Community Home Lenders of America, a trade association for the mortgage industry, is calling on government agencies to start having conversations about the impact of a jury verdict or judicial ruling in the Sitzer/Burnett lawsuit on lending practices.

In a Thursday letter sent to Federal Housing Finance Agency director Sandra Thompson, Federal Housing Administration commissioner Julia Gordon, Rural Housing Service administrator Joaquin Altoro, and Department of Veterans Affairs Secretary Denis McDonough, the CHLA expressed concern over the impact of a change in the payment of buyer’s agent commissions, from home sellers to homebuyers, on mortgage lending for “minorities and veterans” and other “underserved homebuyers.”

In the letter, the CHLA states that it believes the change could have a “profoundly negative impact” on homebuyers’ ability to finance or pay for those commissions as well as on loan appraisal loan-to-value (LTV) requirements and calculations.

After the Sitzer/Burnett ruling, the CHLA’s executive director, Scott Olson, stated that after the members started reporting, they saw contracts that explicitly stated that buyers would be responsible for their legal representation.

Olson stated that “no matter how it all turns out, people will have to deal with this right now.” “We do not have specific solutions to everything. But we have identified what we believe to be the most important concerns. We are asking the major players to examine this and see if they can work together to come up with solutions.”

In the case of cooperative compensation, the buyer’s agent fees are included in the price of the house, which makes the cost of the buyer’s representation completely financeable. If this were to change, CHLA fears that first-time buyers, families with low incomes, veterans, and minority homebuyers would be negatively affected by the obstacles and complications associated with the need to pay the buyer’s agent commission.

Olson said: “There are people who are most stressed and challenged because of the rise in mortgage rates, in terms affordability, buying a house and getting into homeownership. So it’s just another monkey wrench in the equation.”

The CHLA also stated that it encourages policies that would allow programs that assist with down payments to cover the cost of a buyer’s agent if a problem arises.

Olson and CHLA discussed how a change to the commission structure might hinder VA Buyers who are using VA loans due to the fact that they do not require down payments. VA buyers cannot pay for buyer representation under current regulations.

Olson says that the CHLA is trying to anticipate any issues that could arise from changes in the commission structure. He encourages government agencies to engage in this type of conversation.

Olson stated, “It is important to stay one step ahead.” “We’re just trying to position us so that, when problems arise and roadblocks occur, we will have already begun the conversation about how we can solve them.”