Last month, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2014-15 allowing dual agency agreements in FHA short sales. Dual agency includes transactions in which two agents are working for the same broker and one agent represents the seller and the other agent represents the buyer. Dual agency also applies to a single agent who represents both the buyer and the seller in a short sale transaction.

Some agents have received information from loan servicers that HUD will only allow a 3-percent commission if there is a dual agency agreement on an FHA short sale. This is not true. HUD has clarified its guidance to servicers that FHA short sales with dual agency agreements are eligible for up to a 6-percent commission if the contract that is submitted meets all current pre-foreclosures sales guidelines including the required marketing period, and yields the highest net return to HUD.