Fannie Mae released a new rule in their lender servicing guide published February 24, 2009. Part VII, Section 504.02 states:

“Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in aggregate. Servicers are reminded that they must continue to obtain any approvals that may be required by interested third parties in connection with preforeclosure sales.”

While I must point out that in accordance with state law all commissions are negotiable between sellers and brokers individually and in no way set by a fixed standard, it is welcome news that Fannie Mae is requiring servicers to honor our contracts with our clients. I have always found it troubling that lenders feel it is necessary to cut our commissions in a short sale situation. After all, the agents are usually doing a herculean amount of work just to push these things through. Loan servicers should be thanking us, not trying to punish us!

This rule should help put an end to this unreasonable and unnecessary practice. On the other hand, there are certainly a large number of short sales that are not Fannie Mae loans. In those cases, I was thinking about this and struggling with a way to express my thoughts in a way you could use to make lenders understand why this is, in my opinion, an unacceptable practice. I came across a blog posting by Walter Sanford ( that articulates a suitable response fairly well, so with attributing the following text italicized in quotations to Mr. Sanford, here you go:

This is the letter that I would send:


City, ST  ZIP


Today, I received your request to lower the commission I require my sellers to pay for my help in determining whether a short sale will solve or mitigate damage toward achieving their goals.  I also have presented a marketing plan and determined value.  I have made suggestions to enhance value in addition to marketing and showing the property to buyers who I develop from my marketing.  My sellers are happy with this arrangement.  I will not adjust my commission.

The contract that I have with the sellers is in writing.  It has been dated and signed.  Substantial monies have been expended by my company to execute my promises.

As you must know, you have no right to interfere in my listing contract, because you are not a party to it.  You are the lender, and we have offered you a reduced amount on your payoff in return for a full reconveyance.  This has been necessitated due to the market and poor lending practices.

Your interference in my contract in tortuous interference in the relationship that I have with my seller, and I request you cease and desist in any further attempts to modify the existing contract between my seller and me.

After taking into consideration the market indicators that I have sent to you and if you find that you need more money, please request more money.  Please do not try to modify a contract with which you have interest.


Company Name

***As always, this is my opinion.  If you want a green light on implementation, go see your attorney.”

So there you go, Walter says it better than I could have. He is correct; the lender has no business sticking their nose into your contract. It is, in my opinion, a suitable response to a ridiculous request. It may work, it may not, but next time I am involved in a short sale I am going to take Mr. Sanford’s advice!