Realtors take stand against banks as brokers

The president of the National Association of Realtors Jan. 22 urged members of the association to join him in a campaign to halt a proposal under consideration by the Federal Reserve Board and the Treasury Department that would allow federally chartered banks to engage in real estate brokerage and property management.

"Should this regulation be adopted, several large financial services holding companies will quickly dominate our industry by buying up brokerages or driving others out of business," said NAR President Richard A. Mendenhall in a press release.

"In a short time, through sheer market power, a few huge banks could control a significant portion of the real estate brokerage, relocation and management businesses and change our industry for the worse," he added.

"Bank-controlled real estate brokerages will become marketing arms of mortgage departments and other services banks sell.'re concerned they will be more interested in making a loan or selling mortgage insurance than helping a buyer find the best deal," Mendenhall said.

Mendenhall said the rule could lead to higher costs for consumers, should banks "bundle" and cross-sell products and services through captive real estate brokerage subsidiaries. "Banks will control the real estate transaction end-to-end, creating opportunities for extra charges and add-ons that consumers may not need," he said.

The NAR is also concerned that banks would be able to share confidential customer financial data with their captive real estate brokerages, jeopardizing privacy and creating an unfair competitive advantage over independent brokerages, Mendenhall said.

"There's no need to introduce such potentially far-reaching change to the real estate brokerage industry.'s broker-centric real estate industry is the envy of the world and has been a major contributor to our record national homeownership rate. Real estate brokerage is highly competitive, widely available, efficient and structured to provide a high level of personal service to buyers and sellers."

Comments on the proposed rule are due by March 2, and Mendenhall urged every Realtor concerned about the issue to contact the Federal Reserve Board and Treasury.