Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-17
REALTY BUSINESS
LITTLE CRITICIZED
Secretary Petty of Washing.
ton Board BIames Evils
on Few.
Continued From First Page.)

development in the realty investigation
as follows: THE real estate brokerage
business as such has been unjustly con-
nected with much of the notoriety and
publicity given to certain failures and
disclosures during the past two years,
most Of which occurred In the mortgage
loan field. Looking back over the past
two years, we find that throughout the
Investigations by Congressional Com
mittee, the Department of Justice and
the grand jury and subsequent indict-
ments and criminal trials, there has
been total Of seven cases which caused
the various difficulties publicly discussed.
"A study of these seven cases discloSeS
/ that four concerned financial institu-
tions dealing in mortgage investments
/ and more commonly considered invest
ment bankers. Two of these were not
| located in Washington and the other
I two, incidentally, have in the main
been conducting their business on a
national basis. The other cases con-
cerned a finance corporation which can
/ be classed as a purely speculative ven-
ture from its very inception; the ac-
tivities of a discredited lot promoter
who was expelled from membership in
the Seattle Real Estate Board and whose
license to operate was revoked by the
State of Washington, which latter action
automatically prevented his operation
in most Of the States having real estate
license laws; and, finally, the acts of a
real estate broker who. in selling certain
homes, permitted settlements to be
made without exhibiting title examina-
lions with the result that the existence
of certain ground trusts was not dis
closed.
No Actual Loss.
This last case referred to is the only
I one that can properly be considered as
involving the acts of a real estate
broker as that term is usually referred
to, and, incidentally, 1t has been publicly
stated that in this particular case none
of the home purchasers sustained any
actual loss.
! while this board and all honorable,
! thinking people unite in condemning
| the fundamentally wrong practices
which were the causes Of the unfor-
| tunate situations and while We regret
the losses which perhaps in many in
stances will be serious, at the same time
we realize that erroneous conceptions.
prejudice, ignorance and suspicion
which do not reflect either accuracy
or truth have caused confusion in the
public mind which has unfairly and
unjustly associated the real estate
brokerage business with the happenings
which have occurred in the past year
or so.
grave apprehension precipitated during
the period Of discussion Of these I'M
fortunate instances several items Of real
estate legislation were introduced in
Congress. some of which, however.
would not have reached any Of the
cases involved. The real estate brokers'
license law which this board has in
dorsed for eight years would have
definitely prevented or at least in
operations of the lot promoter and the
one real estate broker enumerated
among the cases.
Mortgage Foreclosure Procedure.
ut is also significant that during
the past two years discussion Of these
matters there has not been a single in
stance involving the mortgage fore
! closure procedure of the District Of Co.
lumbia and neither has there been a
single case publicly presented to the
Senate Investigating Committee which
questioned the propriety or fairness of
our local mortgage foreclosure proce-
dure. This fact alone justifies the posi-
ton taken by the Real Estate Board as
we'll as the major business and profess
sional organizations of Washington that
there is no need in Washington for any
drastic legislation dealing with the fore
closure of mortgages.
Our Legislative Committee, with
broad viewpoint and holding paramount
in mind the best interests Of the City
OF Washington, Is conscientiously en-
deavoring to develop helpful suggestions
for legislation designed to make as o
matter of law the methods and prac-
tees which for many years have been
followed by banks. building associations,
trust companies and legitimate real es-
cages. together with such other con-
structive suggestions which its study
may reveal as desirable in furthering
protection to the public.
Reviewing failures in the mortgage
loan field have noted that all of the
prominent failures have been firms op-
Grating on national basis There has
not come to my notice any failure Of an
important mortgage brokerage house
which confined its operation exclusively
to its home city. For this reason draw
the conclusion that, aside from GRIM
inality, the high commissions necessi-
tated in selling mortgage investments
nationally is one of the direct causes of
inflated loans which almost inevitably
bring to grief the houses issuing them.
Blame in Financial Field.
From this statement 1t will be seen
that most of the wrong doing and wrong
practice have occurred in the so-called
financial field. and in this connection
our board has consistently favored the
enactment OF fraud law to cover i'm
proper practices in the sale of securi-
ties. We do not object to a so-called
blue sky law so long as the require
ments necessary to qualify mortgages
are based on fair market value as dis
tinct from the value placed by the as
SCISSOR for taxation which for practical
purposes cannot be used as fair market
value and which in fact is not SO used
In any State having a blue sky law.
Our board will again press for the
enactment of the real estate brokers
license law which is designed to reach
the sharp practices of irresponsible and
untrustworthy real estate brokers. We
will also cooperate in the DEVELOPMENT
OF any legislation which offers assur-
ance of preventing recurrence Of the
unfortunate happenings in respect to
| the releasing of mortgages.
"All of our efforts and influence shall
be directed toward obtaining for the