The Washington Report

In This Issue
Conventional Residential Lending Report
Fannie Instructs Its Servicers Not to Cut Commissions on Short Sales

Federal Tax Report
Administration Budget Proposal Targets Mortgage Interest Deduction

Housing Report
New FHA Loan Limits Released

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 takes 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, which 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.

Fannie Mae Announcement 09-03 (2/24/09)

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

back to top

Administration Budget Proposal Targets Mortgage Interest Deduction

On Thursday, February 26th, 2009, the Obama Administration released an overview of its FY 2010 budget plan. The detailed, full budget proposal has not yet been published. Among proposed budget items is a provision that would reduce the rate at which high-income taxpayers - those whose family income is $250,000 ($200,000 for singles) or more - would benefit from itemized deductions. Currently, taxpayers in the 33% and 35% income brackets are able to reduce their taxes through deductions for mortgage interest payments, charitable contributions, local taxes and other expenses by 33 and 35 cents, respectively, on the dollar. Under the Administration's proposal, these individuals would only be able to reduce their tax bill by 28 cents on the dollar. The Administration estimates that the change would raise $318 billion over the next 10 years, and has targeted the funds for planned health care reforms.

While NAR has supported and applauds the efforts of the Obama Administration in taking aggressive measures to stabilize both the housing market and the nation's economy, NAR expressed its concerns with the proposal's impact on housing values and the pace of economic recovery in letters to President Obama and Members of the House of Representatives and Senate.

NAR's Letter to President Obama Expressing Our Concerns with His Proposal to Modify the Mortgage Interest Deduction

NAR's Letter to the U.S. Senate

NAR's Letter to the U.S. House of Representatives

Linda Goold 202-383-1083, Jeff Lischer 202-383-1117, Samuel Whitfield 202-383-1131

back to top

New FHA Loan Limits Released

The new Federal Housing Administration (FHA) single family loan limits are now available. In most areas the loan limits returned to their previous high from 2008. Areas that saw an increase in January retain the new, higher loan limit. The new limits are in effect through December 31, 2009. Because the new limits are a comparison of 2008 and 2009 there is not a process for appealing the limits. The mortgage limits for all areas are available on the "FHA Mortgage Limits" on REALTOR.org.

FHA Loan Limits Chart

Mortgagee Letter 2009-07: Loan Limit Increases for FHA

FHA Web site

Megan Booth 202-383-1222, Jerome Nagy 202-383-1233

back to top

Go to archived weekly reports >>

Last Updated: 03/02/2009 Kara Beigay