According to a report from the National Association of Realtors, a majority of the members of the U.S. House of Representatives has cosponsored legislation that would permanently prohibit big banking conglomerates from entering real estate brokerage or property management.

A total of 231 members of the House and 25 U.S. senators have signed onto the Community Choice in Real Estate Act, H.R. 111/S. 98, since the legislation was reintroduced at the start of the 109th Congress. The bill is backed by the National Association of Realtors.

Banking conglomerates have requested permission from the Federal Reserve Board and the Treasury Department to sell and manage real estate under the 1999 Gramm-Leach-Bliley Act. For the past three years, Congress has denied financial holding companies and subsidiaries of national banks from taking over local real estate companies by denying yearly funds to finalize the proposed rule.

"For the third Congress in a row, a majority of the House of Representatives has reaffirmed that national banks should not be able to take over local real estate businesses and trigger the same kind of consolidation and loss of consumer protections we've seen in the banking industry as well as the securities and insurance industries banks have recently acquired," National Association of Realtors President Al Mansell said.

If the nation's largest banks become the nation's largest real estate brokers, homebuyers will be much more likely to take out high-risk interest-only loans, according to testimony by the National Association of Realtors at a hearing about the proposed legislation.

The association cited statements made by Federal Reserve Chairman Alan Greenspan about the growing use of riskier new mortgages that is helping push up home prices to "unsustainable levels" in some local markets. Greenspan said, "The dramatic increases in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages, are developments of particular concern."

Nearly a fourth of mortgage loans made this year nationally have been interest-only, according to LoanPerformance, which tracks loan originations.

The National Association of Realtors recently launched a new consumer education campaign to help consumers, particularly those with credit problems, avoid the pitfalls of "toxic" loans and abusive lending practices. Realtors are working with existing programs and community groups to help consumers obtain information about financial literacy and how to avoid predatory lending.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to gmeissner@silvar.org.