Exploring New Avenues: Dual Licensing in the Wake of the NAR Commission Settlement

Exploring New Avenues: Dual Licensing in the Wake of the NAR Commission Settlement

The anticipated approval of the National Association of Realtors' (NAR) commission settlement may well usher in a new era for the mortgage industry, characterized by innovation and adaptation. Bob Broeksmit, the Mortgage Bankers Association's (MBA) President and CEO, highlighted the potential for dual licensing as a game-changing strategy during the MBA’s National Advocacy Conference in Washington, D.C.

Broeksmit emphasized the market's dynamic response to the settlement, predicting it will pave the way for novel business models, particularly in representing buyers. He proposed a forward-thinking model where lenders could have their loan officers also licensed as real estate agents, offering buying agent services at a competitive rate. This approach, according to Broeksmit, presents a unique opportunity for retaining talent and adapting to market demands.

The settlement, which NAR announced last Friday, includes significant changes such as a $418 million damage payment and a prohibition against sellers' agents dictating compensation for buyers' agents. It also proposes the removal of compensation details from Multiple Listing Services (MLSs) and the requirement for buyers' agents to have written agreements. These adjustments are expected to be implemented by mid-July, pending court approval.

In a pioneering move, Absolute Home Mortgage has begun experimenting with a dual-licensing structure. CEO Matthew VanFossen shared insights on loan officers obtaining real estate licenses and vice versa, aiming to compensate for lower commissions by covering both sides of transactions. However, this shift could impact marketing service agreements between mortgage companies and real estate firms.

Broeksmit on Biden’s Housing Plan and Regulatory Developments

Broeksmit also critiqued President Biden’s housing plan, announced during the State of the Union address, for focusing on stimulating demand rather than addressing the core issue of supply shortage in the housing market. He suggested that improving the capital gains tax exemption for home sellers would be a more effective strategy.

Furthermore, Broeksmit addressed the Consumer Financial Protection Bureau's (CFPB) initiative to scrutinize so-called "junk fees" in mortgage closings, arguing that the industry had already spent significantly to comply with existing disclosure rules and that surprises at closing were unlikely.

The conversation also touched upon the resignation of HUD Secretary Marcia Fudge, with Broeksmit noting the challenging nature of the role and its high turnover rate.

For a more detailed look at these developments and their implications for the mortgage industry, you can read the original article here.