Fannie Mae and Freddie Mac will not count buyer’s agent commissions as part of their allowable interested party contributions (IPCs), according to announcements from the government-sponsored enterprises (GSEs) on Monday.

The GSEs noted that this guidance was not an update to their selling guides but a clarification on the treatment of seller-paid real estate agent fees.

Based on the selling guides in use by the GSEs, property sellers are allowed to make financing concessions toward the borrower’s closing costs at a maximum amount of 2% to 9% of the property value. In their guidance issued on Monday, the GSEs note that “fees or costs customarily paid by the property seller according to local convention are not subject to these financing concessions limits.”

“Buyer agent fees have historically been fees customarily paid by the property seller or property seller’s real estate agent, and, as such, they are currently excluded from these financing concession limits,” according to the statement from Freddie Mac.

Moving forward, the GSEs say that if these fees continue to be “customarily paid by the property seller according to local convention, they will not be subject to financing concessions limits.”

These clarifications come after the National Association of Realtors (NAR) reached a nationwide settlement agreement with the plaintiffs in the commission lawsuits. If the settlement is approved by the court, although agents and home sellers will not be able to list offers of compensation on the MLS, home sellers may still offer to cover the buyer’s agent fees if they so choose.

In late March, NAR and the Mortgage Bankers Association (MBA) sent a letter to Federal Housing Finance Agency (FHFA) director Sandra Thompson, Fannie Mae CEO Priscilla Almodovar, Freddie Mac CEO Michael DeVito, and Federal Housing Administration (FHA) Commissioner Julia Gordon asking for the officials to confirm their treatment of IPCs to home purchase transactions.

On a recent episode of NextHome CEO James Dwiggins and chief strategy officer Keith Robinson’s podcast “Real Estate Insiders Unfiltered,” NAR president Kevin Sears announced that he received confirmation from Gordon that, per FHA policy, if sellers continue to pay buyer broker commissions and fees as a manner of state and local laws or customs, and if these expenses are reasonable in amount, the existing policy would not treat those payments as interested party contributions.

NAR has also reached out to the U.S. Department of Veterans Affairs seeking similar guidance on VA loans, but Sears said that letter remains unanswered.

Despite this, NAR was glad to see the news from the GSEs.

“NAR is pleased to see that our letter in collaboration with the Mortgage Bankers Association (MBA) regarding the Interested Party Contributions (IPCs) garnered a timely response from Fannie Mae and Freddie Mac,” Mantill Williams, NAR’s vice president of communications, wrote in an email.

The Community Home Lenders Association (CHLA) expressed support for the GSEs’ announcement.

”CHLA appreciates Fannie Mae’s clarification today that seller payment of buyer realtor commissions will not be counted towards seller concession caps,” a spokesperson wrote in an email. “CHLA wrote Fannie Mae, along with all of the federal mortgage program regulators, in December to ask for exactly this type of action to protect first time homebuyers in the wake of emerging realtor lawsuits which may shift the responsibility to buy a buyer’s broker from the seller to the buyer.”

The American Real Estate Association (AREA), a startup trade organization, also was pleased by Monday’s announcement.

“Today’s statement regarding seller commission compensation was well-received,” wrote Jason Haber, the co-founder of AREA. “Next, we hope Fannie will provide a similar framework for buyers. Will buyer payments for their own professional services count against the IPC cap? That remains an open question at this time.”