According to Bulletin 2009-22, released on August 20, 2009, servicers of loans backed by Freddie Mac may no longer condition approval of short sales on the reduction of the listing broker’s fee, as long as that listing fee is less than six percent of the sales price (see the bottom of page 3). Fannie Mae offered similar guidance in February.
Interestingly, while the Fannie Mae rule implies that servicers can make their approval conditional on a fee reduction where fees greater than six percent, the Freddie Mac rule explicitly requires the servicer bring the fee down to no greater than six percent in order to approve the sale.
“In the event the sales commission exceeds six percent, the Services must renegotiate the commission to limit it to six percent of the property sale price.”
I heard last week from at least two members who have a practice of listing lower-priced properties for a flat fee that often ends up being more than six percent of the sales price – presumably because listing at a straight commission rate wouldn’t generate enough of a fee to make the transaction financially worthwhile for the brokers/agents involved. So while Fannie might be able to offer some flexibility for those transactions, if the seller has a loan serviced by Freddie the deal apparently can’t be approved unless the fee is reduced.