HUD has delayed its prohibition of dual agency listings on short sale properties according to a statement made this week by the National Association of Realtors (NAR).
The HUD prohibition had first been outlined in a July letter to mortgage servicers describing new anti-fraud requirements for short sales and deed-in-lieu of foreclosure transactions. The original policy was slated to go into effect October 1, 2013.
In response, NAR President Gary Thomas wrote a letter toHUD outlining NAR’s concern with both the reasoning behind the prohibition and the possible consequences of it.
“NAR has been told that the policy was implemented because the HUD Inspector General detected fraud and abuse in the pre-foreclosure sales process; however, no
statistics or reports were provided to NAR detailing short sale fraud by real estate agents,” the letter said. “NARtakes fraud very seriously…If there is evidence of fraud by our membership, we would like to be part of an effort to develop policies that effectively address these
Thomas’s letter also raised concerns about how a prohibition on dual listing would affect agents’ and brokers’ ability to effectively serve their clients.
“More homeowners are at risk of falling into foreclosure if they cannot find a real estate agent, especially one who is knowledgeable about the short sale process, to list their homes,” Thomas said. “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. Members have told me that they will no longer list short sales because they do not want to restrict agents from representing their buyers, many of whom have been loyal customers for years.”
NAR announced Wednesday that, following talks withHUD, the proposed prohibition had been delayed indefinitely. “The result is that the dual agency policy will not be implemented on Oct. 1, allowing NAR to continue the dialogue with agency officials on a formal solution to the dual agency issue,” NAR said in a statement.