Update: HUD Mortgagee Letter 2013-23

by Scott Drucker on September 26, 2013



hudOver the last few weeks, several brokers have contacted AAR to express concerns regarding U.S. Department of Housing and Urban Development (HUD) Mortgagee Letter 2013-23. The concerns surround that portion of HUD’s new pre-foreclosure sales policy that states, “no party that is a signatory on the sales contract, including addenda, can serve in more than one capacity.  To meet the Pre-Foreclosure Sale (PFS) Addendum requirements, brokers and their agents may only represent the seller, but not both parties.”  In other words, HUD will no longer allow “dual agency” agreements in short sale transactions. This restriction includes those dual agency transactions in which two different agents are working for the same broker and one agent represents the seller and the other agent represents the buyer.

AAR has worked closely with NAR policy representatives to address this onerous restriction and, on September 18, 2013, NAR President Gary Thomas submitted a letter to The Honorable Carol Galante, Assistant Secretary for Housing, urging HUD to reconsider implementation of the polices set forth in Mortgagee Letter 2013-23.  AAR President Sue Flucke has also submitted a letter to HUD in which she explained why the subject restriction is harmful to Arizona REALTORS® and FHA borrowers throughout our state.

As a result of these efforts, on September 25, 2013 HUD reported to NAR that it will reissue Mortgagee Letter 2013-23 and remove all dual agency language. The result is that the dual agency restriction originally considered by HUD will not be implemented on October 1, 2013.

Although this was a team effort, AAR would like to extend its sincere gratitude to Ken Ryan and G-II Varatto for their assistance in contesting HUD’s proposed dual agency restriction.  Their commitment to the industry is greatly appreciated.  Thank you all.


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Scott Drucker

Scott M. Drucker, Esq. is General Counsel to the Arizona Association of REALTORS® (AAR). He serves as the primary legal advisor to the association. Scott oversees AAR’s Risk Management Committee, which includes professional standards administration for twenty of the state’s local REALTOR® associations, and the development of standard real estate forms. Please note that this post is of a general nature and may not be updated or revised for accuracy as statutes and case law change following the date of first publication. Further, this post reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.

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{ 1 comment… read it below or add one }

Sherry Mitchell October 8, 2013 at 9:22 am

Thank you Sue Flucke and all who worked to overturn this verbage with HUD. Great job!

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