Banks, Real Estate Commissions, & The Rico Act
November 16, 2010 by admin
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Banks, Real Estate Commissions, & The Rico Act
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Home Page > Business > Sales > Banks, Real Estate Commissions, & The Rico Act
Banks, Real Estate Commissions, & The Rico Act
Posted: Feb 10, 2010 |Comments: 0
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Banks, Real Estate Commissions, & The Rico Act
By: Grant House
About the Author
Successful Full Time Realtor in Las Vegas since 2002
Illinois real estate Attorney retired since 1991
Author, artist, musician; Husband, father, friend
Photo is Barbara & Grant
(ArticlesBase SC #1845531)
Article Source: http://www.articlesbase.com/ – Banks, Real Estate Commissions, & The Rico Act
Q: Does routine forced reduction of Realtor short sale commissions by Banks
amount to a form of extortion that falls under the RICO ACT?
Suppose we have a small group of powerful bosses whose names, by
coincidence, all end in a vowel (Fargo, Chase, B of A, etc).
They target a small class of defenseless business people (Realtors) in a
very distressed neighborhood (Las Vegas, or your home town).
These people already owe the bosses a lot of money (on 1st and 2nd mortgages & HELOCS), so the bosses proceed to syphon off half of their business (REO listings = the
majority of closed transactions each month) and give that business only to
those who the bosses directly control (A very small group of
REO listing agents. Bank of America recently said they added only 3 realtors
to their REO approved list in 2009 IN THE ENTIRE U.S. and NONE in NV; to
get on the list one needs a year’s experience in REO sales; tough to do if
you don’t already have REO listings. Didn’t our tax money bail them out? Shouldn’t they spread these real estate jobs around a little? Why, no! That would be … inconvenient.)
The bosses further squeeze the business people’s income on what is left (By reducing short sale commissions by 25-33% routinely and often refusing to
approve the final HUD 1 closing statement unless “someone,” usually the Realtor, agrees
to pay for additional items on the HUD per bank demands at the 11th hour) and they keep it for themselves. The bosses have the peoples’ main industry (real estate) by the throat (Banks control REO sales, approve all short sales, and loan the money to any non-cash buyers).
When, due to declining income, the business people (Realtors) can’t pay back their
loans, the bosses take their houses and sell them at current discount
prices (in Las Vegas, Feb 2010 avg price is roughly 80% below Feb 2006). The business men lose whatever equity they paid down (5 to 20% at 2006 prices) and the bosses keep that for themselves, too. And then they come after the people for the deficiency at the old inflated prices, demanding payment despite the fact that the bosses have intentionally damaged their ability to pay. (Q: Didn’t the bank make an implied promise under Equity Law NOT to damage their barrowers ability to repay the loan?)
This “routine reduction” applies to hundreds of short sale transactions each month in Las Vegas alone. When Realtor income is down by 60-75% already, it feels like a systematic shake down. The bank is not actually a party to the short sale contract - it is
merely a beneficiary of the closing. The Realtor can’t say no to a commission reduction without losing his entire commission. If he refuses, the bank has a “gun to the head” of the transaction. If the transaction does not close, the bank gets the property anyway via foreclosure. If the Realtor stands up for his rights, he may breach of his fiduciary duty to his client. The bank order is an offer he can’t refuse because of FEAR of greater loss.
The commssion is reduced by an order called a “short sale approval” that arrives on
bank letterhead, signed by a bank officer, and 100% of that amount is retained by the bank. For the Realtor, it’s death by a thousand cuts.
To make the math easy, let’s suppose a Commission of 6% (split between listing and selling agent) on a $100,000 short sale house is reduced by a bank to 4% = a $2000 reduction.
Multiply this by 569 Las Vegas short sale transactions in January, 2010 = $1,380,000 in additional bank profits in one month. At this rate, the 4822 short sales closed in Las vegas in the past 12 months = roughly $9.6 Million in lost Realtor income in Las Vegas alone, all taken from the people who can least afford it. The average price per residence was actually $140,000 for the same period, so the $ amount is probably considerably higher. Multiply this by every city across the country and you know where the bank CEO bonuses come from. (GLVAR data)
It’s a lot of money. Tony Soprano would be proud.
Retrieved from “http://www.articlesbase.com/sales-articles/banks-real-estate-commissions-amp-the-rico-act-1845531.html”
(ArticlesBase SC #1845531)
Grant House -
About the Author:
Successful Full Time Realtor in Las Vegas since 2002
Illinois real estate Attorney retired since 1991
Author, artist, musician; Husband, father, friend
Photo is Barbara & Grant
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Article Tags:
rico act, real estate, commission, short sale, extortion, las vegas
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Banks, Real Estate Commissions, & The Rico Act
When banks routinely reduce real estate commissions in a short sale, is that Extortion covered by the RICO ACT? The bank is not party to the contract. They have no legal right to the commission, especially that of the buyer agent. They obtain consent by Duress, ie. fear. If the agent refuses, the transaction fails; the agent gets paid nothing. Also, the commission reduction, often 25% or even 1/3 of the commission, is retained by the bank and the order comes signed on bank stationary.
By:
Grant Housel
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Successful Full Time Realtor in Las Vegas since 2002
Illinois real estate Attorney retired since 1991
Author, artist, musician; Husband, father, friend
Photo is Barbara & Grant
