Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-18
Blaine Subcommittee Hits
ViciousIy at Alleged Prac-
tees in District.
GREATER SAFETY ASKED
FOR MORTGAGE HOLDER
Would License Brokers and Sales
men-"Blue Sky" Commission
Favored in Report.

Striking out viciously at what was
described as fraudulent and deceptive
practices in real estate transactions in
the District of Columbia, the Blaine
subcommittee of the Senate, concluding
nearly two years of Investigations CT
the local realty business, today laid
voluminous report before the Senate,
urging enactment of three types of
laws, held needed for public protection.
The committee urged enactment of
law to license and regulate real
estate brokers and salesman, creation
of blue sky" commission to regulate
issuance of realty securities prior to
sale; and revision of the mortgage
foreclosure system, setting up greater
protection for the mortgagor or Dor
rover.
Sees Years of Delay.
Reciting some of the matters revealed
by its Investigations, the committee re-
ported:
AFTER evidence of fraud has been
publicly offered there have been years
of delay, and in some cases no action
at all. in prosecuting offenders highly
placed.
The mortgage bill was reported to
the Senate with amendments designed
to prevent losses to investors in mort
gage notes through release of the mort
gage instrument without payment OF the
funds loaned by individual noteholders.
Regulation Of Releases.
This would provide that before
mortgage lien against property can
l. al 0v4j sy1
of the release of such mortgage must
be stamped cancelled and released" on
the mortgage instrument by the recorder
of deeds. It also would provide that
only trust companies banks and build
ing loan associations, acting under
supervision of the controller of currency.
may act as trustee under mortgage
loan transaction amounting to more
than $4,000.
investigations in a recent failure in
dicated that in number of cases the
borrowers under mortgage bond deals
paid off notes to the mortgage firm as
trustee, this being followed by the re-
lease of the mortgage instrument, but
it is alleged in some court actions, that
the note holders had not been paid on
by the investment concern which f1oated
the mortgage notes.
LaIRe LOSSCS kAArBCus
Reporting that the Investigating Com
mittee had found that very large and
probably excess number OF real estate
brokers and statesmen are operating In
the District without legal regulation or
supervision of any kind, the committee
declared:
1.-The inevitable result has been the
commission and preparation of vast
amount of fraud and criminality by I'M
scrupulous real estate operators, with
attendant losses, amounting to many
millions of dollars, to thousands OF per-
sons both within and without the Dis
trict of Columbia"
The report states that as result
of examination of the operations OF
the Joseph Shapiro Co., Inc, num-
Der of indictments were returned by a
grand Jury. "A number of persons who
had purchased property, without being
informed of the existence of certain
deeds of trust which were lien on the
houses, were substantially benefited by
the cancellation of such membranes" "
Other Operations Cited.
Referring to investigation of the OPP
erations of the Country Club Proper
ties Co., directed by Noel B. Clarke,
which sold undeveloped suburban house
sites under the "free-lunch, free-lec-
ture" promotion system, the committee
declared that hundreds of persons had
been induced to purchase lots to which
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