The Washington Report

The Federal Housing Finance Agency (FHFA) sent a letter to NAR confirming that both Fannie Mae and Freddie Mac published explicit confirmations on April 15th, 2024, that buyers whose agent is compensated by the seller will continue to have access to financing through those institutions.  Furthermore, so long as it remains "customary" by “local convention” for the seller to pay commissions, those will not be added to the interest party contributions (IPC) and subject to the caps on IPCs.

Interpretation of this rule under the proposed settlement was of great concern, and NAR wrote to Fannie Mae, Freddie Mac, and the FHA seeking confirmation of our interpretation. In a letter to NAR, FHA confirmed that this interpretation does hold.

FHFA's Letter to NAR

Fannie Mae's Notice on Real Estate Commissions and Interested Party Contributions

Freddie Mac's Guidance on Commission Paid to Real Estate Agents

This week, the U.S. Supreme Court (SCOTUS) in the Consumer Financial Protection Bureau v. Community Financial Services Association of America ruled in a 7-2 decision that the current funding structure for the Consumer Financial Protection Bureau (CFPB) is constitutional. There were specifically two trade groups challenging the structure of the CFPB funding. Those two trade groups claimed that the CFPB funding structure violated the Appropriations Clause of the Constitution. The CFPB is funded from Federal Reserve profits, and it is not funded based on an annual appropriation like other federal agencies. The court provided that Congress’ authorization for the CFPB to be funded by the Federal Reserve does not violate the Appropriations Clause. SCOTUS held that “Congress’ statutory authorization allowing the Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfies the Appropriations Clause.” 

To learn more about the ruling, please see the full SCOTUS opinion.

This week, the New Jersey Supreme Court unanimously ruled in the case Kennedy v. Weichert that independent contractor agreements entered by real estate brokers and salespersons are enforceable under New Jersey law, and that independent contractors are not subject to New Jersey’s Wage Payment Law, and that the independent contractor agreements are dispositive of a salesperson’s classification status under the New Jersey Broker’s Act. This case is a major victory for the real estate industry because the Court upheld the validity of the independent contractor agreement and determined that the plaintiff was properly classified as an independent contractor and not an employee for state law purposes. This ruling also is consistent with New Jersey law, which provides that the ABC Test does not apply to real estate salespersons, provided that the relationship is defined via a written agreement.

NAR will continue to provide updates regarding independent contractors matters. To learn more about this and other legal cases, please see NAR’s Legal Action News Feed.