During the boom years, the big banks were pushing to be allowed to add real estate office to their portfolios. That would have given them control of the market from listing to foreclosure. Lucky for the consumer, this didn't happen. This article from Diana Olick at CNBC: Short Sale 'Fraud' Follow, gives you just a small look into what it might have been had they been allowed to become licensed real estate offices.
Big banks currently control a large portion of the RE market via short sales (which require their approval) and foreclosures. When they are not putting the screws to you via high credit card interest rates they "extort" money from you when you try to buy a home. "Pay us under the table or we won't let you sell your house." I wonder how they report this alleged under the table income on their balance sheets? Is there a line item for "Income - RESPA violations." I would say it is time for the bank regulators to perform an audit of some of these banks. HUD where are you? If a REALTOR® were to take part in any of this alleged fraud and violation of RESPA laws then they would lose their license and the ability to make a living in the real estate industry forever! RESPA applies to the lending world. However, if they refuse, then they lose a client, a transaction, and a paycheck.
If any bank is truly found guilty of this alleged practice, they need to lose their license to lend. They also need to pay penalties to help fund additional regulators to root out these types of abuses. Any Buyer or Seller that has fallen victim should be awarded direct compensation for such abuses.
Here is something to think about. If that house next to you sold for $100,000 plus an undisclosed $1000 under the table, then the true value of homes are not being represented. The true value of the home was $101,000. Doesn't sound like a lot. Every home in the area just lost $1000 in value due to such a sale. The State (if home is in California), just lost $10 in real estate taxes for the first year. Doesn't sound like much, but imagine that this alleged abuse has occurred for 1000 homes across California. That is $10,000 in taxable income per year that the State has lost plus the 2% annual increase.
I could continue with a rant about "I'm from the Government, I'm here to help you," but I will leave that to someone else.
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