NAR Settlement Could Disrupt Mortgage Partner Agent Programs

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A proposed settlement to resolve a slew of real estate commission lawsuits could make it harder for mortgage lenders to drum up business by offering incentives to homebuyers who agree to be represented by the lenders’ partner real estate agents.

Some big mortgage lenders, including Rocket Mortgage, loanDepot and Better, collect referral fees from partner real estate agents in exchange for sending them “leads” — unrepresented buyers who have qualified to take out a mortgage or who are shopping for a lender.

Lenders can incentivize buyers and sellers by promising those who agree to work with partner real estate agents thousands of dollars in cash or closing credits — essentially rebating some of the commission the buyer or seller pays their agent.

One such partner agent program, offered by Navy Federal Credit Union, is powered by a subsidiary of Anywhere, the real estate franchise giant. Formerly known as Realogy, Anywhere’s brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker and Sotheby’s International Realty.

But the National Association of Realtors may have unintentionally thrown a monkey wrench in the gears of mortgage lenders’ referral programs by agreeing to prohibit listing brokers from making offers of compensation to buyer’s agents through multiple listing services (MLSs). NAR did not respond to Inman’s request for comment.

That prohibition — part of a proposed $418 million settlement that NAR announced Friday in the hopes of resolving a swarm of commission lawsuits filed by homesellers — could make it harder for lenders to advertise incentives to consumers who agree to work with their partner agents.

That’s because mortgage lenders often recoup at least part of the cost of providing those incentives — which can amount to thousands of dollars in cash or closing credits — by charging agents (or their brokers) a referral fee, typically a percentage of the commission the agent earns if the “lead” buys a home.

The proposed settlement — which would also require buyers’ agents to enter into written agreements with their clients — could make it riskier to offer such incentives to consumers since it would be harder to know in advance how much a buyer would actually be willing to pay their agent.

Once they’re asked to enter into a written agreement specifying how much they’re willing to pay their agent, some buyers might even decide they don’t want to work with a buyer’s agent at all.

Lender partner agent programs

To facilitate the payment of referral fees, many mortgage lenders have formed their own real estate brokerage businesses. But the real estate brokerages operated by mortgage lenders typically don’t employ many agents or provide services directly to consumers.

Instead, they exist primarily to provide lenders with a mechanism to receive referral fees from other real estate brokerages that do employ agents, and to populate property search portals with listing data from multiple listing services (MLSs).

Rocket Mortgage’s parent company, for example, also operates a real estate brokerage, Rocket Homes. The brokerage’s property search site,, attracts about 1.5 million unique visitors per month.

Rocket Mortgage’s partner agent incentive

Rocket’s partner agent closing credit offer. Source: Rocket Mortgage.

To incentivize homebuyers, Rocket Mortgage’s “BUY+” program, promises a closing cost credit equal to 1.25 percent of their loan amount (capped at $10,000) if they are represented by an agent partnered with Rocket Mortgage. (When announced in April 2023, the program originally provided a 1.5 percent closing cost credit).

Rocket Homes’ role in the process of matching buyers to agents not only makes it a potential defendant in real estate commission lawsuits, but the outcome of those lawsuits could affect its referral business, the company noted last month in its 2023 annual report to investors.

“In addition to litigation risk, developments or outcomes in such litigation or other legal proceedings involving the operation of the real estate industry could result in a significant change to the broker commission structure, the effect of which could result in reductions to the share of commission income received by Rocket Homes in both our core referral business and in our efforts to list and sell homes from our centralized location,” Rocket Companies disclosed to investors.

Representatives of Rocket did not respond to Inman’s requests for comment.

LoanDepot offers up to $3,500 cash back for buying a home with a mellohome-approved real estate agent and financing through loanDepot.

In its latest annual report to investors, loanDepot describes its mellohome agent matching service, Home Services LLC, as “our wholly-owned captive real estate referral business. A large portion of our purchase-oriented customer leads have not yet selected a Realtor, thus affording us the opportunity to provide a more integrated customer service between the two key homebuying functions, as well as capture ancillary revenue in a RESPA-compliant manner.”

RESPA — the Real Estate Settlement Procedures Act — is legislation intended to help mortgage borrowers shop for settlement services like title insurance, without having to pay kickbacks and referral fees that can increase their costs.

LoanDepot’s $7,000 ‘Grand Slam’ bundling incentive

Source: mellohome.

In 2021, loanDepot launched a “Grand Slam” package of incentives providing cash rebates of up to $7,000 on bundled services when clients buy and sell with a mellohome preferred real estate agent, finance with loanDepot, and choose the company’s title insurance services.

A loanDepot spokesperson said the company had no comment on the potential impact of NAR’s proposed commission settlement on the company’s partner agent incentives.

Navy Federal RealtyPlus partner agent program

Navy Federal Credit Union’s RealtyPlus program offers $400 to $9,000 cash back to homebuyers and sellers who sign up to be connected to a real estate agent in Navy Federal Credit Union’s agent partner network, which is powered by franchise giant Anywhere.

According to a website FAQ for the Navy Federal RealtyPlus program, Anywhere splits a share of its commission with Navy Federal Credit Union when buyers and sellers who are referred to agents affiliated with Anyhwere close a deal.

“When you buy or sell a home through our program, the real estate company splits their commission with us,” prospective borrowers are informed. “This commission split is a common practice in the real estate industry and is used to increase business for the broker and provide a savings to homebuyers and sellers.”

Representatives from Anywhere and Navy Federal Credit Union acknowledged receiving Inman’s requests for comment on Friday but had not provided responses by publication time Monday.

Better offers a $2,000 closing credit to buyers who work with a Better Real Estate partner agent. After shutting down its in-house real estate brokerage services last year, Better moved “to a purely partner model” with respect to Realtors, pairing borrowers who come to Better to get preapproved for mortgages with agents in their local markets.

When Better unlocked $565 million in fresh capital by consummating its long-awaited SPAC merger in August, Better CEO Vishal Garg told Inman that the company would hire mortgage loan officers, coordinators, processors and underwriters and “aggressively” partner with real estate agents to grow the business to “greater heights” than before.

A spokesperson for Better said in a statement that the company “would expect demand for our partner agent program to increase significantly as a result of the NAR settlement.”

Better’s partner agent incentive offer

Better declined to address whether uncertainty over how much homebuyers might be willing to pay their agent if the NAR settlement takes effect would impact Better’s ability to advertise that they can “save big” if they “match with a partner agent and save $2,000.”

Better’s position is that “if the fee for buy-side Realtors has to be paid for through the mortgages, then customers will increasingly turn to the mortgage companies for help selecting a Realtor who is price efficient. Similar to title insurance and homeowners insurance programs, we believe that we will be able to help consumers match with the Realtors who deliver the best value for them.”

Sharon Cornelissen, director of housing at the Consumer Federation of America (CFA), said that if adopted, NAR’s proposed settlement will provide “additional incentive to lenders to make sure the real estate agents they partner with offer high-quality services at great prices.”

“We hope that lenders will explore products that will help pay first-time homebuyers for the additional closing costs of paying for a real-estate agent as well,” Cornelissen said in an email to Inman. Even though the CFA expects commission costs to drop, “I think ‘closing costs’ programs will be more necessary than ever.”

Editor’s note: This story has been updated with comments from the Consumer Federation of America, and to note that loanDepot declined to comment. 

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