Real estate professionals are sounding the alarm as the clock ticks closer to the deadline for changes in broker payment rules that could significantly impact veterans relying on VA loans.
With the August deadline looming for the implementation of business practice alterations outlined in the National Association of Realtors’ (NAR) commission lawsuit settlement agreement, concerns are growing regarding the potential fallout if the U.S. Department of Veterans Affairs (VA) doesn’t revise its policies on fees veterans can’t currently pay when using their VA loan benefit.
James Dwiggins, CEO of NextHome, minced no words, stating, “One of the consequences of what the lawyers, the Department of Justice and the Biden Administration have done is they have screwed veterans, minorities and low-income Americans.” He emphasized the potential plight of buyers unable to finance representation in the loan process due to sellers refusing compensation, putting them at a disadvantage in competitive markets.
Echoing Dwiggins’ concerns, Anthony Lamacchia, broker-owner of Lamacchia Realty, highlighted the added challenges for VA buyers in multiple-offer situations, noting, “It just adds yet another layer of difficulty to the transaction for a VA buyer.”
Under the terms of NAR’s settlement agreement, listing brokers will no longer be allowed to offer blanket commissions to buyer’s agents, and buyers must sign agreements outlining agent fees. Despite this, industry groups fear some sellers may offer no compensation, further disadvantaging homebuyers and veterans.
NAR, along with the Mortgage Bankers Association (MBA) and the Community Home Lenders of America (CHLA), have urged the VA to reconsider its policies, emphasizing the potential harm to veteran borrowers.
While awaiting VA action, Todd Armstrong, a Compass agent and veteran, remains hopeful for change, noting, “Federal Housing Administration and Fannie Mae have clarified their policies… [and] believe something is going to come out of the VA soon.”
In response, the VA stated it’s working with stakeholders to ensure veterans aren’t disadvantaged, with press secretary Terrence Hayes affirming, “We are fully committed to ensuring that Veterans are neither disadvantaged nor overcharged.”
However, industry experts caution that time is running out, and consumers could suffer if the VA fails to act. Alice Jump, a real estate law partner at Reavis Page Jump LLP, emphasized the importance of VA loans, stating, “It is good for everybody if VA loans can be used and are readily available — it expands the groups of potential buyers.”
As discussions continue, the hope remains that swift action will be taken to alleviate concerns and ensure fair treatment for veterans and all homebuyers alike.