Plaintiffs in an antitrust lawsuit that could shake up the real estate industry have subpoenaed mortgage giants Fannie Mae and Freddie Mac, sharpening scrutiny of real estate commissions nationwide.
The subpoenas were issued by the smaller of two bombshell commission lawsuits filed against the National Association of Realtors and real estate franchisors Realogy, Keller Williams, RE/MAX, HomeServices of America and HomeServices subsidiaries BHH Affiliates and HSF Affiliates.
The suit, filed on behalf of homeseller Joshua Sitzer and other plaintiffs in the Western District of Missouri, alleges that the sharing of commissions between listing and buyer brokers inflate seller costs and thereby violate the Sherman Antitrust Act, the Missouri Antitrust Law and the Missouri Merchandising Practices Act.
Potential to Upend Commission Structure
This and a bigger, related suit in Illinois on behalf of seller Christopher Moehrl seek to have homebuyers pay their broker directly, rather than having listing brokers pay buyer brokers from what the seller pays the listing broker. Such a change could upend the U.S. real estate industry by effectively forcing changes in how buyers’ agents are traditionally compensated. Both suits seek class-action status.
The defendants’ attempt to have the Sitzer suit thrown out failed in October. A similar attempt to throw out the Moehrl suit has yet to be decided by the court.
Meanwhile, attorneys for the Sitzer plaintiffs have filed a slew of subpoenas against REALTOR® associations, multiple listing services, MLS system vendor CoreLogic, consulting firm T3 Sixty, and now Fannie and Freddie.
The Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corp. (“Freddie Mac”) are government sponsored enterprises (GSEs) that purchase mortgages directly from lenders, guarantee that they will pay up if homeowners default, repackage the mortgages into mortgage-backed securities and hold them or sell them to investors.
In separate, nearly identical filings dated Feb. 10, the Sitzer plaintiffs are asking Fannie and Freddie to produce the following for the time period of Jan. 1, 2007 to the present:
Document due on or before Feb. 24:
Documents that show how they gather, retain and store data concerning residential real estate broker and/or agent commissions in the U.S., including data types and formats
Data for each purchase or sale of residential real estate and each actual transaction of real estate services in the U.S., including all terms of each transaction; property locations; all pricing information including sale price, rebates, closing costs, fees, taxes and financing type and terms
All information about broker and agent compensation for each real estate transaction in the U.S., including type, terms, source, amount, the amount offered in any listing and the amount actually paid, rebates, discounts or incentives; the currency in which the sale and the broker and agent compensation was billed and paid; whether the seller, buyer or anyone else who made an offer was self-represented; and the type and amount of any expenses or costs associated with the transaction and who paid those expenses
All documents and data reflecting broker and agent commissions and fees in residential real estate transactions, including but not limited to data compiled in the Uniform Closing Dataset, Closing Disclosures, Uniform Loan Delivery Dataset, or otherwise stored as a result of the Uniform Mortgage Data Program or any other program