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Scandal, Corruption, and a "Click-Through"

By
Real Estate Agent with Integrity Real Estate
Those of you who follow my posts know that I've yet to employ the ill regarded "click-through" to lure trusting souls to a remote site.   While this particular post is intended only to divert your attention elsewhere, I don't intend to duplicate the tactic anytime soon.   Allow me to explain my motives.

OpEdNews.com is a site that I hadn't even heard of three weeks ago.  A couple of friends noticed that a writer for OpEdNews.com had quoted a number of my talking points from Title-opoly and brought the fact to my attention.  The edgy, political tone of the written word on the site immediately appealed to me.  I admire writers who stand their ground while tackling tough, timely issues.  After a bit of soul searching, the average post on OpEdNews is extraordinarily well written, I decided to create a profile and submit a post to the editor.

My first article on OpEdNews, The Cult of Plausible Deniability, isn't for everyone.  It's intended to spark contentious debate by dealing with the public policy implications of destabilized housing markets. 

The article could be summarized in this way:
The current housing crises was precipitated by a breakdown in protocol by licensed real estate professionals nationally.  The ostensible correction of housing markets as characterized by pundits isn't a correction at all.  It's the collapse of an enormous business model that once served as the foundation of the social institution that is homeownership. Industry wide complacency is the crux of the problem.

Click here to read: The Cult of Plausible Deniability
.   Your thoughts are appreciated.

Comments (26)

Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Lenn

I have to remember to be careful with phraseology when you're around.  I was referring to licensed professionals in the broad connotation of every player in a transaction.  Emails from readers today pointed to my treatment of the title industry as being unfair.  The public at large wants to blame the mortgage industry.  I'm now more interested in exploring the social implications of the housing crises rather than assessing culpability. 

This truly is a fascinating time to observe the real estate industry and the changes taking place.

I'm of the opinion that class action litigators are going to attack everyone and anyone with a license who collected a fee.

Have a great New Year! 

Jan 02, 2008 12:07 PM
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO

Ah but here in Cleveland, Ed, we had people who were supposedly Title reps contacting people directly offering them a title to a home plus a several thousand dollar bonus if they would allow their name on a title while 'peeps' resided in the home, building up their credit for home purchase purposes and then of course they would own the home in two years of good payments and the first person contacted would simply transfer title.

Yeah right. One lady (who has since declared personal bankruptcy) was in fact a Title Co employee -- a title company I had never heard of.

The scam can be run in many ways.

Jan 02, 2008 12:12 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I'm always around.

Intended or not, the introduction to your article singles out "licensed real estate professionals" as the culprits in the mortgage mess. 

Unless I'm mistaken, real estate professionals means licensed real estate salespersons or brokers.  OTOH, loan officers, originators, lenders, etc, would take offense at the use of that term to describe their industry, the mortgage industry.  Further, title services representatives are generally, to my knowledge an arm of the insurance industry and/or legal profession.  Non of them are members of the real estate profession. 

In the end, the decision of whom to blame may fall to the question of what entity or entities had the authority to prevent the mortgage abuses that led to the original mortgage mess and now financial industry mess.  In reality, the entities with the least authority is the lowly real estate licensee.  We have none except that of the authority for supervision by the broker over the individual licensees.  We have absolutely no authority over the application or approval of mortgage loans.

We do have authority over our own actions and if abuse is observed, an agent should give that information to their buyer client, whch many do, to no avail.  Many do not because they don't understand abuse when they observe it. 

Fact is, they didn't teach that in real estate school.

Jan 02, 2008 12:25 PM
John Lockwood
Lockwood Real Estate - Sacramento, CA
That's OK -- don't mind me, Ed.  I was just touchy because I do it all the time.   :)
Jan 02, 2008 12:58 PM
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

Ed,

The title industry, once noted for its technical expertise in the conveyancing process, has become the 'trap door' for unscrupulous and overly ambitious types to find a 'point of sale' at which to capture 'regulated' but questionably ethical fees from 'improperly steered' consumers...there's plenty of blame to go around...focus today, I believe should be upon fixing the business models of the various 'industry professionals' you talk about rather than wasting valuable resources on trying to establish culpability! JMHO, Thanks,   Fran

Jan 02, 2008 01:06 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Ed, Congrats on another great post.  There are several ways in which agents and brokers can be held  responsible for the mortgage woes many buyers are up against.

1. For those who ended up up-side down I wonder how many had real estate agents trying to nudge up the appraisal to push the deal through.  I saw way to much of that my first six months when the market was still rocking.

2. Agents who turned  a blind eye to terrible mortgage instruments that were an accident waiting to happen. When your buyer comes in with an interest rate of 1.5% -SOMETHING IS WRONG. This isn't rocket science - this is common sense. You don't need to be a mortgage guru to tell your client that this does not compute.  Those who didn't know better on some of these instruments are not sharp enough to be an agent handling such a large asset...which brings me to #3.

3. Brokers who brought in anyone with a pulse and a license in the hopes of getting one or two deals with high splits.  

I'm not suggesting that these were primary causes.  To say so, imbues us with far too much power.  

Jan 02, 2008 08:06 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Hi Lenn

I've thought about your comment at length and simply can't agree.  During presentations, I often use the term "real estate professionals" to refer to all licensed professionals.  So far, the practice hasn't lead to any confusion or disagreement even with audiences comprised of mortgage professionals.

I think it's important to recognize that a successful real estate closing requires the contribution of an array of different disciplines.  The real estate agent is just one of many "real estate professionals" that participate in protecting the interests of a mutual client.

One of my hopes is to change the mistaken impression that title professionals are a part of the insurance industry.  A title policy is not an insurance product.  It's by definition an indemnity contract that makes specific reference to the intricacies of the pending  transaction.  Title agents do far more than guaranty litigation free homeownership.  They also insure the veracity of the overall transaction for the benefit of the lender.  The insured closing letter (ICL) given to every lender prior to every dispersement poses greater risk factors to the title agent than a title policy ever will.  Most claims arise under the auspices of the ICL.

The fact that insurance commissioners have jurisdiction over the title industry in most states is confusing to me and many others.  It's a tradition steeped in something other than reality or common sense.  In many states where title agents agents are licensed, which is not every state, the test given is similar to that given to bail bondsmen.  The title industry is horribly misunderstood and poorly represented by its national trade association.
Jan 02, 2008 08:55 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

John

Not to worry, I didn't even know what HTML stood for.  I'm really not into technology at all.  There's been some controversy on this site when click throughs are used to lure readers to a writers outside blog.  To me, it's all the same at the end of the day.

Jan 02, 2008 08:58 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Fran

Assessing culpability isn't a waste of time, it's a necessary step to properly educating regulators and public officials as to the causation factors of the pending devastation.  The title industry will take the fall for the housing crises if the truth isn't fully brought to light.

Your industry's lobbying efforts are by far the weakest among real estate trade associations, at least as it relates to the average title company.  If the blame game isn't played out fully and culpability placed where it belongs, small to mid-sized title companies will suffer the brunt of governmental intrusion.  That's my fear.

Think about it, the focus is always directed to the title agent as the final stop in a transaction.  That focus needs to be properly redirected.

It's fine to talk about the new business model as it emerges, I just want to make sure that companies like yours play a functional role within it.

As it stands at this moment, my friend, I don't believe that the independent title agent has a chance in hell of surviving this mess.   Title insurers will portray themselves as the collective messiah of sorts and state regulators will welcome the opportunity to deal with a limited number of players.  Unfortunately, it makes sense from a regulatory auditing perspective.

The blame game is a part of a critical educational process that needs to take place quickly.

I wish that I could agree with the last part of your comment, but I can't. 

BTW, Happy New Year!

Jan 02, 2008 09:22 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Hi Ruthmarie

Thanks for the thoughtful comment and Happy New Year!

You and I seem to be on the same page.  The specifics that you mention are really symptoms of a much larger issue.  I believe that we're witnessing the collapse of a monstrous business model that's no longer relative or practical.  The effects are devastating because the model served as the mantle of the social institution that is homeownership.

It's my opinion that the new model and new players have begun to emerge on the horizon, but we're not ready to accept the reality of radical changes in the real estate industry.   

Jan 02, 2008 09:44 PM
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Ed.

I'm sure you know my thoughts on this so I won't say much other than to you to have a Happy and prosperous 2008 and I appreciate your sharing in the past.

Jan 02, 2008 10:36 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Neal

Happy New Year! 

Jan 02, 2008 10:59 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I would suggest that when you address a crowd of representatives of the mortgage industry, if you refer to them as "real estate professionals", the folks in the audience believe you're speaking about someone else.  Or, they are reading the program brochure, or text messaging someone.  Or, they are very polite.

Words have meaning and I would predict that if you take a poll of mortgage professionals, title professionals or lawyers, they would not refer to themselves as "real estate professionals" unless, of course, within the context of an address, it was made clear that the term was all inclusive of everyone who contributes to the home buying process from search to settlement. 

I have no way of knowing what others think when they read your opening paragraph, the one on ActiveRain above.  However, I do know what I thought when I read the introduction and then "clicked through".  I thought that you were placing the responsibility for the mortgage mess squarely on the shoulders of the real estate licensee. 

Real estate licensees refer to themselves as "real estate professionals".  No one else does. 

Mortgage people, title people and lawyers involved in the industry do not. 

Nontheless, it was a very interesting read.  Worth a click through.

Jan 02, 2008 11:04 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Lenn

Thanks!  I'm definitely not blaming any one group.  I'm trying to show that the problems are very deeply rooted and probably impossible to sort out in any meaningful way. 

Jan 02, 2008 11:11 PM
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

Ed,

I see your point...and I'm glad we don't agree...there are more than a few ways to solve a problem, and hearing divergent viewpoints adds to the dialog!!! I know you mean well and I think I know your motives, and both are admirable! Stay in touch! Thanks,   Fran

Jan 03, 2008 01:05 AM
Fran Gatti
RE/MAX Integrity - Medford, OR
Managing Principal Broker - RE/MAX Integrity

Ed,

I have to agree with Lenn that your statement, "real estate professionals" means licsensed salespersons and brokers and in that case, your article sounds like abuse is coming solely from those writing the contract.  Another comment pointed out that todays buyer's are commonly coming to us (real estate professionals) pre-approved and pre-qualified. 

Now that I know you are using the term "real estate professionals" to encompass everyone involved with a real estate transaction, your article makes more sense to me.

 

Jan 03, 2008 05:30 AM
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire

Hi Ed...I'm afraid my first impression was also that you were pointing the finger at we Realtors and/or Brokers. Perhaps that was not your intention....but you know what they say about perception!

Taken in the intended context...not only was the post a great "overview" of what happened...it also made it frighteningly clear how difficult it will be to sort it all out!

Jan 03, 2008 02:00 PM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Lenn, Fran Gaspari, Fran Gatti, and Joan

Thanks for the constructive input.  I've revisited the article and will admit that I still perceive things differently than all of you.  I do, however, acknowledge that the disconnect is on my side since so many of you are in agreement with each other.   I guess it's all about growth being a process, not an end.

Thanks again, your guidance is greatly appreciated.

Ed Ryb 

Jan 03, 2008 09:48 PM
Anonymous
Diane Cipa
I'm with you, Ed, on the semantics.  WE are all part of the collective real estate industry.  This has been my livelihood for over 30 years.  Whether I was engaged in sales, lending or title, it's always been real estate.
Jan 07, 2008 04:35 AM
#25
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263

John I agree with you that there is a huuuge ongoing problem in this industry.  I'm sorry to the realtors and others who feel defensive but as an appraiser who was constantly fighting off mortgage brokers and realtors alike who tried to push me around for value, I agree that this problem is not an isolated one-it is widespread.  

I know this won't make me popular but I feel that sometimes in the interest of "doing business" and making "it happen" real estate professionals have cut corners and even committed fraud and then rationalized it.  If "everyone else is doing it" it becomes the standard operating procedure and it doesn't even seem wrong anymore. 

I suspect (and hope) that Active Rain has a higher caliber of real estate professionals blogging and commenting so John's opinion may not apply to anyone here.  Maybe he is preaching to the choir however that doesn't change the fact that some serious damage has been done to this country by people who only cared about their own bottom line.  

A very well written article John.  It expressed a lot of how I've been feeling.  Keep writing!!!! 

Jan 07, 2008 08:14 AM