to read it over. 🙂 **FEEL FREE TO SHARE**
As a result of the recent nationwide National Association of Realtors Settlement (NAR), which mandates that compensation for real estate agents cannot be listed on multiple listing services (MLS) and that the buyer’s agent must enter into written agreements with their buyers, guidance has been provided by all agencies addressing what impacts this may have on mortgage lending.
Under this new requirement, the buyer would sign an agreement with their buyer broker agent at the beginning of their home search, verifying the services the agent would perform and the fee(s) they would be paid. Separately, the seller would enter into an agreement with their listing agent when the home is listed, verifying the services to be performed and the fee(s) to be paid.
When a buyer makes an offer, they would specify both the price being offered and the fee the buyer’s agent expects to be paid. The buyer, seller, and their agents would settle on the final terms of the purchase contract.
Movement Mortgage will continue to monitor and assess the impact of the NAR settlement and other real estate agent commission lawsuits to determine if any further updates are necessary.
Below is a breakdown by agency which addresses Buyer Agent Real Estate Commission Fees and Interested Party Contributions and documentation requirements.
Fannie Mae-(Conv), Freddie Mac-(Conv), FHA and USDA
Fees or costs customarily paid by the property seller are not subject to Agency and Government Lending interested party contribution limits and are not considered to be a seller concession. Buyer agent fees have customarily been paid by the property seller or property seller’s real estate agent and are currently excluded from interested party contribution limits. If these fees continue to be customarily paid by the property seller, they will not be subject to interested party contribution limits nor considered a seller concession.
A fully executed buyer-broker representation agreement must be included in each loan file which spells out the terms of the agreement and must be included in the purchase agreement and be supplied to the appraiser prior to the appraisal being completed.
Any buyer-broker charges paid by the buyer must be included in the total amount needed to close and sufficient funds to close must be documented in the loan file prior to closing.
VA Loans – Circular 26-24-15
Effective for sales contracts, signed on or after August 10, 2024, VA is authorizing a temporary variance that allows Veterans to pay reasonable and customary amounts for buyer-broker charges including commissions and other broker-related fees, subject to the following:
Buyer-broker charges are not included in the loan amount.
Any buyer-broker charges paid by the Veteran must be included in the liquid asset requirements.
Veteran buyer-broker representation agreement must be included in the loan package and uploaded when requesting the appraisal.
Total amount paid by the Veteran for buyer-broker fees must be recorded in lines 1 through 3 in section H of the Closing Disclosure (CD).
As a reminder:
The seller may still pay the Veteran’s buyer-broker charges.
The seller’s payment of buyer-broker charges is not considered a seller concession.
In advance of the effective date of the local variance described above, VA released a WebLGY system enhancement to collect the amount of Veteran-paid buyer-broker charges. After the system enhancement is released, lenders are expected to indicate if the Veteran paid any buyer-broker charges, and, if so, to indicate the total amount paid in the applicable fields when requesting the Loan Guaranty Certificate (LGC) on VA-guaranteed purchase loans.
