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.
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.
- 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
The documents are due on or before Feb. 24. Inman has reached out to Fannie Mae and Freddie Mac for comment and will update this story if and when we hear back.
The Sitzer and Moehrl cases have attracted the interest of the U.S. Department of Justice (DOJ), which admitted in October that it sent a civil investigative demand to CoreLogic relating to a probe on real estate commissions and told the federal courts that NAR had inaccurately portrayed a 2008 consent decree between the trade group and the DOJ.
The DOJ said, contrary to NAR’s suggestions in legal filings, the decree did not approve any NAR rule or policy as pro-competitive. In response, NAR said it believed it had always accurately described the implications of the 2008 consent decree.
See the full subpoenas below: