Realtors and bankers in Mississippi are continuing to duke it out over the fight for banks to enter the real estate business.
“It’s been a yearly battle,” sighed Pam Beard, broker/owner of BrokerSouth GMAC Real Estate in Vicksburg and president-elect of the 5,500-member Mississippi Association of Realtors.
The Gramm-Leach-Bliley Act of 1999, the most sweeping reform of financial services regulation in more than 60 years, authorized the Federal Reserve and Treasury Department to define allowable activities for financial holding companies.
Realtors have vowed to negate the proposal to allow banks to enter the real estate business, and have had identical bills introduced to stop it: Senate 98 and House Resolution 111. Rep. Bennie Thompson (D-Miss.) is one of 223 cosponsors as of June 7, and the only congressman from Mississippi listed as a bill cosponsor even though others may support it.
Another venue for quashing the proposal is in the form of an amendment to an appropriations bill authorizing money for fiscal year 2006 for Transportation, Treasury, Judiciary, Housing and Urban Development (HUD) and related agencies. The amendment would prohibit the Federal Reserve and Treasury Department from approving the pending proposal relating to the offering of real estate brokerage and management services by banking institutions.
“Such a provision, which is being pushed by the National Association of Realtors (NAR), is anti-competitive and anti-consumer,” wrote Edward Yingling, president and CEO of the American Bankers Association (ABA), in a July 18 memo to members of Congress, “cc’ing” Senate Appropriations Chairman Thad Cochran (R-Miss). “We oppose this protectionist attempt by NAR to undermine the Gramm-Leach-Bliley Act through the appropriations process.”
At press time, the House and Senate versions were expected to move to conference, where the permanent provision would likely be dropped in favor of the one-year moratorium contained in the House bill.
“They’re manipulating the appropriations process when these bills should be considered in financial committees,” said ABA spokesperson Laura Fisher. “It’s a back- door way for Realtors to accomplish their goals.”
By state statute, banks are allowed to participate in real estate brokerage in 26 states. Credit unions, state-chartered banks and savings institutions offer real estate services.
At least two sides to every issue
Realtors say they don’t have access to cheap money for mortgages like banks, which have federal protection. They argue that banks would have little incentive to advance homeownership except when it profits their bottom line or to promote government programs designed to encourage homeownership, such as FHA, VA and rural housing programs.
“It’s unfair to allow these mega banks into the brokerage business because of their ability to borrow money from the Fed at discounted rates. Those dollars would be put at risk,” said Larry Edwards, a broker with The Smith-Edwards Company in Ridgeland.
Bankers say that consumers are protected because all rules applicable to real estate agents would apply equally to bank-affiliated agents and that provisions of the Bank Holding Company Act would prohibit banks from conditioning credit on the purchase of another product or service.
They also point out that real estate brokers are not subject to any of the comprehensive privacy provisions passed by Congress in 1999, and that many real estate firms already offer one-stop shopping, including mortgages and insurance. Other depository institutions, like credit unions, also offer real estate brokerage.
“Our franchise has GMAC Mortgage Company, but my agents and clients rarely use the mortgage arm,” said Beard. “We’re not the ones approving their loan. The biggest worry would be protecting clients’ rights, so they don’t feel pressured to use a certain mortgage company to get a home loan approved.”
Anti-competitive trends are taking place in several states, said Fisher.
“A lot of states are passing laws so Realtors can’t offer menu services,” she said. “Real estate commissioners in many states are preventing Realtors from giving rebates to their customers. And also, the Federal Trade Commission and the Department of Justice are investigating real estate practices to determine whether they’re anti-competitive. All these activities should point to one thing: that Realtors will do anything they can to protect their very lucrative monopoly.”
Beard quipped: “There could not be a more competitive business than real estate.”
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info