Found this in a forum. Whether it is true or not, it is good to be aware of it and be on our guard:
I would like to share this with all of you with the hope that you would help disseminate to the public about a scam.
This involves HDB transactions and is also affecting private property transactions.
There is now a prevalence of loan brokers who work with lawyers and property agents to trick the purchasers into paying exorbitant legal fees and profiteering from it.
Many property agents now introduce housing loans to their clients through loan brokers who pay the agents a commission for every successful referral. The loan broker will impose a condition that the buyer must use a particular law firm to act in the purchase. These lawyers that the loan brokers recommend have a tie up with them to pay the loan broker a commission
for the referral.
This is how it works;- the lawyers will charge between $2500 to $3000 for acting in the purchase of a HDB flat whereas the normal rate charged by other lawyers is about $1500 to $2000. The extra fees charged by the lawyers are paid to the loan broker as a commission. The loan brokers are paid between $500 to a $1000 by the lawyers and they in turn pay the sum of $300 to $500 to the property agent as commission. There are some loan brokers that can do up to 600 cases a month. This means that they can make about $200,000 a month by milking the HDB heartlanders.
The loan broker when asked will always say that the commission that they pay to the agents are from the banks when actually, they come out of the pockets of the lawyers, which is paid by the unknowing purchaser. What the
banks pay are the referral fee that they would anyway pay to the agents directly for a loan referral without going through a loan broker. A lot of loan brokers have suddenly sprung up in the last 2 years to catch on to this, they basically make a lot of money without doing anything.
This has been going on for about 2 years and thousands of innocent HDB purchasers are being ripped off. Lots of people know about this but nothing has been done yet. The authorities have not done anything about this because the lawyers and loan brokers cleverly hide this through innovative financial arrangements. It is hard to prove as the lawyers pay these commissions to the loan brokers through cash.
The only way to break this scam is for the press to publicise how it works so that the heartlanders are educated and protected from these greedy lawyers and loan brokers and their property agents. The lawyers are profiteering from this even though it is illegal for them to pay commissions.
The time has come for this scam to be busted wide open, All of you journalist and net users must participate by telling the whole Singapore about how this scam works before this becomes a national joke.