Housing Loan: A boom and bust

Now with the Rs.40,000 crores housing loan scam involving a leading housing finance company and 12 other private-public housing finance company, India seeks an explanation from the agencies. Loans are granted to the builders (most cases large builders) by flaunting the norms set by the RBI and National Housing Banks. But we all know these are routine processes, which clearly requires a hand shake between the builders and loan company. In this case a huge chunk of loan meant for high and middle income group (now with property prices this definition needs re look!) was diverted to the large corporates. These are known names and should you all care to go through the business section of news paper you would be able to understand who are these fallen empires.

The current property prices sky rockets beyond imagination of the salaried class and calculations of little smart house buyers. In most of the cases getting retail housing loan has become tricky and housing finance companies arbitarily chooses to allocate the finances to the projects it likes most (local managers recommends) all settled through the greedy builders and property brokers. Within no time they would advice from where you can get the amount which is always cooked up for the banks. In all fake documents given by the builders, reviewed by housing banks and approved by the registrars which facilitates the current boom in the market.

Now with such a kind funding by the housing banks (though a cheap rate given by National housing Bank) to the builders and their project through the poor house buyers in middle, crushes the finance load on the end users. It easily takes burden off the builders to avail the funding from other sources. We all know who is supposed to be financing the property markets. Not the genuine investors!!

This time a bust in the market would be in place if the relevant investigation targets the financial institutions and real estate firms. May be a call for regulator would become more sound for the sector where self regulation has failed and non existent. Much to the waiting reforms required to root out the malice of speculation in the trade which is throwing the house buyers out of the property markets. Suddenly the real estate firms and finance companies are been liquidated by these buyers who could not wait longer for their dream home and are caught in the web laid by the smart players in housing market. Till the bust happens within next few months, buyers would be advised to take extra caution in dealing in housing market.