Big Banks in Real Estate
By Charles TurnerWASHINGTON: The mortgage-lending subsidiaries of national banks are immune from state regulation, the Supreme Court has ruled in a decision that upheld a controversial regulation issued six years ago by the Office of the Comptroller of the Currency, the chief federal bank regulator.
The attorneys general and bank regulators of all 50 states had urged the justices to find the regulation out of bounds, either as a misinterpretation of the National Bank Act or as a matter of constitutional federalism.
The story in the International Herald Tribune continues here.
While this doesn’t mean that Wells Fargo (or Wachovia which filed the lawsuit) will be putting signs up in your neighbor’s yards tomorrow, it does open up that possibility. The ruling in the bank’s favor today would allow them to conduct their real estate activities outside of state control.
Real estate is currently state controlled (the Oregon Real Estate Agency). This will blur that line. Obviously the National Association of Realtors was one of the most outspoken opponents. If big banks enter real estate a lot of the marginal (previously referred to as stupid) Realtors are going to have an even harder time competing in an already tightening market. While I can’t say that it thrills me either on a personal or professional level we’ve been positioning ourselves with our tools and service to be able to compete in any market. Since they would enter the game way back on the learning curve, I expect that they will have to pay their way into markets by buying out existing brokerages.
Not everything is price driven. It’s why Target and Nordstrom both do equally well serving their target market.
What’s the practical fallout from this? Will we see WellsForgo jump into the home selling biz? One stop shopping for the house and the loan? Scary, yes, but that’s kind of also what you guys are promoting as well, right?
Not everything is price driven. It’s why Target and Nordstrom both do equally well serving their target market.
Maybe, but in this age of outsourcing there is a tendency to try to drive costs and prices down as far as possible. It’s the main reason we haven’t seen incomes rise significantly over the last six years or so. If these banks are successful in driving down costs of buying and selling homes (and that remains to be seen) then there would be downward pressure on that cherished 6% commision.
Oh, and maybe it’s not the best example to prove your point as Target has been pretty successful in promoting low-price chic.
Have you ever had the misfortune of returning something to Target?
It’s not totally clear what the “fallout” might be. One possibility is a bank employee without a real estate license will be your agent.
My fear isn’t so much the one stop shopping but the lack of state oversight since the ruling makes it clear that the big banks with federal charters will not play by the same rules as local state charterd banks or existing brokerages.
Have you ever had the misfortune of returning something to Target?
Oh, but you only discover this problem after you’ve bought.
Ever tried to return an exotic mortgage that was more exotic than you thought. There seem to be a lot of people who would like to do that at this point, but I digress.
My fear isn’t so much the one stop shopping but the lack of state oversight
I think this is the problematic part of this ruling: it takes away some rights of the States (to regulate banking in this case).
It’s not totally clear what the “fallout” might be. One possibility is a bank employee without a real estate license will be your agent.
Wouldn’t they just hire real estate agents that would work for the bank in this case? You guys work for Prudential, for example, a big insurance company. So maybe in the future you could be working for Wells Forgo Northwest Properties? Prudential has a lending arm and Wells Forgo is a lender that might get a real estate department.
Me, I worry when banks are allowed to get into too many different things: Selling real estate, selling stocks, etc. I tend to think that a lot of those pesky bank regulations that went into effect after the Great Depression were put into place for a reason and now that they’ve pretty-much been dismantled it might not bode well. Human nature is still the same now as it was in 1929. Illustrated by recent events: The tech bubble crash of 2000, Enron, now the subprime debacle, next the Alt-A debacle. And when we start allowing banks to play dangerous games with our money in this environment… like I said, it doesn’t bode well.
Tip,
The Glass-Steagall Act of 1933 we repealed in 1999. Since then we have seen the rise of large banks again. This is just more of the same. It seems we didn’t learn our lessons of allowing banks too much power with our money.
The Supreme Court is as corrupt now as our central government. How sad to see circumstance sink as low as this.
A bit off topic, but I found this bit on vacancy rates very surprising:
http://tinyurl.com/yttj5p
11%
That’s the percentage of condos unoccupied (but complete) during the 4th Quarter.
An 11% vacancy rate for condos is amazing. That’s nationwide; I wonder what it is here in PDX?
Look to the RMLS for Portland. Scary thought that all of those riverfront condos that are sitting vacant might just continue for a while. I see a new condominium project starting on Beaverton-Hillsdale Highway near Fred Meyer and just wonder if it’s going to go to the dogs.
And Whoa. I just read the article on msnbc.com that March was the worst month for home sales in the country in 40 years (since 1967).
JJ,
Yup, March existing home sales numbers are out today, not very rosy:
http://www.realtor.org/press_room/news_releases/2007/ehs_mar07_weather_hits.html
Interesting read.