Realty firms stop loans

Clivebenss SG

By Mavis Toh

PROPERTY firms with moneylending arms that do a roaring business are now putting the brakes on their ventures.

Their activities came under the spotlight last Tuesday when Minister of National Development Mah Bow Tan said in Parliament that his ministry is drafting measures to stop moneylenders from exploiting cash-strapped flat sellers.

Property agency owners and moneylenders told The Straits Times there are about 10 realty firms that hold moneylending licences and operate credit arms along with their property businesses.

Moneylenders' Association of Singapore president David Poh estimates that there are at least another 30 individual property agents who are also licensed moneylenders.

There are currently 260 licensed moneylenders in Singapore, up from 173 in 2008 and 169 in 2007.

The draw? Licensed moneylenders are currently free to set interest rates for loans above $3,000.

Clivebenss SG

I REFER to Monday's report, 'Realty firms halt lending activities'.

As reported, there are currently some real estate agencies and agents who are licensed moneylenders. Although the moneylending business is typically constituted as a separate legal entity, the individuals behind it are essentially the same as those of the real estate group.

At present, there is no prohibition against a real estate agent holding a moneylender's licence and vice versa. However, when either scenario occurs, the likelihood of collusion between the credit companies and estate agents becomes real.

Already, the report mentioned 'black sheep' moneylenders cum estate agents who have abused the trust of cash-strapped HDB sellers and exploited them. The sellers who had hoped for a breather were smacked with exorbitant interest rates and possibly robbed of the lion's share of their sales proceeds in other 'hidden costs'.

Singapore Accredited Estate Agencies (SAEA) urges estate agencies and agents who are licensed moneylenders to exercise caution and ethical conduct in their professional relationships with their clients who are HDB sellers. Although legal, it is not advisable for the two businesses to mix.

We do not support the practice of estate agents working with moneylenders and referring their clients to them for introducer's fees or to take advantage of their clients' financial plight.

Estate agents should not introduce HDB sellers to moneylenders for a fee as this is not within the ambit of their job and the real estate brokerage service rendered. In fact, estate agents who do so stand in potential breach of fundamental ethical obligations to their clients and may be perceived as lining their own pockets rather than acting in the interests of their clients.

SAEA will not hesitate to act against such agents should they be accredited.

Instead, according to the HDB resale checklist for sellers, estate agents should, among other duties, help HDB sellers work out their estimated sales proceeds before selling, and upon resale, sellers must discharge their outstanding mortgage loan and refund the Central Provident Fund (CPF) monies used to buy the flat with interest to their CPF accounts. Estate agents should also advise sellers to plan for their next home before they sell their flat, and should the sellers wish to buy another HDB flat, they will need to know if they are eligible for an HDB or bank loan.

If HDB sellers are in dire financial need, there are other avenues of help to which estate agents can refer their clients so they do not lose the roof over their heads.

Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies

Clivebenss SG

I REFER to yesterday's report, 'Govt steps in to curb errant property agents', and the response by Dr Tan Tee Khoon of Singapore Accredited Estate Agencies ('Estate agents shouldn't work with moneylenders'; Thursday) to Monday's report, 'Realty firms halt lending activities'.

While estate agents appear to be the culprits singled out, should the authorities be more concerned that if lawyers continue to draft such agreements and have these caveats frivolously lodged, the problems will persist?

In the first place, the situation should be such that lawyers decline to work with moneylenders and estate agents when requested to draft such agreements and lodge such caveats.

Are not these lawyers duty-bound to check the validity of their clients' claims instead?

Should not such lawyers have advised their clients accordingly of the principle in Rule 40 of the Legal Profession (Professional Conduct) Rules?

Rule 40 states as follows: 'An advocate and solicitor shall in appropriate cases evaluate with a client whether the consequence of a matter justifies the expense or the risk involved.'

Will we eventually see many negative sales in the property market because of the unnecessary litigation involved in such caveats as many lawyers draft such agreements, generate litigation and lodge caveats?

Tan Chin Aik