Realtor Exemption Letter
October 13, 2009
The Honorable Barney Frank
Committee on Financial Services
United States House of Representatives
Washington, DC 20515
Re: Realtor Exemption in H.R. 3126 Consumer Financial Protection Agency
Dear Chairman Frank:
Thank you for your leadership in advancing legislation to create a much-needed Consumer Financial Protection Agency (CFPA). As civil rights and consumer advocates working to protect the rights of homebuyers, we are concerned that the exemptions for real estate brokers and real estate agents may leave the CFPA unable to address the key roles that real estate professionals play in helping homebuyers obtain credit.
For many consumers, real estate brokers and agents offer the first point of entry into the housing market. These professionals shape and determine buyers’ choices and expectations in many ways, including influencing their financing decisions. However, real estate professionals work with mortgage lenders in broad ways that may not be included under the CFPA’s definition of financial activity. Some examples include:
- Residential real estate developers oftentimes only allow buyers to finance their purchase through a single financial institution.
- Real estate agents and brokers may direct some borrowers to sources of credit and not direct other, similarly situated borrowers to those same opportunities. Agents and brokers oftentimes offer in-house financing or have well-developed relationships with local mortgage lenders and mortgage brokers. Paired testing investigations, in which white and minority actors pose as similarly situated homebuyers looking to do business with a real estate agent, have uncovered steering practices in which real estate agents and brokers direct white buyers to good loans while making no such referrals for minority buyers.
- Licensed real estate agents involved in foreclosure rescue scams may offer distressed homebuyers the false opportunity to avoid foreclosure by renting to own. Although these transactions are arranged as a sale in which the agent helps a homeowner sell their property to an investor, in practice real estate agents are trapping distressed homeowners in a new, predatory loan.
These three practices demonstrate the broad, but important role that real estate agents play in helping homeowners obtain credit. We look forward to working with you to eliminate ambiguity and make clear that these and similar practices are not exempt from CFPA authority and oversight. Should you or your staff have any questions regarding our position, please contact Ben Clark with the National Fair Housing Alliance at 202-898-1661 or firstname.lastname@example.org.
A New Way Forward
Consumer Federation of America
Empire Justice Center
National Community Reinvestment Coalition
National Council of La Raza
National Fair Housing Alliance