Tuesday, March 3, 2009

News from Fannie Mae and Freddie Mac

FHA and Conforming Loan Limits Released
For many areas, last year's loan limits are staying in place. Read more >
Home Valuation Code of Conduct (HVCC) Effective May 1
On December 23, 2008, New York State Attorney General Andrew M. Cuomo, Fannie Mae and Freddie Mac announced the final agreement of the Home Valuation Code of Conduct (HVCC). The agreement establishes standards on solicitation, selection, compensation, conflicts of interest and appraiser independence. The HVCC is effective May 1, 2009, for any mortgage that will be sold to the GSEs. Federal Housing Administration (FHA) and Federal Home Loan Bank (FHLB) mortgages are not covered in the agreement. For more about the HVCC, click here.
Fannie Instructs Its Servicers Not to Cut Commissions on Short Sales
On February 24, 2009, Fannie Mae sent Announcement 09-03 to its servicers instructing them not to negotiate commissions on short sales below the amount negotiated by the listing agent (unless the commission exceeds 6 percent). The requirement took effect March 1, 2009. Fannie Mae recognizes that
(a) negotiating commissions for short sales is unfair because getting a short sale to closing requires intensive work over many months, often requiring working with numerous buyers, and (b) compensating real estate agents fairly benefits Fannie Mae because agents play a crucial role in short sales.
The Announcement reminds servicers that third party approvals (i.e., private mortgage insurers) may be required and can affect commissions. NAR has asked both Fannie Mae and Freddie Mac to strengthen their policies against reducing short sales commissions, welcomes Fannie’s announcement, and has urged Freddie to follow Fannie’s lead.

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