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Realtor Discourages Use of Outside Lenders
Market conditions also prompted the memo, he said. Now that the real estate market has slowed, agents are selling fewer homes, which means they have less commission to split with the brokerage.
To make up for that, Long & Foster, the largest privately owned mortgage brokerage in the country, must rely more heavily on affiliates that offer mortgages, insurance, settlement services and title services, he said. "It's almost that real estate is the loss leader."
Some agents said they have no problem with Foster's directive, such as Gerry Staudte, who works at the Burke-Fairfax Station office.
"We basically have a sister company that provides a good service, and he's asking us to give them a shot," Staudte said.
Bank of America and Wells Fargo each reacted mildly to Foster's memo. Terry Francisco, a Bank of America spokesman, said his bank values its relationships with Long & Foster agents and hopes to remain popular with them. Wells Fargo said it valued its joint venture with Long & Foster, but declined to comment about Foster's push to avoid other Wells Fargo loans.
Real estate firms promote these arrangements as one-stop shopping. But they have also prompted complaints over the years that some brokerages have retaliated against agents who didn't make referrals or blocked other lenders from soliciting business.
These practices still exist, which is why Foster's memo is problematic, said Harvey Jacobs, owner of Stress-Free Settlements in Rockville. "It's clear they're not making it on commissions as much as they were. So they're looking for other pockets to put their hands in, and those pockets are other affiliated businesses."