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07-02-2012, 02:40 PM
Scary eh? Don't borrow from loan sharks!
The Straits Times
Feb 7, 2012
Loan sharks' new tactic: Owe money? Sell house, hand over COV
Illegal moneylenders get own agents - some, debtors themselves - to sell victims' homes
By Elizabeth Soh
Loan sharks have found a new way to get some debtors to pay up: demand that they sell their Housing Board flats and hand over the cash over valuation (COV) quantum.
Illegal moneylenders recruit real estate agents, some of whom are debtors themselves, to carry out the sales. In return, the agents get commissions of up to 8 per cent, compared with the usual 1 per cent to 5 per cent.
One debtor, engineer David Liew, 37, was involved in such a sale. He owed about $200,000, which he had borrowed to settle gambling debts in 2008.
After three years of struggling to pay off only the interest and being harassed by loan sharks, he decided to sell his four-room HDB flat in Bedok - which cost him $350,000 five years ago.
He told the loan sharks of his intention. To his shock, they sent a property agent to handle the sale. When he would not hand over the keys, they removed his gate so they could hold viewings for buyers. The agent found a buyer who paid $500,000, including a COV of $50,000.
The COV is what buyers pay above the valuation of the flat, as determined by an HDB-approved valuer.
Mr Liew 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.'
He had bought the build-to-order flat with his wife. They are now estranged.
Mr Liew had been harassed by loan sharks for defaulting on his debt within a year of moving into the flat. Once, three neighbouring families were locked in their homes after loan sharks padlocked their gates.
'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.
He has no children, and now lives with his parents in a rental flat. He took on another job selling insurance and is paying the loan sharks about $3,000 a month.
He said he did not lodge a complaint against the agent or moneylenders as he was threatened with violence when he objected to them letting prospective buyers view his flat.
Like Mr Liew, housewife Xie Xin Ni, 38, was also told by loan sharks that she and her husband would have to sell their five-room flat in Punggol through an agent appointed by them. 'My husband initially refused but I just want to pay them back so they will leave us alone. Even if I lose money in the transaction, I just want peace.'
The mother of two said they expect to sell their flat for about $520,000, including a COV of $30,000, which they will hand over to the real estate agent immediately to offset part of a $50,000 debt incurred two years ago to pay medical bills.
Under new rules, all agents must be registered with the Council for Estate Agencies for HDB transactions. Its spokesman said it can act only if it gets complaints, but so far, it has not had any.
'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,' he said. Those who breach the code can face disciplinary action. 'If found guilty, the salesman may be fined up to $75,000 or have his registration suspended or revoked.'
The Straits Times contacted Mr Liew's agent and found that he was helping to sell at least four other debtor-owned units, and collecting an 8 per cent commission on each property. The high commission, it is understood, is given in exchange for keeping mum. The agent declined to be named but said he knew of at least five others who were doing the same thing for the same illegal moneylender.
When contacted, one of the other agents said he had 'no choice' as he owed the loan shark about $70,000.
They each sold on average two flats for the loan shark in the past year.
Property analysts and real estate agencies said that while collusion with moneylenders to get loans for home buyers was rampant about two years ago, these new 'collaborations' probably involved a few small groups of rogue agents.
PropNex chief executive Mohamed Ismail said agents are told of rules and regulations during training sessions.
He added: '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.'
esoh@sph.com.sg
The Straits Times
Feb 7, 2012
Loan sharks' new tactic: Owe money? Sell house, hand over COV
Illegal moneylenders get own agents - some, debtors themselves - to sell victims' homes
By Elizabeth Soh
Loan sharks have found a new way to get some debtors to pay up: demand that they sell their Housing Board flats and hand over the cash over valuation (COV) quantum.
Illegal moneylenders recruit real estate agents, some of whom are debtors themselves, to carry out the sales. In return, the agents get commissions of up to 8 per cent, compared with the usual 1 per cent to 5 per cent.
One debtor, engineer David Liew, 37, was involved in such a sale. He owed about $200,000, which he had borrowed to settle gambling debts in 2008.
After three years of struggling to pay off only the interest and being harassed by loan sharks, he decided to sell his four-room HDB flat in Bedok - which cost him $350,000 five years ago.
He told the loan sharks of his intention. To his shock, they sent a property agent to handle the sale. When he would not hand over the keys, they removed his gate so they could hold viewings for buyers. The agent found a buyer who paid $500,000, including a COV of $50,000.
The COV is what buyers pay above the valuation of the flat, as determined by an HDB-approved valuer.
Mr Liew 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.'
He had bought the build-to-order flat with his wife. They are now estranged.
Mr Liew had been harassed by loan sharks for defaulting on his debt within a year of moving into the flat. Once, three neighbouring families were locked in their homes after loan sharks padlocked their gates.
'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.
He has no children, and now lives with his parents in a rental flat. He took on another job selling insurance and is paying the loan sharks about $3,000 a month.
He said he did not lodge a complaint against the agent or moneylenders as he was threatened with violence when he objected to them letting prospective buyers view his flat.
Like Mr Liew, housewife Xie Xin Ni, 38, was also told by loan sharks that she and her husband would have to sell their five-room flat in Punggol through an agent appointed by them. 'My husband initially refused but I just want to pay them back so they will leave us alone. Even if I lose money in the transaction, I just want peace.'
The mother of two said they expect to sell their flat for about $520,000, including a COV of $30,000, which they will hand over to the real estate agent immediately to offset part of a $50,000 debt incurred two years ago to pay medical bills.
Under new rules, all agents must be registered with the Council for Estate Agencies for HDB transactions. Its spokesman said it can act only if it gets complaints, but so far, it has not had any.
'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,' he said. Those who breach the code can face disciplinary action. 'If found guilty, the salesman may be fined up to $75,000 or have his registration suspended or revoked.'
The Straits Times contacted Mr Liew's agent and found that he was helping to sell at least four other debtor-owned units, and collecting an 8 per cent commission on each property. The high commission, it is understood, is given in exchange for keeping mum. The agent declined to be named but said he knew of at least five others who were doing the same thing for the same illegal moneylender.
When contacted, one of the other agents said he had 'no choice' as he owed the loan shark about $70,000.
They each sold on average two flats for the loan shark in the past year.
Property analysts and real estate agencies said that while collusion with moneylenders to get loans for home buyers was rampant about two years ago, these new 'collaborations' probably involved a few small groups of rogue agents.
PropNex chief executive Mohamed Ismail said agents are told of rules and regulations during training sessions.
He added: '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.'
esoh@sph.com.sg
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