Loan sharks force debtors to sell homes
Feb 07, 2012
Sheena Chua
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No more scrawling elevator walls with debtor’s names; some illegal moneylenders have employed a new method to get debtors to pay up—making them sell off their Housing Board (HDB) flats and hand over the cash-over-valuation (COV) amount as payment.
(Some illegal moneylenders are making debtors sell their HDB apartments, using the COV received as payment. Image courtesy of Thinkstock.)
These lenders get property agents—some of whom are also debtors—to conduct the sales. For their work these agents get up to 8% commission for these sales. Agents usually receive commissions of 1-5%. COV is the amount that homebuyers foot above the valuation of the flat, as determined by an HDB-approved valuer.
One debtor is engineer David Liew, 37, who spoke to The Straits Times of his embroilment in such a transaction.
In 2008, Liew borrowed some $200,000 from illegal moneylenders (also known as loan sharks) to pay off gambling debts. After years of only being able to pay off interest, and the consequent harassment that he (and occasionally his neighbours) had to put up with, he told his lenders of his decision to sell off his HDB flat, a four-room Bedok unit that cost him $350,000 five years ago.
“I felt so bad and so humiliated […] As soon as the five-year occupation period was up, I decided to sell the flat,” he said.
The loan sharks, however, brought over a real estate agent to handle the sale. He withheld the keys, but they removed his gate to hold viewings with potential buyers. Eventually, the rogue agent found a buyer who paid $500,000 inclusive of a $50,000 COV—an amount Liew was not satisfied with.
He said, “When they found a buyer, they arranged everything, made me sign despite the fact that I wasn't happy with the price, and then demanded I pay the $50,000 to them once I received it.” Liew added that he did not make a complaint against the errant agent to authorities because he feared for his safety.
Freshly established rules dictate that all agents have to be registered with the Council for Estate Agencies (CEA) to conduct HDB transactions. A CEA spokesperson informed The Straits Times that the council is only able to act when there is a complaint; none, however, have surfaced.
Said the spokesperson, “Under the Estate Agents Act, estate agents and sales staff are not allowed to refer a client to any moneylender, licensed or otherwise, or receive any commission or other benefit from any moneylender relating to any moneylending transaction.” Violation of this rule could result in a fine of up to $75,000, or a suspension or revocation of the agent’s registration.
The Straits Times reported that Liew’s real estate agent was currently aiding in at least four such debt-related HDB sales at an 8% commission per sale. The anonymous agent let on that he knew of five other agents who were engaging in similar transactions for the same illegal moneylender; one of whom said he had “no choice” as he also owed the lender a sum.
Analysts and agencies noted that collusions with moneylenders to obtain loans for buyers were a common thing about two years ago, and these cases are likely to involve only a small group of rogue agents.
PropNex, for one, said its agents are informed of rules and regulations they need to adhere to during training sessions. Chief executive Mohamed Ismail said, “Now that you have to be registered, your rice bowl is at stake when you help these moneylenders. But if they are working together at a moneylender's request, then it is collusion and they should be taken to task.”
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Related Categories: Daily Property News and Updates, Real Estate Agents, HDB
Tags: CEA, Council for Estate Agencies, HDB, HDB flats, Housing Development Board, illegal moneylenders, Legal issues, loan sharks, property agencies, property agents, rules and regulations
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