A Look At The Real Agenda Behind The NAR

Tyler Durden's picture

We have long held the machinations of The National Association of Realtors (NAR) up to some ridicule. As many will note, we ignore every NAR data release due to the fact that it is certified guesswork (at best) as per the massive periodic revisions that just so happen wipe out all prior year gains. We also suspect a darker side, as the NAR, courtesy of its anti money-laundering exemption, is simply a middleman allowed to close its eyes as dirty money is ferried into the US and specifically its real estate market. But former Fannie Mae chief credit officer Ed Pinto digs a little deeper into the real driver behind the NAR. For 90 years the NAR (and its predecessor organization) has supported expanding the government’s role in housing finance. Today, the government guarantees upwards of 90 percent of all new mortgages. It is easy to reconcile the NAR’s interest in home ownership and its support for the expansion of the government’s role in housing finance. In Ed's research he has not come across a single instance where the NAR has stated that lending standards should be tightened. To the contrary the NAR has almost always called for loosened lending standards and continued or increased government involvement, no matter the market conditions.


Authored by Edward Pinto, former executive vice president and chief credit officer for Fannie Mae

The National Association of Realtors (NAR) exists to preserve the free enterprise system and protect home ownership in America for today and tomorrow. Is this fact or fable? For 90 years the NAR (and its predecessor organization) has supported expanding the government’s role in housing finance. Today, the government guarantees upwards of 90 percent of all new mortgages.

It is easy to reconcile the NAR’s interest in home ownership and its support for the expansion of the government’s role in housing finance. It is as basic as Economics 101. The marginal buyer is the one who is just willing to pay the price in the marginal transaction undertaken with the marginal seller. Sales in a housing market occur at this marginal or equilibrium price. It is in NAR’s and its members’ interest to lobby the government for loose and highly leveraged lending policies in order to “qualify” more marginal home buyers in an effort to increase marginal prices. Since the primary goal is to create more buying power today, little or no concern is paid to the fact that these new highly leveraged buyers are exposed to abusive levels of delinquency and foreclosure risk in the future.

For decades, the FHA and HUD promoted ever increasing levels of leverage in the US housing market. Increasing leverage serves to expand the pool of marginal buyers.  From 1954 to 2006 FHA’s compound leverage (the combined effect of lower down payment, a longer loan term and higher debt-to-income ratios) increased 16-fold while its incidence of foreclosure also exploded, increasing 13-fold. But the leadership at FHA/HUD would not be content until the entire housing market had followed suit and levered up.  Enter the National Homeownership Strategy (1995), with the lynchpin being the elimination of down payments. By 2004 HUD was able to boast: “Over the past ten years, there has been a ‘revolution in affordable lending’ that has extended homeownership opportunities to historically underserved households.”

In my research I have not come across a single instance where the NAR has stated that lending standards should be tightened. To the contrary the NAR has almost always called for loosened lending standards and continued or increased government involvement, no matter the market conditions. Rather than protecting free enterprise and homeowners, the result was the creation of a dangerously synchronized market consisting of an unprecedented numbers of overleveraged loans made to an unprecedented number of overleveraged borrowers–a housing finance market ill-equipped to absorb the potential shock of declining prices.

Given its business model, the NAR finds it immensely profitable to lobby for the addition of higher risk marginal buyers to the market.

First, real estate commissions are paid in a lump sum at closing, leaving the real estate agent with no skin in the game—if the loan defaults that is someone else’s problem.

Second, commissions are generally paid as a percentage of a home’s sales price, so as prices increase, so do commissions.

Third, marginal buyers generally enter the market by moving from rental to home ownership. This sets off a chain reaction of sales. The renter buys an existing home at say $140,000, allowing the seller to move to another home, one that is generally more expensive. The chain of sales continues perhaps for a total of 4 or 5 times, until the last seller either rents or buys a new or vacant home. While the real estate commission at 5 percent of the first sale is $7000, the 4 subsequent sales in the chain might generate another $35,000 in commissions, for a total of $42,000 generated from adding just one higher risk marginal buyer.

The reason for the NAR’s fervor for the FHA and other government financing agencies now becomes clear. It is also the reason the NAR is not deterred by the FHA’s more than 3 million foreclosures over the last 3 decades.

Based on these incentives, the NAR’s self-described interest in preserving the free enterprise system and protecting home ownership in America for today and tomorrow is a fable.

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machineh's picture

Merge the NAR with the NRA.

Voila -- the National Association of Armed Realtors. 

Renewable Life's picture


A dirty rotten "association" that represents Corporations in their lobbying efforts??? It can't be! Not in America! 

ihedgemyhedges's picture

Where I live most of the real estate agents are desperate to work middle aged moms, mostly pretty good looking.  Therefore, the organization shall be known as: NAMsILFR

otto skorzeny's picture

really-the only ones left selling around here are the old hags that used to be decent looking(whorish). the young hot ones resumed being soccer moms in brO's shitty economy and were lucky(?) enough to marry a cop or firefighter or other govt employed slug(ka-ching)

Jack Burton's picture

The young hot ones around here are almost always smart enough to go after and get the Cop, Firefighter, City hall or county courthouse employee. They know how to use that sex appeal to hook into the government employment gravy train. My small town economy has a two tier system. The top earners are government employees and the health care professionals. These guys more often than not have married the local hotties, as these girls know where the money is. The second tier are the unfortunate ones who must fight and struggle for employment in the private sector. Good paying jobs in the local private sector economy are about 1/10 as many as when I graduated high school. The majortiy of private sector workers are low payed and heavily taxed by the local tax authorties and the state. Their wives tend to be fatter, uglier and just overall less attractive than the higher paid government sector workers.

Now I know this all sounds like a lot of BS, but remember, I live in a small town and it is small enough that we all know each other, have gone to school together, played on sports teams together and partied when young together. I know how the local economy plays out. And YES, the better looking a young woman is the more likley she is going after the guys with government jobs, but the real lookers go after the health care professionals. Sadly enough, private sector workers are the guys who can't get a date and end up with one of the town whores.

When you live in a small town, you witness first hand just how America's economy has split between well paid secure government employees and the few well paid private sector workers who must compete hard for any decent job and the other private sector workers who are stuck in the new low wage, part time and heavily taxed private job market. It is a wonder more guys don't wake up to how private sector workers are being screwed and all the goodies and the beauty queens go to government workers. Especially cops, firemen and government administration managers.

The profound split is obvious with government being THE best paid work in small town and rural America. Big cities offer more private sector jobs, but those wages are also stagnant. While the State of Minnesota just gave an across the board pay raise to all state employees, even as private sector wages sink or are frozen. The Governor just said "To keep our talent, we must pay more to our valued state workers". What a load of shit, tens of thousands whould kill eachother to get a chance at one of these state jobs, even without the pay raise! Our governor is a damned liar, handing out our tax money to buy the state workers votes in the next election!

I am sick of seeing this shit, where private sector workers live in poverty and get the shit taxed out of them, while the pay raises keep flowing to our valued talent working for the state of Minnesota!

azzhatter's picture

Ever notice they all drive older model luxury cars. I went with 2 different ones looking at houses and one had an older jaguar and the other had a 12 year old Benz.

otto skorzeny's picture

they fucking drive POS Lexuses(Lexi?) around here exclusively-even the dudes

Larry Dallas's picture

+ 1000

The one with the license plate "CBAgent" is a total Barbie-milf, but has a 2002 Benz ML that is 2 generations prior to this one.

Lexus is the Realtor car of choice too.

azzhatter's picture

Mine was a 50 year old with a lot of makeup and dressed like she was 25. Trying hard to impress. I'm not sure but I think I could've got a knobber for signing

Dr. Richard Head's picture

My neck of the woods is showing some promise.  A house that was on the market for twoyears, while the homeowner was no longer paying on said mortgage for that same period of time, has just sold!!!!  It was listed for 25.6% less than what it sold for back in 2006 and was a bank short sale.  The good news is, based on the final closing price, banks are allowing for realtor/bank fees to yet again be rolled right into the mother fucking loan.  HAPPY DAYS ARE HERE AGAIN!!!!!

thisandthat's picture

NARMILF? National Association of Realtor Mothers I'd Like to Foreclose?

fourchan's picture

these reporters have never driven around detroit, shit looks like dresden.

otto skorzeny's picture

Dresdsen WAS shitty-but it only took a few years for the industrious, hardworking Germans to rebuild after WWII-the coons in DeeTroit-not so hardworking. Patton commented that the Germans were quick to rebuild while the rest of Europe(Fr,It) needed a lot of prompting and bribery

Freddie's picture

Dresden would have to be hit with nukes to ever become like Detroit.  More mass murder wars for banksters.

Miss Expectations's picture

What are you talking about...General Patton was murdered on December 21, 1945.  He missed the rebuilding.

Haloeffect's picture

Thank you Miss Expectations.  What happened to doing even a little research?



2005 - fog mirror, get loan

2013 - fog mirror, become chat room historian

I love the added authoritative detail about France and Italy.  

nope-1004's picture

Realtors are already armed - with stupidity.  I can't think of a single organization that provides "investment advice" and trends that has a higher conflict of interest as far as sales go.  Not only do realtors never advise that tighter lending standards should be employed, but they also never advise not to buy a home, because there goes the transaction tax they administer.

As the internet evolves and as home viewing / buying / sourcing goes around them, they will lose their influence.  It's not a matter of if, just when.  The value of their transaction tax isn't there.


serog's picture

Internet is pretty evolved.

Agent P's picture

In the age of the internet, realtors are some of the most overpaid people in the world.  I'm supposed to pay 3% to the realtor on each side after the buyer found the house themself online?  Go fuck yourself.  The NAR can lick my balls.

Joe Davola's picture

I'd be armed when going into an 'empty' home in many parts of the country these days.

Cognitive Dissonance's picture

"In Ed's research he has not come across a single instance where the NAR has stated that lending standards should be tightened."

Silly man. Clearly you have not been taking your NAR happy pills. Today, right now, is always the best time to buy a house. 

Cortez's picture

Car salesman say the same basic thing.  CUZ da DEALS r sOOO GOOD!!

derek_vineyard's picture

real estate agents???  the prettier w/ benefits should rise to top.......takes zero intelligence

Groundhog Day's picture

I once went into a car dealership because they advertised a 2 year old car i was looking for which they didn't have anymore 2 hours after i just called them.  The car salesman tryed to convince me it was in my best interest to buy a new car cuz it would retain its value longer.  retard

Poetic injustice's picture

I would buy new car... for a price that they asked for 2 year old.

Ham-bone's picture

In other news...researchers determine water is wet and snow rather cold.

C'mon - name an industry "concerned" about it's consumers?

Car manufacuturers suggest lowering credit standards, lower (no) down payment, and 0% interest rates for selling cars...and credit risk goes to who?

Higher Ed ever suggest that perhaps tightening lending to those capable of paying, etc. etc.

Ultimately, anybody and everybody with no skin in the game advocates for greater government backstopping, bailouts, insurance, issuance...basically advocate for the gov to take risks and bear losses free market players would not.  The gov and taxpayers are the stooges for every bubble and resulting bailout / bail-in.  Skin in the game...what a novel idea and oh so effective where it is still in play.

etc. etc.

Squid Vicious's picture

I would like to slap that shit-eating grin off Larry Yun's face...

economessed's picture

Realtors:  opportunistic middle men, often lacking in education who as a profession, add nothing to GDP.  The job is attractive to narcissistic, self-centered individuals who believe that photos of their heads are the main value-add to their work.  That they can work collectively to manipulate the system further should surprise nobody.

derek_vineyard's picture

if you can't make it anywhere else and want to lie to yourself that you are a professional....just become a realtor.


Salah's picture







benbushiii's picture

The NAR is essentially in business to promote loans and servicing so the financial community can earn the spread on the borrowed money.  They are no different than consolidators or Fund of Funds that earn $s for pushing products.

Richard Head's picture

Real estate agents are largely uneducated leeches.  6% commission?  Give me a fucking break.

A Lunatic's picture

Obama gonna pay my mortgage, bitchez........

Dagny Taggart's picture

Even rural realtors understand you cannot get financing for anything that looks capable of off grid sustainability. These monstrosities are non-conforming and the Fannie/Freddie machine won't buy the paper. The bank explains it's just darned hard to bundle and sell these things.



francis_sawyer's picture

So Rachel Ray is selling houses now?

otto skorzeny's picture

Rachel Ray is a pig-the other chick-not so much. I'm picturing her tits are popped out behind that sign.

Seasmoke's picture

NAR is a great place to pick up MILF

q99x2's picture

Have to send that Mr. Pinto a letter to let him know how beneficial it would be to allow students to purchase homes with financial aid money.

besnook's picture

damn liberals! oh, wait, oh, nevermind, damn liberals! fn dumbasses! when are you dumbasses gonna realize both sides(are there two sides) are gaming your dumbasses? the bottom half of the class usually catches up eventually. when will that time come for you?

Freddie's picture

NAR probably generates a lot of plastic surgery business for realtors.  Big hoots help move houses.

CheapBastard's picture

moar free zero down mortgages....moar defaults...more bailouts...


It never ends.

karzai_luver's picture

Um , it has looked to me as if the RE business and Nar as pushers and GM are one and the same, both still exist only at the pleasure of the fascist gvt of the u.s and it's goons.


What a sad state of affairs and still the peeps believe they are in a freedom loving country full of capitalist loving "agents".


What a joke what a farce what delusion and the mind to actually believe such drivel.

Talk about your magical thinking.


p.s. if you participate in sad delusional market then yes , gertrude you are THE problem and enable the fascist.


good night sleep tight.




JR's picture

It’s called gradualist socialism.

Economist Dr. Murray Rothbard stipulates that government ownership of any undertaking - which is what this is in that it ultimately makes We-the-People liable for payment of “the government’s role in housing finance”  -  “injects a point of chaos into the economy.” This is so, he says for “No government enterprise can ever determine prices or costs or allocate factors or funds in a rational…manner.”

So much then for forcing legitimate homeowners into chaos and risk at the hands of speculators, depriving Americans of home ownership as their safest and main source of not only family wealth but of an important source of post-retirement income.

Banker control and central planning of the US economy is subjugating Americans’ inalienable right to retain value, i.e., “own” private property, under a free market enterprise system of supply and demand to degradation under communism.

karzai_luver's picture

I am sorry , but a house was never to be the main source of retirement or wealth.


That is where the WHOLE game fell into the gutter.


That was and IS not the purpose of a house.

sorry but many peeps read themselves dumb.


JR's picture

I am sorry, too, for you see, that is not for you to say, and, in a free society, would not be up to the bankers to say, either, by manipulating the value of your home with free money. A house with positive equity is a wealth asset; here is how Wikipedia explains it:

Wealth in the United States is commonly measured in terms of net worth, which is the sum of all assets, including home equity, minus all liabilities.[1]Total net worth of US households and nonprofit organizations 1945–2009, unadjusted for inflation or population change.

For example, a household in possession of an $800,000 house, $5,000 in mutual funds, $30,000 in cars, $20,000 worth of stock in their own company, and a $45,000 IRA would have assets totaling $900,000. Assuming that this household would have a $250,000 mortgage, $40,000 in car loans, and $10,000 in credit card debt, its debts would total $300,000. Subtracting the debts from the worth of this household's assets (900,000 - $300,000 = $600,000), this household would have a net worth of $600,000. Net worth can vary with fluctuations in value of the underlying assets.

Here is the latest on household wealth from the Census Bureau (now out of date):

For all households, median household net worth decreased by 35 percent from 2005 ($102,844 [+/- 2,606]) to 2010 ($66,740[+/- 1,955]) (All comparisons are significant at the 90 percent level.  All dollar figures are in 2010 constant dollars). This decrease in median household net worth reflects the declines in housing values and stock market indices. However, excluding home equity, median household net worth increased by 8 percent from 2009 ($13,859) to 2010 ($15,000).

Compared with those who are older, the young have limited income or savings to acquire various assets, accumulate wealth, and diversify their wealth holdings. Between 2005 and 2010, median net worth decreased for all age groups but more for older householders than for younger ones.  For householders 65 and older, median net worth was equal to $195,890 in 2005 and $170,128 in 2010; for householders under 35, median net worth was equal to $8,528 in 2005 and $5,402 in 2010. When looked at in percentage terms, the story is quite different (see Figure 1).  Median net worth decreased by 37 percent for householders under age 35 compared with a 13 percent decrease for householders 65 and over. Thus, even though the 65 and over population lost more net worth in absolute terms, the younger age groups were disproportionately affected in terms of the share of net worth lost. The group with the largest decrease in percentage terms was the 35- to 44-year-old group, whose net worth decreased by 59 percent


Blankenstein's picture

A single house is not an investment.  It is a roof over your head and should be treated as such.  The who NAR perpetuated myth of housing investment is what propelled the housing prices to astronomical heights.  A house is a depreciating assest and to rob from future generations to try to make up for a lack of savings is appalling. 

besnook's picture

actually, it was. the idea was to pay off your mortgage so you owned your dwelling with minimal expense. the problem with that idea was the "mobile" economy where people did not stay in the same place for their lifetime whether it was to "upgrade" to a bigger, better house or downgrade due to job loss because of downsizing or health reason or moving to where the jobs moved, either extending their mortgage or moving into rental property.even so, 35% of homes are owned without mortgages. these people, depending upon when they paid off their house are reaping a great return on their investment when compared to rent payments they would have to pay on a similar house minus taxes and upkeep. mind you, anything over a coupla per cent return is much better than most "safe" investments today. in other words, if i paid 100000 dollars for a house today that would normally rent for 1000 dollars/month and my tax and maintenance cost are 500/month(very high) then the return on my investment(my asset) is 500dollars/month or 6%, a damn good tax free return.

adr's picture

There was a chart that showed the median home price before the founding of the modern NAR and after. After the NAR prices pretty much went on a straight upward trajectory.

Why would people who get paid commission for every sale want each individual sale to go up in value? I can't think of a reason. Hmmm.

No they wouldn't conspire with appraisers and the government to make more money, that's unethical.

besnook's picture

until the recent national bubble and excluding regional job related booms real estate prices have tracked inflation(wages) pretty closely. the most accurate correlation to the stock market bubble and the real estate bubble was the financial coming of age of the baby boomers that the investment bankers and real estate industry milked for more dollars than they had. the single most important piece of legislation for real estate was the capital gains tax exemption on the sale of a primary residence passed in 1997, the agreed upon beginning of the real estate boom.

csmith's picture

Question: What is the equivalent of NAR in the higher education market?

You would think they'd be just as vocal about maintaining these multi-billion $ subsidies...