HUD Delays Dual Agency Ban on FHA Short Sales
September 27, 2013
The U.S. Department of Housing and Urban Development has reportedly postponed a ban that was to prevent real estate professional from representing both buyers and sellers in an FHA-short sale and deeds-in-lieu of foreclosure transactions.
In July, HUD had issued a letter to mortgage servicers stating that dual agency would no longer be permitted on pre-foreclosure transactions starting Oct. 1. However, the National Association of REALTORS®, who lobbied against the policy, reports that HUD said Wednesday it would be reissuing its July guidance to servicers and will be removing the dual agency language.
HUD’s dual agency ban would have stretched to preventing dual agency of agents who represent both buyer and seller in a short sale transaction, as well as include transactions in which two agents work with the same broker and where one agent represents the seller and the other the buyer.
NAR had issued a letter to HUD on Sept. 18, urging HUD to reconsider its ban. NAR had argued that “some real estate brokers have hundreds of agents across multiple offices. If one of those offices chooses to list a short sale, under HUD’s new policy, none of the other agents can bring a buyer to that property.” That would prevent some agents from listing short sales because they would not want to restrict the other agents from being able to represent buyers, NAR said. NAR also expressed concerns that prohibiting dual agency in such transactions would conflict with some state licensing laws and multiple listing service guidelines, generating confusion in the industry.
HUD had originally proposed the ban on dual agency to prevent fraud and abuse in the pre-foreclosure sales process.
Since the dual agency policy will no longer take effect Oct. 1, NAR officials say that allows more time to work with HUD to develop a solution to the HUD’s dual agency concerns.
“NAR feels there are other ways that HUD could address concerns about the short sale process without restricting such a significant number of real estate agents from participating in pre-foreclosure transactions,” stated Gary Thomas, NAR’s president, in the letter to HUD.
Source: REALTOR® Magazine Daily News
Updated: September 30, 2020