Testifying before the House Subcommittee on Financial Institutions and Consumer Credit's hearings, NAR President Richard A. Mendenhall says Realtors oppose a proposal to allow banks to enter real estate brokerage and property management because it violates congressional intent, violates longstanding federal policy against mixing banking and commerce and places independent real estate companies at a serious competitive disadvantage. Cash-rich banks could use profits from taxpayer insured operations to subsidize real estate functions, freeing more resources to consolidate market power. Some real estate firms would be forced to close their doors. Banking industry representatives say that because a home is financed, real estate brokerage is incidental to banking.
Banks have it backwards.
It is the mortgage that is, in fact, incidental to buying a home, Mendenhall says. Let me put this in perspective. There are two parties to every real estate transaction, a buyer and a seller. The seller requires no financing for his part of the transaction, he says. These sellers are not shopping for a loan or any of the other lender services.