Letters

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?Banks in Real Estate Would Lead to More Risky Loans, NAR President Testifies?

RISMedia?s Real Estate magazine,

July 2005

No Win-Win, Here

I totally disagree with Ms. Duke?s idea of allowing banks to broker property. In terms of competition, they will narrow the playing field, not enlarge it! Consumers are already misled by big banker?s marketing and small print. The question to ask here when making this kind of decision is ?Is this a win-win for everyone involved?? I think the answer is an easy ?no? for consumers and community brokerages. The only win here is for the massive national banks. The smaller community banks will fall by the wayside because they won?t be able to compete.

We are at an all-time high in our real estate market because of the very profitable interest-only loan. Consumers aren?t paying down debt. How much more will this be the case when lenders control both sides of the equation?

Charlie Schrantz

Realtor

Winchester, Virginia

Banks Not Consumer Focused

In my opinion, it is a direct conflict of interest for banks to have the opportunity to become brokerage firms. As Realtors, we constantly have to update our knowledge of RESPA and state regulations. Bankers and lenders really don?t know their head from a hole in the ground when it comes to contract law and protecting the interests of their clients. There have been times where I have told a client not to buy right now because it isn?t in his or her best interest. I am almost certain that wouldn?t be the case with a lending institution.

I know I am very good at what I do when I help my clients. Customers are savvier, but they still really don?t understand the real legal aspects of buying a home. Banks will never have the customer?s best interest at heart. Elizabeth Duke doesn?t know what she is talking about. She is only interested in lining the pockets of Wachovia and other banking institutions. What I can?t do, no matter how good I am, is compete for clients with big lending institutions. I don?t have deep enough pockets?I don?t know an agent or even an office that does. I don?t ever want to be a lender?why do they want to be real estate agents?

Jan J. Hair

Realtor

North Fulton County, Georgia

Just Joining the Bandwagon

I was a banker for 30 years, retiring in 1986. Banks should not be in the real estate brokerage business because it would be a conflict of interest. Banks notoriously want to join the band wagon at the pinnacle of whatever phase of commerce is making the headlines at the current time. Look back at the banking debacle that culminated in the early ?90s: interest rates were still high, comparatively speaking, with rates that were out of sight in the early ?80s, when banks began taking advantage of the extraordinary high rates by making all kinds of loans in all kinds of markets. It was lend, lend, lend, regardless of the borrowers ability to repay. So what happened? They went belly up in the late ?80s and early ?90s because of bad loans.

The same chaotic experience will be replayed if banks are permitted to sell real estate. Where will the homeowner go when his banker/broker calls his loan because of his inability to continue his payments for whatever reason? Suddenly, banks will own all kinds of real estate because of customer inability to maintain payments. Then what happens? Another banking debacle! Only this time it will be worse because banks hold all the money and the real estate.

When I was in the banking business, banks used to pride themselves on the fact that ?they were not in the real estate business.? They repeated that phrase time and again. Now, all of a sudden that has changed and they want to be in the real estate business. Why? Could it be because of the juicy commissions they would reap, especially with the multi-million dollar homes being listed all over the country.

I don?t know if we have a real estate bubble in this country, but if we want it to burst for sure, let?s let the banks into the real estate brokerage business.

Jack Capone

Realtor

Thomaston, Connecticut

Banks vs. Brokers

You would logically conclude from this article that the Realtor is the only selfless professional that stands in the way of vicious predatory lenders that are just waiting for an unwitting buyer. However, NAR?s own statistics show that in most transactions, the Realtor can be as compromised as any lender or ?Big Bank.? Brokers, in increasing numbers, offer one-stop-shopping to clients, which frequently includes loans and title insurance. What is the difference in self interest between a big bank and a real estate brokerage, mortgage broker, title insurance representative, or real estate firm? It clearly is a case of ?buyer beware.?

Mary Lynch

Principal

Parker, Colorado