I knew it wouldn't be long but government is finally coming to the rescue!!! We'll before you get too excited, check out the new proposal that Freddie Mac is touting. New Proposal
My state in particular has been hit with every known investment scam possible. But this proposal is another one of these "feel good we're doing something" campaigns. The problem is fraud has occurred throughout the country in unprecedented levels, and often we do not find out until long after its perpetrated that there is even a problem.
This new proposal makes it sound if education will end fraud. The problem is that education alone hasn't ended any crisis. I remember Nancy Reagan's, "Just say No" campaign. Did it work, sure it did to a very limited degree. There was a slight reduction during the 80's and 90's in adolescent drug use. How many millions did it cost tax payers to roll out this campaign? I remember while serving a church mission in 1989, that the youth in North Philadelphia were very unaware of the "just say no" campaign, and drug use was sky high among minority adolescents. But Rudy Giuliana puts more police officers on the street, and gets aggressive in sentencing these drug purveyors, and bingo crime rates drop.
This new campaign sounds wonderful on face value, but does relatively nothing in terms of cleaning up real estate fraud. The real solutions are much more difficult. The market has some bearing to how successful these fraud purveyors are in spinning their lies. Mortgage rates and the sudden boom in values had allot to do with the current problem. The banks themselves hold allot of responsibility with lax underwriting and ridiculous loan programs. Then you have mortgage and real estate professionals who sell out their principals for more commissions. Then you have consumers that begin to believe that getting rich quick isn't a dream, but an entitlement.
So how do you rid the world of fraud or drugs. It's called enforcement, and you change the environment in which these frauds can be perpetrated. The real question is why government agencies, both local and federal, have had a blind eye to these frauds over the past 10 years. The problem with the government is it is often reactive instead of proactive, and unfortunately criminals are proactive and are long gone when the government finally decides to clean up the mess.
So how do we become more proactive. It's called licensing at this point. If you limit access you create environments that make it hard to thrive as a criminal. But licensing needs to address all players, not just appraisers, or loan officers, or real estate agents. One of the big problems in Utah is that we've put together some fairly progressive state licensing. But there are seminar groups that preach investment scams that simply do not get licensed, but the state until this year was hamstrung in terms of going after these company's. Now this is changing as well, and these investment schemes are being shut down left and right.
The mayor of salt lake county is a nice guy, but Freddie Mac and he are naive to think that this will solve the problem.