American Homeowners Association (AHA)® - Your Home for Savings, Security and Smart Choices
  Your Home for Savings, Security and Smart Choices Customer Service    Toll-Free 1-800-470-2242    
America's #1 Homeowner Organization
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
 
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
Financing | Contractors | Moving | Real Estate | Reminders
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
Froople!  Shop Online | Grocery Coupons | Local Discounts | Flowers & Gifts
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
AHA Home University | AHA on Your Side | AHA Top Tips | Article Library
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
Airline Tickets | Hotel Reservations | Car Rentals | City Guides
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
Home & Auto Insurance | Vision Care | Legal | Life Insurance | Tax
Home Benefits Home Services Shopping Resources Travel Professional Services About AHA
About Us | Our Mission | FAQs | Privacy Statement | In the News | Testimonials

Banks and Brokers Squabble

Billions of dollars in fees and commissions are at stake in a bid by bankers to provide brokerage services.

Should banks be allowed to offer real estate services? This is not a $64,000 question. Actually, the total value of homes sold in 1999 in the U.S. was closer to $908 billion, with the broker's commissions totaling around $46 billion. Looking to expand from mortgage loans into real estate brokerage, the banking industry is asking the Federal Reserve Board for a piece of this action. That would mean banks could continue their quest to provide one-stop shopping services for consumers, with banking, investing, home buying and home improvement loans. But is that really good for consumers? As usual, it's hard to separate the rhetoric from reality.

The issue has started a bitter debate between the American Bankers Association and the real estate industry represented by the National Association of Realtors(r) (NAR). Each must work together in the home finance arena but when it comes to bankers entering the Realtor(r)'s turf, the gloves come off. NAR "strongly opposes the proposed rule change, which would result in domination of the real estate business by just a few large financial holding companies. This would be bad for the economy, bad for business and bad for consumers... Like a voracious octopus, the banking industry -- already bloated with recently acquired rights to deal in securities and insurance--has seen something else it wants--the highly successful real estate brokerage."

But how big is the power grab really? The banking industry says that many real estate brokerages already offer mortgage services that banks normally offer, so why discriminate? More competition in the home buying and brokerage market should be good for the consumer. Banking wants to facilitate real estate transactions through their holding companies' brokerages, which would provide services to for-sale-by-owners and commercial property transactions, especially. But NAR isn't backing down. It says that consumers could end up overpaying for homes, sellers could undersell, and all might be vulnerable to liabilities related to disclosure rules and other safeguards.

What does the public think? Beware of polls, they can always be used to manufacture results for the entity that sponsored the poll. But in one survey by Public Opinion Strategies, nearly two out of three consumers said their interests would be best served by keeping bankers out of the brokerage business. Nearly 70 percent of survey respondents said they would be hurt by approval of the regulation because bank-owner real estate brokerages would have access to their bank accounts and personal financial information. And 58 percent said banks are too powerful already.

The Federal Reserve Board, which will make the decision regarding banks later this year, has extended the period for public comment from March 2 until close of business May 1, 2001. The Fed is interpreting a law passed by Congress called the Gramm-Leach-Bliley Act of 1999 that expanded the role of bank holding companies. For more information go to the Federal Reserve website. �

Sources used to create this article include Realtytimes.com