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November 6, 2019

HUD/FHA Change Policy Re: Commission Offered to Agent Buying For Self

News from NAR's Advocacy Team . . .

HUD/FHA Guidance on MLS treatment of REO Commissions

BIG WIN!! NAR expressed concerns to the FHA about HUD's policies regarding commissions and the conflict with NAR MLS policy. Changes are coming effective December 1. For the details, see the FHA's response below:

Thank you for your correspondence regarding the U.S. Department of Housing and Urban Development's (HUD) policies concerning broker commissions for HUD's real estate owned (REO) homes. The following information is from HUD's Office of Housing.

In your correspondence, you shared your concerns that HUD's platform for REO/HUD Homes (www.hudhomestore.com) prevents brokers with an ownership interest from receiving a commission, which you believe conflicts with Multiple Listing Service (MLS) policy regarding the payment of commissions.

FHA policies are developed and regularly revised to best serve our mission and the millions of homeowners we serve across the country, and with consideration of potential abuse. FHA regulations provide flexibility regarding payment of broker commissions, which HUD has utilized to prevent conflicts of interest, abuses of government funds, and practices that could remove homeownership opportunities from our mission-targeted owner-occupant and low to moderate income homeowners. HUD has undertaken further research on the impacts of restricting broker commissions. As a result, HUD is currently working to update our system, to allow brokers to be paid commissions on all competitive sales irrespective of the individual/entity purchasing the HUD REO property.

The system will retain the existing question about the Selling Broker/Agent and their ownership interest, to ensure that we can continue to gather and analyze this data; however, entering zero in the Selling Broker Commission field will no longer be required. In addition, the following warning notice will be removed: "HUD will not pay a sales commission if the selling broker or agent submitting the bid is also a purchaser or has an ownership interest in an entity identified as a purchaser. In such cases the selling broker must enter zero in the Selling Broker Commission field (6a) of the Bid Submission Screen." These system changes will be effectuated no later than December 1, 2019.

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