It has been a recurring issue over the years that banks have expressed a desire to enter into the selling side of the real estate transaction. Some banks have actually sought out the opportunity to own real estate brokerages.
For obvious reasons, the National Association of Realtors has been opposed to this idea and has petitioned the government to block banks from doing so. Part of their reasoning is that the division of responsibility in the real estate industry makes all parties more accountable.
Arguments - Pro and Con
The American Bankers Association has contended that the public would benefit from access to greater choice and a healthier competition. On the other hand, realtors have argued that consumers would ultimately lose in this proposition with fewer choices, higher loan fees and reduced customer service.
Also at issue is the fact that banks are meant to be neutral parties, lending money without bias, and their involvement in the selling part of real estate would remove that impartiality.
Both houses of Congress have subsequently sided with the real estate industry this week on this matter with the reintroduction of the Community Choice in Real Estate Act. Over a dozen U. S. Senators and more than 245 members of the House of Representatives have signed onto the bill.
Since 2003 there has been language included in annual appropriations bills which has temporarily blocked banks from having the power to own and operate local real estate brokerages. The passage of the Community Choice Act will make this prohibition permanent.
Senator Barbara Boxer, who introduced the legislation, stated that, "Permitting banks to engage in commerce could compromise their lending decisions and create conflicts of interest while restricting consumer choice and competition among mortgage lenders."
It seems clear, at the least for the present, that there is strong sentiment among consumers, community advocates and the legislature that the business of selling real estate should remain with real estate agents and stay out of the hands of banks.
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446, E-mail
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