QUESTION: Sir John, when banks impose SALES QUOTA to their employees in their department who sell their foreclosed properties, will it, in principle, be interpreted that the bank primarily derives income from foreclosed properties? Should banks be required to be licensed brokers?
ANSWER: NO. As I said, banks derive income from interests of selling loans. Banks are not in the primary business of profiteering from selling foreclosure properties. This is the principle and reason why banks, as an entity, are not regulated under RA 9646. The bank departments who employ people who sell foreclosed properties, are, in my opinion, also not regulated by the RA 9646. Banks and their foreclosed properties disposition departments are exempted from the RA 9646 per Section 28 B/C.
FOLLOW-UP QUESTION: Let me just clarify what I mean by sales quota. Every year, acquired assets group have annual sales quotas to meet in terms of gross sales. The quota is imposed on their department not on accredited brokers. Now, they also have annual income quotas to meet aside from gross sales quota. My question is whether banks aren't in violation in deriving income from their foreclosed properties.
ANSWER: When banks hire and employ people to sell their foreclosed properties, it is just natural that there should be some kind of a quota to measure the performance of their employees. When they impose quota on their department and employees, they are simply wanting to get a return of investment for the salaries they paid to you. The bank, in imposing a sales quota to their department employees, cannot be misconstrued as deriving income from foreclosed properties.
Now, how can I say that banks don't derive income from foreclosed properties? The answer is because they are not allowed to use the foreclosed properties for income generating activities. They are not allowed to lease it out.
It is financially disadvantageous on the part of the bank when those assets sit idle in their inventory of foreclosed properties, that is why they have departments with employees whose primary task is to sell and dispose those properties.