Fannie Mae, Freddie Mac Clarify IPCs
Fannie Mae and Freddie Mac issued guidance regarding allowable interested-party contributions in light of the proposed Sitzer-Burnett verdict settlement agreement.
Fannie Mae and Freddie Mac said Monday they will not count buyer agent commissions as part of allowable interested party contributions (IPCs).
The government-sponsored agencies (GSEs) said their guidance was not an update to their selling guidelines but a clarification to the treatment of seller-paid real estate agent fees.
“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,” Freddie Mac said in a statement.
Fannie Mae said in a statement, “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.”
In March, the National Association of Realtors® announced a proposed $418 million settlement agreement to the Sitzer-Burnett verdict that would end litigation of claims brought by home sellers related to broker commissions.
After the settlement announcement, NAR and the Mortgage Bankers Association of America asked the Federal Housing Finance Agency to confirm its position on buyer agent compensation and IPC limits. NAR and the MBA called it a “critical piece of the post-settlement puzzle.”
The clarification confirms that buyers whose agents are compensated by the seller will continue to have access to financing through the GSEs, Ken Fears, NAR’s director of conventional housing finance and valuation, said.
“Furthermore, so long as it remains ‘customary’ for the seller to pay commissions, those will not be added to the interested party contributions (IPC) and subject to the caps on IPCs,” he said.
“NAR will continue to press for access to affordable financing options and keep you up to date on any changes,” he said.
By BeachesMLS Staff
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Source: Florida Realtors®
