Real Estate Regulatory Updates

It started with a simple LinkedIn post I asked: What’s your take on LO Comp reform? What followed was a tidal wave of responses. 30+ industry leaders reached out to share how LO Comp is affecting the people who originate loans and, more importantly, the consumers they serve. Some saw opportunity. Some saw overreach. Many saw the same thing: a broken system with no clear path forward. What reignited this conversation? A white paper from the Community Home Lenders of America (CHLA). It argued that the current LO Compensation rule, originating from the Dodd-Frank Act, has strayed far from its original intent and is now harming consumers by limiting flexibility, reducing access to bond and affordable loan programs, and creating inconsistent enforcement across channels. The CHLA’s proposed reforms include: → Allowing loan officers to reduce compensation to match competing offers → Exempting bond/HFA loans from rigid comp restrictions → Allowing adjustments for LO errors or brokered loan structures It was a bold move—and it sparked an even bolder response from across the industry. Greg Sher, pointed to a morale crisis among LOs: “They get discouraged and leave the business because they can’t compete like every other line of work.” Dana Peznowski, CRCM flagged unintended consequences: “The rule removes incentives for accuracy and forces lenders to eat the cost of mistakes. That gets priced in, and consumers pay for it.” Ken Perry highlighted a core compliance problem: “Without real enforcement, the rule gives violators the upper hand and punishes ethical originators. That’s the opposite of consumer protection.” But not everyone saw CHLA’s white paper as a step forward. Brendan McKay, Broker Action Coalition, fired back: “This wasn’t reform. It was a tired ‘blame the broker’ narrative… lazy, inaccurate, and frankly disappointing.” Robert Pieklo, President & CEO of AFR, was even more direct: “This was a poorly crafted attempt to take shots at a channel. Competition, not fulfillment method, should drive this conversation.” Some leaders reminded us that real reform must be done carefully—and with an eye on legislative realities. Alfred Pitzner, CMCP, Managing Director at Conforma Compliance Group, cautioned: “If the CFPB rescinds the rule without a statutory replacement, the industry loses its safe harbors and becomes subject to vague Dodd-Frank prohibitions. That would create more confusion, not less.” Justin Wiseman, at MBA, agreed: “We support thoughtful reform, but let’s be clear, this isn’t just a regulation. It’s embedded in statute. Any change must protect both consumers and competitive fairness.” Even so, nearly every contributor agreed on one thing: Reform is overdue, but it must unite, not divide. Any regulation on LO comp (which I don't think is needed any longer) should result in the same handling at LO level regardless of channel that LO originates in. Where do you stand on this? #VieauxPoint

Update Agents/Brokers reviewing this post: CMS Memo Update: CY 2025 Agent and Broker Compensation Date: July 18, 2024 Key Updates: 1. Court Rulings: Recent court decisions have paused certain new rules. Therefore, previous regulations remain in effect for CY 2025. 2. Compensation Rates: • Initial Enrollment: Payments to agents/brokers must be at or below fair market value (FMV). • Renewal Compensation: Limited to a maximum of 50% of FMV. • Referral Fees: Specified limits are in place. • Updated FMV amounts are provided for different regions. 3. Submission Requirements: Organizations must report agent/broker usage and compensation rates. CMS will not penalize for late submissions if done in good faith. 4. Training and Testing: Guidelines have been updated to remove enjoined provisions. New adjusted rates (shows $100/50 removed in general):

HR 7895 passed the House Education and Workforce Committee last week 34-0. It would prohibit PBMs from paying brokers, consultants, or advisors any compensation tied to placing PBM business. Yet another half measure. The last was the CAA disclosure rule. Instead of requiring service providers to proactively disclose their compensation, Congress put the burden on plan sponsors to go ask. Predictable result: spotty compliance, uneven enforcement, and a lot of employers who still don’t know what their broker earns on their account. Now we get HR 7895. Same pattern. Instead of going after the vertical integration driving drug costs higher, Congress is going after broker comp. There’s a school of thought that commissions are inherently corrupt and that fee-only is the only ethical model. I respect the people who hold that view. I disagree with the framing. Commission and fee are both payment structures. Either one can be aligned or misaligned with the plan’s interests. Commissions can rise with costs. A fee-only consultant who recommends the same vendor on every engagement has a conflict too. It’s just less visible because the dollars don’t trace to a carrier. The question isn’t just how the consultant gets paid. It’s whether the plan sponsor can see the fee, evaluate the alignment, and document the call. That’s a disclosure problem, and we already have a disclosure law. Enforce it. We already ran this experiment. Last year Centene pulled commissions on stand-alone Part D plans. Aetna, Cigna, Humana, Elevance, and United followed on some PDP and MA products. What happened? Brokers stopped writing those plans, and seniors lost access to independent help on the most complex product they buy all year. The work didn’t migrate to fee-only advisors. Seniors went without advice, took what the carrier put in front of them, or got channeled to a call center. Take the commission channel away on the employer side and the mid-market plays out the same way. Self-funded employers big enough to carve out a PBM but not big enough to write a six-figure flat fee every cycle lose access first. The PBMs the bill is supposed to discipline sell directly to employers who now have nobody between them and the contract. The real cost driver isn’t the broker fee. It’s list price inflation negotiated to drive bigger rebates. It’s formulary placement sold to manufacturers. It’s spread pricing on generics. It’s a supply chain where the same parent company owns the PBM, the specialty pharmacy, the mail order pharmacy, the GPO, the PSAO, and the insurer. None of that changes if every broker in the country works fee-only tomorrow. We keep getting bills that aim at the edges. Disclosure nobody has to give. Prohibitions on the smallest dollars in the chain. Meanwhile the vertical integration that actually drives the cost of a prescription sits untouched. We’ve spent a decade arguing about how brokers get paid. When does the conversation move to the rebate stack?

Last week, I got a call from Maria Volkova at National Mortgage News, letting me know that the mortgage lending industry is buzzing with speculation. The reason? The Consumer Financial Protection Bureau (CFPB) is reportedly considering rescinding the Loan Originator Compensation Rule. While nothing is final yet, the potential implications are significant for both borrowers and loan originators. What would I be thinking as a Loan Originator? For starters, the absence of clear regulatory guidance could lead to inconsistent practices and increased legal exposure. Sure, some originators might welcome the flexibility to negotiate compensation more freely, but that also reopens the door to steering concerns, which the original rule was designed to prevent. Regardless of where you stand, one thing is clear: brokers and lenders alike would need to rapidly overhaul compensation structures and retrain teams if the rule is rescinded. What About Borrowers? Although borrowers don’t typically follow regulatory updates, they’ll feel the impact. If the current exemption allowing upfront fees when the lender pays the originator is removed, borrowers could face significantly higher out-of-pocket costs. Let’s not forget, the LO Comp Rule was created to protect consumers from being steered into higher-cost loans. Its removal could make it harder for borrowers to confidently compare offers and trust the process. A Time for Caution and Action! Any sudden change could lead to widespread inconsistency across the industry, making the mortgage process more confusing and less predictable and at a time when we’re all craving more certainty, not less. To be fair, we don’t know exactly what’s coming. While some argue the LO Comp Rule is overly restrictive, its removal could create a regulatory vacuum that affects pricing, transparency, and trust. I’m sure this will be a hot topic at HousingWire’s Gathering event happening now. As for me, I believe all stakeholders (originators, lenders, regulators, and advocates) should not only stay informed but actively engage in the conversation. We need to do everything we can to shape what comes next...Because let’s face it: the chaos isn’t slowing down anytime soon.

How will SEBI’s end to volume-based discounts impact the market? For a year, there has been ongoing discussion about regulators implementing parity on exchange transaction charges. This change would mean stock exchanges would charge all brokers the same transaction fees, irrespective of turnover value, which is the current metric for charges. Market insiders suggest that this is now closer to a rollout. Here's how this would impact the market: Revenue Losses: Exchanges offer brokerages a discount on transaction fees based on the turnover value. However, the brokerages charge clients the full transaction fees. This difference forms a large part of their revenue - 15-30% for discount brokers and 50-75% for deep discount brokers. If regulators implement parity, then the brokers will lose this income. Brokerage Charges: Brokerages will likely adapt to the new regulation by passing on the added cost to investors, increasing their brokerage charges. Discount brokers (charging as low as ₹20 per transaction) and deep-discount brokers (offering even lower or no fees) will have to adapt their business as their operations would become unsustainable. Broking Firms: Yesterday, the shares of major discount brokers fell by 5% on average. New-age firms like Zerodha, Groww, Upstox, and Angel One will be hit worst as they are charged lower rates by Market Infrastructure Institutions (MIIs) due to the high volumes they generate. The impact on them will be worse if SEBI places any restrictions on Futures & Options (F&O), as indicated by SEBI Chairperson Madhabi Puri Buch last week. This change, if implemented, will be the second blow to discount broking. Earlier, discount broking firms would earn interest from fixed deposits and other instruments made from investor funds. As of January 2023, these funds amounted to ₹46,000 crores, according to a consultation paper released by SEBI. However, in June last year, the regulator ruled that brokers should upstream client funds to the clearing corporation at the end of the day instead of keeping the funds. As the market adjusts to these regulatory changes, investors must keep up-to-date to make well-informed decisions. #DiscountBrokers #SEBI #MarketTrends #MarketRegulations

🚨 Why UnitedHealthcare’s Commission Cuts Should Keep Everyone Up at Night On July 1, 2025, UnitedHealthcare, the top Medicare Advantage carrier, cut broker commissions on 200 plans in 39 markets, impacting 8% of enrollment, but only for new sales. Renewals remain paid. This follows a broader trend. Carriers like Aetna, Cigna, Elevance/Anthem, and Humana have cut commissions in some markets. Senate hearings and reports show Medicare Advantage faces scrutiny over rising costs, benefit cuts, and marketing practices. Why it matters, big time... Agents & Brokers: Many rely on MA commissions for 40–60% of their income. This cut means immediate revenue loss and pressure to pivot toward other verticals like life insurance or ancillary products. Beneficiaries: Licensed agents help seniors navigate thousands of plan options during open enrollment. Without that guidance, risks of mis-enrollment, reduced satisfaction, and support bottlenecks increase. Insurers: While commission cuts offer short-term cost savings, investor credit downgrades (Moody’s and S&P) have already linked MA margin strain to increased risk. Regulators: Bipartisan pressure is mounting to curb MA incentives like commissions and kickbacks. Expect deeper compliance audits and enforcement, especially around marketing and transparency. What’s driving this? ⮕ Margin Pressure: Per-member costs for Medicare Advantage have increased $50–80 monthly. ⮕ CMS Scrutiny: New 2025 rules require transparency around administrative payments and broker incentives, shining a light on commission structures. ⮕ Investor Alarm: UnitedHealthcare suspended 2025 guidance and was downgraded by Moody’s. Commission cuts reflect shrinking margins and investor pressure. What this means for advisors: ⮕ License to Lead: Renewals still pay commissions. Advisors should double down on stewardship and client retention, the real source of sustainable value. ⮕ Tech + Human Hybrid: Leverage automation for operational efficiency but differentiate yourself through care navigation, advocacy, and relationship depth, areas machines can’t replicate. ⮕ Opportunity in Disruption: Non-commissionable markets create blind spots competitors overlook. Advisors who educate clients early and build trust will gain significant advantages. ⮕ Policy & Fiduciary Play: Advisors must advocate for fair, transparent commission regulations. 💡 Final Word: This is not just a cost-cutting measure, it’s a blueprint for a fundamental shift in Medicare Advantage distribution. Tech-driven channels, captive agents, and regulatory pressure will reshape the landscape. For advisors, it’s time to pivot from transactional sales to trusted counsel. Own your book of business. Strengthen renewal relationships. Get involved in shaping policy. Where do you stand? Will this usher in a commission-free Medicare Advantage world, or will advisors rise to lead the next chapter? 👇 Drop your thoughts below. #MedicareAdvantage

From San Diego MLS: We are writing to inform you of important upcoming changes to SDMLS policies, effective August 12th, 2024. These changes are in response to the proposed NAR Settlement eliminating the Offers of Compensation from the MLS. The changes below will be implemented on all data feeds. SDMLS will continue to work to ensure compliance and avoid liability. Key Changes: 1) Compensation to Buyers Broker: All fields related to Compensation to Buyers Broker (CBB) will be removed from the MLS (Paragon and ConnectMLS), including all data feeds. All ConnectMLS fields will be removed by August 5th. All Other Classes: CBB% (Comp. to Buyers Broker %) CBB$ (Comp. to Buyers Broker $) CVR (Variable Commission) Rental Class: CBB% (Comp. to Buyers Broker %) CBB$ (Comp. to Buyers Broker $) CVR (Variable Commission) CBB% Contract Length CBB Paid 2) Rules & Policy Updates: SDMLS has updated its Rules & Policy to align with the NAR Settlement, including changes related to offering compensation and disclosing listing broker total commission. 3) Violations and Fines: Any attempt to indicate compensation within the MLS, including in private remarks, public remarks, showing instructions, images, or documents, will result in a $1,500 (per offense) fine and immediate removal of the violating content. 4) Warning Messages in Listing Input: To help users of the new rule regarding Offers of Compensation, warning messages will be added to the listing input process to remind agents that compensation information is no longer allowed. How To Prepare For The Change: Review the updated SDMLS Rules & Policy change summary: SDMLS Rules & Policy Change Summary. C.A.R. Resources: Update your buyer-broker agreements and listing agreements to comply with the new rules C.A.R. Resources (Login Required). View our training and informational materials to learn more about these changes and how they will impact your business. When in doubt, speak with your Broker. Review antitrust articles at TheDataAdvocate.com. We understand that these changes will require adjustments to your business practices, and we are here to support you. Please visit our knowledge base at: NAR Settlement Info or reach out to our Support team with any questions. Thank you for your cooperation and understanding as we work together to ensure compliance. Sincerely, SDMLS Team

If you’re planning to buy a home, here’s some news you need to know! MahaRERA has recently introduced new regulations regarding brokerage fees in real estate transactions. These changes aim to bring more transparency and accountability to the process. Here are 5 crucial insights to keep in mind: 1) Clear Disclosures: Sale agreements must now specify the brokerage amount (including taxes) owed to agents. This ensures buyers know exactly what they’re paying for—no hidden costs. 2) Flexible and Negotiable: Including brokerage terms in agreements is not mandatory. Buyers, developers, and agents can negotiate terms that work for everyone. 3) No RERA Enforcement for Brokerage Disputes: Agents can’t turn to MahaRERA to recover unpaid fees or claim interest. Brokerage disputes must be resolved outside the regulatory framework. 4) Guided by Market Practices: MahaRERA does not fix brokerage rates. Fees remain determined by market norms and mutual agreements, keeping negotiations open. 5) Limited Recourse for Agents: RERA-registered agents are critical in under-construction projects but have limited support through MahaRERA for fee disputes. Such matters are handled in courts or via applicable laws. Understanding your rights and the rules around these updates is crucial for a smooth transaction. Take the time to research and communicate openly with all parties involved to ensure a successful home-buying experience! Have you come across these changes in your transactions yet?

Did you know that The NAR settlement changes will significantly impact real estate transactions starting August 17, 2024: 1. Buyer representation agreements will be mandatory before touring homes, requiring clear disclosure of agent compensation and terms. 2. Offers of compensation through the MLS will be eliminated, necessitating alternative methods for buyer agent compensation. 3. Sellers will have more flexibility in deciding whether to offer compensation to buyer's agents. 4. Buyers may be responsible for paying their agents directly if sellers don't offer compensation, or they can negotiate for seller concessions. 5. All commissions will become fully negotiable, potentially leading to more competitive pricing for real estate services. 6. MLS platforms will remove broker compensation fields and prohibit seller agent offers of compensation to buyer brokers. 7. Increased transparency in agent compensation and services is expected, potentially leading to more informed decision-making by consumers. 8. The traditional 6% commission model will no longer be standard, encouraging more flexible commission structures. These changes aim to foster a more competitive and transparent real estate market, potentially affecting pricing, service offerings, and the overall dynamics of buying and selling 🏠 homes. Sources [1] NAR Settlement and How Real Estate Transactions Will Change https://lnkd.in/eZAKxuAZ

IMPORTANT! We just had the long awaited August 17th deadline meaning there are now major industry changes that will affect YOU as a buyer due to the NAR Lawsuit Settlement. Moving forward in your home buying journey, you must be under written agreement with your agent of choice - even if you just want to tour a property through a private showing. Important things to note as a buyer: You DO NOT, I repeat, DO NOT need to sign a Buyer Representation Agreement (BRA) in exchange to tour an OPEN HOUSE. Unfortunately, some agents are claiming this in order to unethically get you under contract. What is the Buyer’s Representation Agreement? It’s a simple, two page document, that outlines an agreement with your agent of choice and ensures both parties are on the same page about compensation and representation. I highly advise you do NOT go direct to a listing agent for representation. They will not get you a better deal even if they claim to do so, as it is their fiduciary duty to represent the seller. The question everyone is asking: Will sellers continue to pay my buyer agent’s commission? Despite the media, I do believe most sellers will continue to offer compensation to the cooperating side as it’s historically been a marketing technique to bring more buyers. Even if they don’t want to or choose not to, I don’t think they will really have a choice. We are going to begin to see agents and their buyers making a conditional offer in which compensation is provided or shaved off of their offer price. And for any seller who chooses to not offer compensation, I’m confident much of their competition will and buyers will redirect their interests to other listings. I know these changes open up the door for a lot of questions & concerns. Please don’t hesitate to reach out to me to discuss this further if needed! Chloe de Verrier 📲Direct: 310.890.9656