The Mortgage Fraud Solution Our Legislature Doesn’t Want
Dave Fletcher put up a couple of great posts today on the topic of mortgage fraud. This is a growing problem in Utah that I have seen happen far more often than it should be happening in our state. The most immediately beneficial solution to problems with mortgage fraud would be for Utah to become a full-disclosure state on real estate transactions. (As a side note this change would also greatly help with solving many of the property tax assessment inequities that plague our state.)
Currently when property changes hands in Utah there is no requirement that any of the terms of the sale be disclosed. Any sales that aren’t done through a Realtor, and therefore are never entered into the multiple listing service Realtors use as a database for listings and sales; remain a mystery to everyone other than the parties in the transactions. Utah’s non-disclosure status makes us a prime target for bad guys who want to perpetrate scams or money laundering. It is just so much easier to get away with illegal activity in our state than it is in most others.
Getting good anti-fraud legislation through our legislature has been incredibly difficult. I argue that the main reason for this difficulty is that a large number of our legislators are either Realtors or they take lots of campaign money from the Utah Board of Realtors. This powerful business interest benefits greatly from its monopoly on market data and they are loathe to allow any changes to the way the real estate business is regulated in Utah.
Here is a presentation put together a couple years ago by the FBI and the Division of Real Estate for our legislature encouraging them to make the change I argue for in this post along with others to bring an end to mortgage fraud in Utah (thanks again to Mr. Fletcher for providing the link). Here’s hoping the legislature begins to give this problem the attention it deserves.
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Bingo, Bingo, BINGO!!
This would help a RAFT of issues, along with perpetrations of fraud. The hurdles are enormous though… for the reasons you state. It seems that those legislators who AREN’T realtors are in the pockets of big developers.
Comment by That One Guy — October 29, 2007 @ 11:13 am
Jeremy,
I’m not up on mortgage fraud as an issue, but who get hurt by these schemes? I can only assume the home buyers are getting scammed since I have very little sympathy for banks that get scammed–they are parties who should have a lot of knowledge about the market and there seems to be little reason they can’t police themselves.
I can only assume we are trying to protect the buyer, but the 10 Ways to Avoid Mortgage Fraud (linked on Dave’s site) are very common sense.
Maybe we should work on having people rely on common sense than believing in someone else’s word. From the little I have read, the only thing that needs to be changed is common sense. What am I missing?
By the way, it seems to me that one of Utah’s biggest problems is testimony meetings. Here’s one way to look at testimony meetings–we have a monthly ritual where our faith is strengthened by listening to people makes claims about the Truth. As a people I think we can become overly disposed to believe someone just because they say, “trust me” or “I know this works” or “expert may say X, but I know Y. I tried Y and it is amazing” etc. This is especially true if the scammer is a fellow Mormon.
Comment by Daniel — October 30, 2007 @ 12:34 pm
Jer,
I like your point… “I argue that the main reason for this difficulty is that a large number of our legislators are either Realtors or they take lots of campaign money from the Utah Board of Realtors.” I heard on the radio the other morning (x96’s Radio from Hell, so take it for what it is worth)that theUtah Board of Realtors is the #1 leader for political campain funding in Utah. If it is true, there is the answer to why this will not change.
In my oppinion it is the same reason that the Great US of A can re-invent things month after month to better our lives but in the 70 plus years we have had automobiles our means of fueling those engines has not changed. The people that have the money can afford to sway the masses!
Comment by Dignin — November 6, 2007 @ 12:02 pm
I’ve mostly read your blog for the education opinions, but I had throw in a big “Right on!” I’ve only become aware of Utah’s strange stance on disclosure in the last 18 months as we bought our first house and I read Freakonomics. The secrecy hurts everyone, even the sellers–they have to buy again afterwards. I hadn’t thought about it enabling all of the scammers and fraud (Dave Fox…”equity millers”), but that now seems obvious too. Great post. The money talks loudly on a lot of issues it seems…
Comment by UtahTeacher — November 9, 2007 @ 1:46 am
UtahTeacher,
First of all…thanks for being a teacher! Second, thanks for your comment. I was a little bummed that this post didn’t receive that much attention since this issue is a really big deal for our state. Mortgage fraud and money laundering are rampant here and it is all because our legislature is a wholly-owned subsidiary of the Utah Board of Realtors.
Comment by Jeremy Manning — November 9, 2007 @ 10:36 am