The recent announcement regarding the National Association of Realtors (NAR) settlement has stirred numerous inquiries among lenders concerning how buyer-side real estate agent commissions and fees should be treated moving forward. Although the final determinations are yet to be made and the industry remains in a state of review, it’s crucial for stakeholders to have a grasp of the interim guidelines as they stand, based on existing regulations and agency advice. These guidelines, however, are fluid and may be subject to alterations as further analyses are conducted and new information emerges.

At present, according to agency guidelines, buyer-side real estate commissions that are paid by the seller are not considered interested party contributions. This classification hinges on the recognition that such practices are widespread and customary within the industry. Nevertheless, if a seller opts to offer a credit that does not specifically reference real estate commissions, this would be deemed an interested party contribution and would thus fall within the established limits. Furthermore, in scenarios where the seller agrees to cover both the buyer-side real estate commissions and a credit towards allowable closing costs, the portion dedicated to the closing costs would be treated as an interested party contribution, subject to applicable caps, while the commission portion would not.

This delineation has significant implications for the 3% points and fees calculation, a critical aspect of mortgage financing. Under the current regulatory framework, real estate commissions, irrespective of any affiliate relationships, are excluded from this calculation. This exclusion stands as a pivotal factor in the financial structuring and compliance of mortgage loans. Looking ahead, the industry remains vigilant, poised to adapt to any changes that might arise from ongoing reviews, negotiated settlements, or court rulings related to the structuring and payment of real estate brokerage commissions. Stakeholders are encouraged to stay informed and consult with local resources to navigate these evolving guidelines effectively, keeping in mind that the landscape is dynamic and subject to refinement.