Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-18
NEW LAWS URGED
FOR REALTY DEALS.
Blaine Subcommittee Hits
Wciously at Alleged Prac-
tees in District.
Continued From First Page.)

the company had no title, land as the
result of various false representations -
In reference to the bill to license real
estate brokers and statesmen, a meas
| ure passed already by the Senate but
on which the House has not passed. the
committee declared that it believed a
law would give public protection that
is urgently needed, by substantially
| reducing fraud and imposition prac-
ticed on the people by INSCRIPTIONS
real estate operators and for the pro-
lection Of legitimate business and
| honest realtors
Procedure Here Blamed.
Discussing the mortgage foreclosure
situation, the committee declared that
the District is practically without laws
providing for an orderly regular form
| of procedure" for foreclosure of mort
cages or deeds of trust.
The length of notice, if any, given to
| mortgage debtor, the time, place.
| terms of sale and the compensation of
| trustee are all matters left to the
discretion of the trustee, mortgage or
"cestui que trust" the committee found.
No period of redemption from a fore
| closure sale is allowed the mortgagor
or grantor in deed of trust. under ex-
listing law, and once sale has taken
place because of a default no matter
how slight. and whether or not reason
| able notice has been given, the mort
gage debtor is foreclosed from any
recovery of the property. no matter
how substantial his equity may have
been, the committee stated
Check up on Foreclosures.
"a detailed examination of the rec
ords of $50 foreclosures showed that in
a very large number of instances the
property was purchased at the sale by
the person or firm making the loan, or
an agent or employe," he report con-
tinued. Such persons were in position
to profit by the foreclosure and charges
and subsequent resale. Instances were
found of repeated sales of foreclosures
OF the same property
The report quoted the following die
tum by the District Court of Appeals
, in a recent case:
There are few, If any, jurisdictions
where the matter of foreclosure is con-
Quoted in the summary way that pre-
walls in the District of Columbia, where,
under power of sale conferred in the
deed of trust, the trustees may, on short
published notice, sell the property mort
gagged without any right of redemption
in the mortgagor."
Counsel Is Quoted.
Nathan William MacChesney. gen.
eral counsel of the National Association
of Real Estate Boards, was quoted by
the committee as follows:
1T is my judgment, based on prac-
teal experience as lawyer handling
large number of foreclosures, that there
could be no real objection to a fair
notice being given prior to foreclosure
and to redemption period OF at least
80 days thereafter. Personally. would
not favor any bill that did not contain
some such provision"
The committee added: The present
laws of the District contain no protec-
| ton of any kind"
The bill as recommended by the
Blaine committee would provide for 25
days published notice before foreclos-
ure sale, for 15-day redemption period
after sale, for limitation of fees, for
notice to all interested parties and for
certain definite legal procedure pre-
tecting alike the rights and interests of
borrower and lender.
Provision Against Fraud.
Particular provision is made against
fraud and transportation by trustees,
the need for which has been demon
strated recently in the District of Co
lumbia," the report concluded.
The committee report also contained
a great volume OF its findings in its
investigation of the mortgage bond is
sues placed on Washington properties
by large and national bond concerns of
high reputation.
Criticism is voiced against what was
alleged to be excessive appraiSals in
these cases, and also in the case Of the
F. H. Smith Co.
Huge Security Sales.
Detailed investigation by the sub
committee" the report states, has de-
veloped the fact that within the past
six or seven years, there has been
issued or sold from the District of
Columbia so-called securities, largely
consisting of mortgage bonds or notes,
in an amount approximating 100000
600, a very considerable portion of
which are of very dubious value, and
in some cases utterly worthless.
I'm the sale of such Securities-many
of which have been distributed to wom-
en- as safe investments for insurance
and savings funds and to large class
of people who have no detailed knoWl-
edge of investment principles-there has
been gross Misrepresentation of values,
and concealment OF essential facts as
to value amounting to fraud, criminal
il character.
In this connection the committee
urged enactment of the blue sky COM
mission type of legislation. rather than
fraud" law holding that the for
mer. sponsored by Senator Blaine, would
more effectively reach fraudulent or
unsound dealings. The blue sky" bill
would set UP commission to pass upon
realty securities before they could be
offered Tor sale as we'll as providing for
the licensing and bonding of dealers in
mortgage bonds
Another Type of Bill.
The other type of securities bill pro-
yides for the licensing and bonding of
security dealers and gives the United
States attorney powers OF injunction to
stop the sale of security issues, lnVeS-
tigation and prosecution.
Details of the investigation of the
bond issues on the large Wardman-built
properties and the Mayfower Hotel, OBJ
tanned at the recent hearings, were IN
cluded in the report to the Senate
In connection with the mortgage is
sues on the Wardman properties, the
committee states:
-Four members of the Investment
Bankers Association of America, name
w. Halsey Stuart & Co., Inc; Hamble-
ton g. Co. A. B. Leach & Co., Inc, and
Rogers Caldwell & Co., Inc, together
with William r. Compton Co., spon-
sored and participated in the public Of
fering throughout the country of what
they designated on their circular to be
'Sli 600 600 first and refunding mort
cages, 6l2 per cent serial gold bonds,
of the Wardman Real Estate Proper
ties, Inc.
Deception Is Seen.
Even the printed description Of this
issue was deceptive. for. in reality, the
IL cI 1 6 AQ0