Statistics donâ€™t lieJoe Cornostate economy, bank liquidation sales, watch group
My wife inspired this article when we entertained some
out-of-state guests. Some are from California, some from West
Virginia and some from Kentucky. My wife reminded me of a statement
made by one of the Californians. The statement was: "Your state
economy is doing better because I do not see the bank liquidation
sales being done on projects as in California."
All of the guests know who I am and what I do for a living,
because most have me train their personnel, so the mortgage
industry demise is always a topic in any group that I venture into.
The remark sparked a memory from when I wrote an article about the
falsehood that Utah was first or second, depending on the year, in
the nation for fraud. I wrote that Utah was not truly worse in
people performing fraudulent acts, but that Utah was better at
reporting and prosecuting fraud than other states and that the
statistics were skewed. With time, statistics do not lie. We only
need to look at the larger impact of foreclosures and liquidation
sales being realized in other states for the true evidence in
support of my statement.
It was interesting that only a few states printed my article
(Utah being one of them), because the industry was not sick in May
2006. Were we healthy? Maybe the statistics were being skewed due
to lack of management, enforcement and prosecution of people
performing fraudulent acts.
Perhaps we could have "kept on going" a little longer if the
major players in the industry performed a more compassionate and
gradual change in lending policy rather than pulling the rug from
under most independent brokers. Whatever the motivation for the
change of industry, it is the time-tested evidence that truly
represents the real statistics. I have always stated that greed
motivates fraud, and stricter penalties and punishments need to be
implemented and enforced. As long as each state is performing the
investigations and prosecutions, the figures are going to be
skewed. I am not suggesting that a larger federal agency take on
such duties; this would make things even worse.
In the mist of federal recommendations (the U.S. Department of
Housing and Urban Development is attempting some foolish effort to
"force the truth" through disclosure), fraud will continue to
create opportunities for people.
What I am recommending is the various local organizationscounty
charters of real estate agents or mortgage lenderscreate and
implement their own task force to assist the states in discovering
and prosecuting such. Local businesses know when something is not
right. Local groups know the people involved and have past
knowledge and experience of individuals involved.
I have a local Utah example where local banks, real estate
agents and lenders stayed away from a development that ultimately
was busted for fraud at many levels. False valuing was easily
detectable to locals in the area. It made major press coverage and
people are facing major time for their acts.
However, more impressive than the results of trail and prison
time is the distain and the preventative measures taken by the
local commerce years before the cases were filed. The local
economies are strong because the local commerce knew their
industry. This statistic is burning its truth in the amount of
locally-funded vs. national/international-funded projects impacting
It makes great sense to have local charters, chapters and groups
act as the watchful eye for their local economy, reporting up to
state officials to investigate and respond before an entire state
is in financial distress. All I can say to the states so heavily
impacted with the mortgage industry dastardly deeds is to look at
your state enforcement and investigation agencies and get them
working effectively, so that you can prevent future catastrophic
I am sure that every state had good, honest business people
contacting their state agencies on potential concerns of fraud.
However, greed is the main motivator, even at the state level. It
needs to be mandatory that all local contacts and requests are
investigated and the potential offenders be contacted so that they
know they are being checked on. Why not! The time of not alerting
the crook has proven statistically unsuccessful.
If potential offenders were notified that a watch group has
initiated a state investigation, two things will take place: The
true and honest operations will invite the inquiry and the cheaters
will go deeper to hide themselves. You know what they do. They
close the targeted operation down and open up with a new name and
location. However, the local watchdogs know the individuals and see
them at the movies, the store, the baseball games, etc.
Local watch groups could notify state agencies on such transfers
of interest and operations so that the individuals can be
monitored. This is not a McCarthy list. Wasn't that at the federal
level? Just another example of large agency failure where local
groups would know who supports their communities. Local groups care
about their local economies because they want their children and
grandchildren to live there.
We get the "we need to protect people from local bias and
prejudice" statement whenever larger agencies are taking control
over local commerce. Well, guess what? After decades of scourging
bias and prejudice out of the entire nation, state-by-state, hate
crimes have increased. Local watchdogs and reporting on gangs and
hate crimes will work much better than any federal or state
The local authorities know the individuals involved and are more
concerned locally. So there it is: An "atypical" article differing
from the wave of control freaks attempting to protect the American
I have seen states restrict or outlaw some lending practices,
only to have major industry players leave their state. If the
states would not have buckled under to the big box players, their
state could have been financially healthier today, but that is
another statistic that is being proven with time, as well.
Joe Corno is president of Utah-based We Be Consulting and
Seminars. He may be reached at (801) 836-2077 or e-mail firstname.lastname@example.org.