BAM Key Details:

  • The impending settlement of commission lawsuits by the National Association of Realtors (NAR) has many industry professionals seeking out new approaches.
  • Dual licensing is one new opportunity agents and mortgage lenders can explore, as highlighted by Bob Broeksmit, President and CEO of the Mortgage Bankers Association (MBA).
  • Absolute Home Mortgage, led by CEO Matthew VanFossen, is already testing dual licensing.

The National Association of Realtors’s (NAR) impending settlement of commission lawsuits is poised to reshape the real estate industry. 

Already, we’re seeing mixed reactions from real estate professionals: those who are all doom and gloom, and those who see new opportunities on the horizon. 

One opportunity being discussed is dual licensing, which offers new avenues for buyer agents and mortgage loan officers alike. Here, we’re breaking down what Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA) had to say about dual licensing this week, along with one mortgage company already testing the waters. 

MBA President on Dual Licensing

Broeksmit spoke about dual licensing during the MBA’s National Advocacy Conference in Washington, D.C. on Tuesday morning, according to HousingWire. He noted that, if approved, the NAR settlement will “creat(e) openings for other business models” particularly in facilitating buyer representation amid seller reluctance to cover the fee for a buyer’s agent. 

The settlement, which includes substantial damages and pivotal rule changes, sets the stage for mortgage lenders and real estate agents to explore dual licensing as a strategic move.

“One of those models could be that you, as lenders, license your loan officers as real estate agents and offer the buying agent service for less than a 3% fixed fee point. And some of you will say I want nothing to do with that. Others of you will say that is a great retention opportunity for my loan officers and the market will figure all this out.”

Bob Broeksmit

President and CEO, Mortgage Bankers Association

Testing the Waters of Dual Licensing

Absolute Home Mortgage, led by CEO Matthew VanFossen, is already testing this approach. VanFossen envisions a scenario where loan officers obtain real estate licenses or buyer agents transition into licensed loan officers, bridging the gap in commission rates.

VanFossen stated that, on average, 50% of referrals to a lending officer (LO) come from buyers’ agents. With impending changes that could take place as early as July 2024, home buyers not represented by an agent may start going directly to listing agents. Some LOs see this as a new challenge. 

“Originators may have to pivot by developing better relationships and ways to assist listing agents. You may see buyers’ agents still be relevant, but LOs need to find vehicles to educate their buyers’ agents, educating them on how to use seller concessions, for example, to finance buyer-paid broker fees.”

Matthew VanFossen

CEO, Absolute Home Mortgage

Dual licensing could be a solution to this challenge. Absolute Home Mortgage is already testing the new structure, and VanFossen said that it is a “definite potential outcome that a lot of mortgage lenders are looking at, legally and in a compliant manner.” 

“Legally and in a compliant manner” are key words there, as dual licensing has some hurdles to navigate, including marketing servicing agreements (MSAs) between mortgage companies and real estate brokerage firms and RESPA compliance. 

Whether you consider dual licensing or another new avenue, one thing rings true for all industry professionals: proactive measures will be vital in ensuring sustainable growth and success in the post-settlement landscape.