Found this in a forum. Whether it is true or not, it is good to
be aware of it and be on our guard:
I would like to share this with all of you with the hope that you
would help disseminate to the public about a scam.
This involves HDB transactions and is also affecting private
property transactions.
There is now a prevalence of loan brokers who work with lawyers and
property agents to trick the purchasers into paying exorbitant
legal fees and profiteering from it.
Many property agents now introduce housing loans to their clients
through loan brokers who pay the agents a commission for every
successful referral. The loan broker will impose a condition that
the buyer must use a particular law firm to act in the purchase.
These lawyers that the loan brokers recommend have a tie up with
them to pay the loan broker a commission
for the referral.
This is how it works;- the lawyers will charge between $2500 to
$3000 for acting in the purchase of a HDB flat whereas the normal
rate charged by other lawyers is about $1500 to $2000. The extra
fees charged by the lawyers are paid to the loan broker as a
commission. The loan brokers are paid between $500 to a $1000 by
the lawyers and they in turn pay the sum of $300 to $500 to the
property agent as commission. There are some loan brokers that can
do up to 600 cases a month. This means that they can make about
$200,000 a month by milking the HDB heartlanders.
The loan broker when asked will always say that the commission that
they pay to the agents are from the banks when actually, they come
out of the pockets of the lawyers, which is paid by the unknowing
purchaser. What the
banks pay are the referral fee that they would anyway pay to the
agents directly for a loan referral without going through a loan
broker. A lot of loan brokers have suddenly sprung up in the last 2
years to catch on to this, they basically make a lot of money
without doing anything.
This has been going on for about 2 years and thousands of innocent
HDB purchasers are being ripped off. Lots of people know about this
but nothing has been done yet. The authorities have not done
anything about this because the lawyers and loan brokers cleverly
hide this through innovative financial arrangements. It is hard to
prove as the lawyers pay these commissions to the loan brokers
through cash.
The only way to break this scam is for the press to publicise how
it works so that the heartlanders are educated and protected from
these greedy lawyers and loan brokers and their property agents.
The lawyers are profiteering from this even though it is illegal
for them to pay commissions.
The time has come for this scam to be busted wide open, All of you
journalist and net users must participate by telling the whole
Singapore about how this scam works before this becomes a national
joke.