A three-year-old prohibition against large banks entering the real estate, leasing, and property management business, remains in effect for the balance of this year. The National Assn. of REALTORS® is working with members of both houses of Congress to pass legislation that would make that ban permanent. The fight promises to be energetic as both sides draw their lines in the sand. "The Community Choice in Real Estate Act" was reintroduced to Congress last month with bipartisan support; earlier this week Congressman Michael Oxley (R-Ohio) stirred the ire of REALTORS (R) nationwide when he suggested that "real estate needs more competition".
The NAR position supports "separation of finance and commerce". The group points to "compromised bank lending decisions and conflicts of interest while restricting consumer choices and competition among mortgage lenders. In addition, should the rule be finalized, real estate brokers' and managers' activities would be considered financial in nature, and thus subject to increased regulation by the Federal Reserve, Treasury Department, and the Federal Trade Commission".
There is a certain irony in this position.
Consider the fact that increasing numbers of real estate offices operate in-house mortgage companies, insurance companies, and title companies.
Consider the recent litigation in New Hampshire to regulate a mortgage company's FSBO web site under Real Estate Commission jurisdiction rather than the Banking Commission's control.
Consider that the State of Illinois regulates banks and real estate under a single umbrella, Division of Banks and Real Estate, to "oversee the regulation and licensure of State chartered banks, trust companies, ATMs not owned by financial institutions, check printers, pawnbrokers, savings banks and savings and loan associations, mortgage bankers and brokers, real estate brokers and salespersons, appraisers, auctioneers, home inspectors, leasing agents, and time share companies".
It is important that we separate finance and commerce. It is important for NAR and its 1-million strong membership to understand that they can no longer have their cake and eat it, too. Let's keep banks out of real estate and stem the tide of the "full service real estate office" that smacks of so much conflict of interest. REALTORS(S) must define their roles with a narrower focus if they wish to remain credible to the increasingly savvy consumer. --Frances Flynn Thorsen
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