On October 25, 2024, the Tennessee Housing Development Agency (THDA) announced a significant policy shift through its Lender Notice #2024-33, effectively replacing its previous guidance, Lender Notice #2024-26. The primary change affects how THDA’s Down Payment Assistance (DPA) can be applied, specifically regarding the payment of selling agent commissions.
Key Policy Update
The THDA clarified that its DPA funds are designated solely to cover a borrower’s down payment and closing costs. However, if any DPA funds remain after these expenses are covered, the leftover funds can now be directed toward paying the selling agent or broker’s commission. Additionally, THDA requires clear documentation, including a fully executed purchase agreement and relevant agreements that outline agency relationships and compensation details between the listing and selling agents.
What This Means for Home Buyers
This update provides more financial flexibility for home buyers utilizing THDA’s DPA. If any DPA funds are left after covering the down payment and closing costs, these funds can reduce the burden of paying agent commissions. This can lower out-of-pocket expenses, making the home-buying process more financially accessible.
For selling agents, this update brings clarity and potentially smoother transactions. Agents must ensure that compensation agreements are explicitly documented and submitted in the Underwriting Package to THDA.
THDA’s updated guidance represents a thoughtful adjustment, aiming to make homeownership more accessible while ensuring transparency and proper documentation of commissions. Home buyers and realtors alike should stay updated on THDA policies and industry changes to maximize the benefits of available programs and maintain compliance with evolving regulations.
Still Have Questions?
In mid-November, the RealTea Podcast will sit down with Josh McKinney, THDA’s Real Estate Industry Advisor to discuss this change, what it means for your clients and for you! Submit your questions by November 12th to be included in the podcast conversation with the THDA! Submit your question below!
