Proposed Bill Would Keep Banks Out of Real Estate

On its first day in session, the 110th Congress introduced the Community Choice in Real Estate Act, which would keep banks from controlling all aspects of real estate transactions.
REALTOR® Magazine Online
Pat Vredevoogd Combs, president of the NATIONAL ASSOCIATION OF REALTORS®, hailed the 110th Congress for quickly moving forward with key legislation that NAR believes will ensure that the real estate industry remains competitive.

H.R. 111, the Community Choice in Real Estate Act, was introduced Thursday in the House by its sponsors Congressmen Paul Kanjorski (D- Pa.) and Ken Calvert (R-Calif.). Fifty cosponsors were added on the first day of Congress.

NAR will work toward the bill’s passage with Reps. Kanjorski and Calvert, who helped garner bipartisan support for it.

NAR has repeatedly stressed to Congress its long-standing support for keeping banks as impartial providers of credit and not permitting them to control all aspects of real estate transactions. Putting real estate brokerage into the hands of banks would leave consumers with fewer choices and higher costs, NAR says.

"REALTORS® provide extensive personal attention to consumers during the lengthy process of buying a home," Combs says. "It would be difficult for banks to provide that type of counsel because of conflicts with their other business objectives.”

What the Bill Would Do

Enactment of H.R. 111 would keep real estate brokerage and management clearly defined as commercial activities and not financial matters, ensuring that the separation of banking and commerce continues as mandated by the Gramm-Leach-Bliley Act.

“Without passage of this legislation, we are concerned that national bank conglomerates will continue their attempts to enter into the real estate industry, putting both competition and the nation’s economic health at risk,” Combs says.

“The U.S. economy depends on a strong real estate market and a healthy banking industry," she adds. However, attempts by the Federal Reserve and Treasury to redefine real estate as a financial activity would have harmful effects resulting in less competition, higher costs for consumers, and give competitive advantages to the banks.”