Fannie Mae relaxes limit of 30 REO listings per broker

By Jon Prior
Source: Thisweek@KW.com

Fannie Mae has relaxed its limit of allocating no more than 30 REO listings per broker from any one Fannie Mae source, acknowledging the abilities of “higher-performing brokers.”

At the end of June, HomePath, the division of Fannie Mae that manages REO inventory owned by the government-sponsored enterprise (GSE), imposed a strict limit of 30 REO listings that a broker of record could have at any time with a single Fannie Mae source. The restrictions also limited listings to a 25-mile proximity. Fannie warned that “100% compliance” was expected.

This sparked a response from the National Association of Realtors (NAR) and Keller Williams Realty, which in support of its brokers and real estate agents, asked for some leniency from Fannie Mae.

While NAR agreed with Fannie that it should not have an inflexible limit on the number of REO listings, the trade group urged Fannie to rely on documented success and professional performance of real estate brokers.

In a letter to Michael Williams, president and CEO of Fannie Mae, Mark Willis, the CEO of Keller Williams Realty, said REO listings require focused market attention “from experienced, results-oriented real estate professionals,” and that the real estate firm disagreed strongly with the limitation.

Willis wrote: “Recent conversations with real estate professionals who are immersed in the REO arena have confirmed our contention that these limitations will impede the objectives of both Fannie Mae and the real estate professionals who have invested heavily in people and systems to efficiently move REO properties. Clearly, the REO arena is an extremely specialized field, requiring dedicated professionals who possess distinct expertise and sufficient financial and organizational resources.”

He went on to address the concern that the limitations would drive talent away from the REO business, which is, by its nature, growing in volume but generating low margins.

Fannie replied July 9. In that announcement, Fannie stated as a general rule, it does not allocate more than 30 active REO listings from any one Fannie Mae source at one time, which has been a long-standing practice.

But Fannie went on to acknowledge some higher-performing brokers can handle more than 30 properties at a time and still exceed Fannie Mae’s standards. The company announced it would approve special exceptions to the limit and clarified that a broker can have 30 listings directly from Fannie and another 30 from outsourcers without Fannie Mae approval.

A spokesperson for Fannie Mae said it was the last action the company took on the matter.