The National Association of Realtors is protesting rulings by the Office of the Comptroller of the Currency that the trade group says “will inevitably lead to national banks becoming actively involved in real estate development and brokerage.” The OCC regulates banking activities.

The Realtor group has fought for years to block federally chartered financial services companies from participating in the business of real estate brokerage. Meanwhile, some real estate brokerage companies offer financial services such as mortgage and insurance related to real estate transactions.

In a letter to the Comptroller of the Currency, NAR president Tom Stevens charges that by approving three recent bank-related real estate deals – the regulator is violating the National Bank Act and the regulator’s own past rulings and regulations.

Stevens urged Comptroller John C. Dugan to reconsider the rulings that allowed the banks to proceed with real estate-related projects and asked to meet with him. A spokesperson for the OCC was not immediately available today.

In December 2005, the OCC approved Bank of America’s plans to build and own a $65 million Ritz Carlton Hotel in Charlotte to provide lodging for the bank’s out of area visitors. The bank indicated only 37.5 percent of the 150 rooms would be used by persons related to the bank’s business, the Realtor group reported.

The OCC also approved plans by PNC to build and own a $170 million mixed use building in downtown Pittsburgh that would include ground floor retail and restaurant space, five floors of hotel space for 158 rooms, and four floors of residential condominiums, which would be sold when completed, the association also announced.

And Union Bank of California reportedly received OCC approval late last year for a 70 percent equity investment in a wind energy project.

“The OCC rulings have the potential to lead to significant erosion of the separation between banking and commerce,” Stevens stated.

In a separate announcement today, the National Association of Home Builders announced its support for a decision by federal regulators that will require banks to provide more detailed data on residential and commercial construction lending when reporting on their quarterly activities.

“This action will allow federal banking regulatory agencies to differentiate the disparate risks posed by residential versus commercial lending activities,” said NAHB President David Pressly, a home builder from Statesville, N.C. “Providing data on one-to-four family residential construction is an important step in developing a secondary market for single-family housing production.”

The home builders’ group announced, “As a result of the regulatory changes, large banks and banks with a high volume of residential production loans on their books will be required to break out their one-to-four-family housing production data in their quarterly Bank Call Report effective on March 31, 2007. All other banks will begin reporting the breakdown of their construction loans as of March 31, 2008.”

Pressly stated, “The bottom line is that more residential-specific data will be reported on loan volume and loan performance, which will invite market analysts and investors to treat housing production loans more favorably. This information will help build a secondary market for construction financing,” said Pressly.


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