HR 2636 – Banks as Landlords too.

One plan being put forth in Washington is to turn the entire Real Estate industry over to the commercial lenders and let them rent, list, sell, appraise, loan, and service loans on their respective property inventories, including Fannie Mae and Freddie Mac. This plan would effectively remove all of the current processes and protections states use to protect consumers by monopolistic predatory practices resulting from monopolies. Today you have the right to hire a Realtor of your choice to work for you in the transaction. If the banks run the Real Estate industry do you think they will pay that Realtor who represents you a commission? Not likely, they will tell you that if you want someone to represent you then pay for it like you do an attorney. Consumers will be hurt under this plan and thousands of hard-working Americans running businesses they have spent years developing and growing will be out of business in short order. Thank banks already did this to appraisers for the most part. In 2008 new rules went into effect requiring all appraisals for lending to go through third-party companies called AMC’s.  So appraisers can’t work directly with banks, Realtors, or consumers for the purpose of lending. They have to be arms length. Sounds good at first, making it a more neutral process. Well guess what the AMC’s almost all are owned by subsidiaries of the three largest banks.  And now independent appraisers make 30-40% less than they did 4 years ago for the same amount of work.  The banks want the same arrangement for Realtors and HR 2636 gives them the power to create Real Estate companies. This was tried in the mid-90′s and defeated by congress, recognizing the danger of not having separation of responsibilities and the abuse that would come to the consumer with this model. Now they are back and trying again. They will next form their own Title Companies and then MERS won’t be a problem anymore.

With this plan the banks will have every incentive to come to homeowners who are underwater or at near zero equity and offer them a buy out of their existing home, and a five-year rent back contract. Sounds great for that poor struggling homeowner, but guess what, pretty soon the banks own 10-15-20% of American homes*. And Uncle Sam is paying them to do it, offsetting the losses on those loans with your tax dollars, and shuffling the numbers around to make it look good. The big banks are just making money on every transaction; they don’t actually invest any real money. They just recycle it.

* Some Hedge Funds are funded by Foreign Nationals and much of Fannie and Freddie’s debt is owed to people outside this country.

Tags: Banks as Landlords, Fannie Mae, Foreign Nationals, Freddie Mac, Government housing, H.R. 2636, Hedge Funds, Keep banks out of real estate, making homes affordable