Positive Real Estate Professionals

With this being undeniably a buyer’s market there are a lot of properties for buyers to choose from; this also means that there are a lot of properties for Realtors to wade through to try to match buyer’s wants. This being the case there has been a conundrum in the past two years: why lenders who had agreed in principle to the terms of a short sale would diminish the likelihood of that sale occurring? What I am referring to is the unabashed insistence by many lenders that Realtors on both sides of the transaction take reduced commissions. Now many of you may wonder what the issue with this is; don’t all Realtors drive Mercedes and eat at swanky restaurants? This idea is not only wrong but it presumes that Realtors are heartless as they dine on caviar while their clients can barely afford hamburger helper. Keep in mind as you read the following article from Sandy Noll that the general commission on a sale is 6%. This 6% is then split 3% to the seller’s agent and 3% to the buyer’s agent. Sounds good right? Wait, both agents then have to split their 3% with the Broker/Owner of the real estate office they work for. This split can range from 70%-30% to 50%- 50%. So on that $100,000 dollar sale the total commission is $6,000. Split among the agents makes it $3,000 each and then taking a 70%-30% split (which is very generous on the part of the Broker/Owner) you get the agent making $2,100. While this may seem like a lot, both agents will have to pay out of pocket for all of the marketing of their listed properties and all the taxes. So my point with this big lead in is cutting the commissions of the Realtors not only may be counterproductive in the selling of short sales, it also directly affects the families of Realtors who work hard to provide for them.

Via Sandy Noll:

Score one for Realtors®! This is great news considering the number of short sales in our market and never knowing if you’ll be compensated for all your hard work and time spent!

Fannie Mae Announces Policy Prohibiting Lenders from Reducing Commissions Below 6% on Short Sales.
March 2, 2009 5pm

Every agent who has participated in a short sale transaction knows there may come a moment when the lender announces a reduction in the commission it will approve as a condition of accepting an offer. A great deal of angst circulates around this issue because, despite what the seller agreed to pay in the listing agreement and notwithstanding the advertised SOC, the transaction cannot close without the lender’s approval which is often a “take it or leave it” position. The buyer and seller want the transaction to close and agents do not want to be a road block to that outcome. Balanced against this is an agent’s and broker’s need to earn a reasonable income and justify their own expenses and liability incurred in a transaction. If lenders condition acceptance of short sale terms on agents’ willingness to accept a reduced commission, agents really have no power – except to decline to list or show short sale properties in the first place – a tragic result for everyone, including lenders.
Fannie Mae was made aware of this pattern and the adverse consequences of agents and brokers avoiding short sales. As a result, Fannie Mae announced a revised policy that took effect March 1. Now, “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.” This policy applies to Fannie Mae loans only and only to those loans where the borrower is in default. Nevertheless, it should give agents and brokers a degree of comfort in knowing that the agreed and earned commission will be paid on many short sale transactions. For a property secured by a Fannie Mae loan, where the seller is in default, the lender may no longer condition acceptance of buyer’s short sale offer on the agents’ and brokers’ agreement to reduce their commission below a total transaction commission of 6%.

The new Fannie Mae policy says the following:

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

Sandy Noll
Realtor
Keller Williams Realty Kirkland
425-890-0878
sandy@sandynoll.com
www.letsachieveyourgoals.com

http://positiverealestateprofessionals.com/washington/

Your Residential Real Estate Specialist

Once again, Rich produces a quality story that brings benefit out of this current crisis. This time, he focuses on the benefit that the renters are entitled to for homes being foreclosed on.

Via Rich Dansereau of Rich Talks Real Estate

I posted earlier today on the three week extension on the foreclosure reprieve that was announce by both Fannie Mae and Freddie Mac. As I thought more about the extension and what it could mean for thousands of homeowners, I began to wonder what it might mean for renters as well. It might seem odd that renters, and not just homeowners, would see any benefit in the foreclosure reprieve, let me explain.

There were several news stories that mostly ran on local news stations this past summer and fall about the plight of renters who had paid their rent on time and to the appropriate parties but found themselves facing eviction. This may sound odd but when you realize that the property owner, who received in good faith the rent payments from his tenants, was not meeting his financial obligations to the lienholder on his property then the issue becomes clearer. In many of these instances the landlord, a.k.a. property owner, had neglected to pay his financial obligation and was now losing his property to foreclosure. When the foreclosure occurred the bank who now owns the property oftentimes immediately evicted the tenant who had been faithfully paying their rent on time. Many times the possibility of this type of thing occurring did not even cross the mind of the tenant who felt safe in the knowledge that they had met all of their responsibilities.

So how does the reprieve come into play in this situation? Fannie Mae announced in December, 2008 that renters in these foreclosed properties would not face eviction as long as they had a legitimate lease and were current with their rent. This is good news for many renters who may have been concerned about this but keep in mind that only Fannie Mae has this National REO Rental Policy in place. The three week extension on the foreclosure moratorium should give Fannie Mae the time necessary to more fully implement this program (Source: CNNMoney.com).

Here is a post written by Rich Dansereau, co-owner and co-author of Positive Real Estate Professionals. In this particular article, he is discussing the reprieve on foreclosures that both Fannie Mae and Freddie Mac have granted. If you have any question, please fell free to ask.

Via Rich Dansereau of Rich Talks Real Estate

In November of 2008, Fannie Mae and Freddie Mac announced a three month reprieve on foreclosures for its seriously delinquent homeowners. They were quickly joined in this moratorium by JP Morgan Chase. This reprieve, though not the answer for all homeowners delinquent on their mortgages, would allow homeowners to explore the options available to them. Today, Fannie Mae and Freddie Mac announced a three week extension to the foreclosure moratorium (CNNMoney.com).

Today’s announcement comes one day before the moratorium was set to expire. Fannie Mae and Freddie Mac have agreed to the three week extension to allow those seriously delinquent homeowners who qualify for a streamline mortgage modification program and choose to participate in it the time to do so. Fannie Mae and Freddie Mac anticipate that up to 6,000 homeowners could save their homes from foreclosure while obtaining a low fixed interest rate mortgage with more favorable terms and affordable payments.