The VA plans to temporarily lift a ban on buyers paying professional real estate agents directly until it determines it needs to engage in a formal rulemaking process, VA officials said Tuesday at a Mortgage Bankers Association conference in New York.
While not an official announcement, comments from VA Deputy Director for Policy Michelle Corydon drew relief from the real estate industry because VA mortgage guarantees are the only loan program with this explicit prohibition. If selling brokers do not offer compensation to buyers’ brokers, veteran buyers will have limited options, potentially leaving veterans without professional representation or forced to switch to less favorable loan products.
“NAR has launched a full-scale advocacy effort on this issue, meeting with Department of Veterans Affairs officials, working with legislators, and mobilizing industry partners to ensure this ban is lifted.” said Shannon McGahn, Chief Advocacy Officer of the National Association of Realtors. “This is also a testament to the thousands of REALTOR®s who came to Washington just a few weeks ago with a unified message. Without this change, thousands of seasoned buyers will not be able to afford the American journey of homeownership. They may be denied access to professional representation when pursuing their dreams. Taking this additional step ensures that veterans have the same opportunities as others to compete in a tight housing market. We commend the VA for recognizing this danger and acting quickly to protect our veterans.”
VA’s current policy states that veteran buyers using VA loan benefits “under no circumstances will be charged brokerage fees or commissions in connection with the services of a real estate professional.” Given the changes in practice required under NAR’s proposed settlement agreement, this policy could create complications for these buyers. This practice change prohibits listed brokers from making compensation offers on the MLS. It also requires MLS participants working with buyers to enter into a written buyer agreement with the client that outlines the amount of compensation that the buyer’s representative will receive and how that amount will be determined.
NAR submitted a letter to the VA in late March, urging policy changes to ensure veterans maintain access to the VA’s mortgage program, which has been a key avenue for service members to achieve homeownership.
“If no compensation is offered by the seller, VA buyers are immediately put at a disadvantage, having to forego professional representation, lose the property in their already limited inventory, or choose another loan product. or may be forced to exit the market altogether,” the letter said. “The VA Home Loan Guarantee Program is an important homeownership tool that provides Veterans with an intensive, affordable, and accessible way to purchase a home as a benefit for their service to our nation. We want to be an active part of the market and help people achieve the American dream of homeownership.”
