In likely its only positive side effect, the current downturn in the economy has caused a downturn in fraudulent activity, say state regulators who watchdog Utah's financial institutions.
"It makes sense," said Deanna Sabey, director of the state Division of Real Estate.
"With more activity, more people are trying to get away with things in a market where greed rules, as opposed to a market that has pulled back."
"There's a lot less misbehaving than there has been," said Brigg Lewis, a St. George mortgage loan broker who sits on the board that votes on enforcement actions brought by Sabey's investigators.
"A lot of the unscrupulous people got out in the last few years as we've been cracking down."
Maralee Jensen, vice chairwoman of the Residential Mortgage Regulatory Commission and a mortgage loan officer from Spanish Fork, said a lot of it has to do with the economy.
"A lot ride the tide when it's good, make the money and get out, which absolutely gives rise to more complaints," she said.
"We like to think those people are gone."
The numbers are telling.
Sabey's division in the Utah Department of Commerce employs 10 investigators and six licensing specialists to ride herd on the state's roughly 35,000 real estate agents and brokers, mortgage loan officers and brokers and real estate appraisers.
As real estate markets were peaking toward the end of 2007, Sabey said, complaints and enforcement actions were basically mirroring those trends.
The division received 675 complaints in the real estate section in fiscal 2008, plus 401 in the mortgage lending realm. That compares to 440 and 278 , respectively, in fiscal 2009.
In 2008, the division kicked 104 mortgage loan writers out of the business, revoking their licenses for five years.
Only 38 were similarly handled last year.
Overall enforcement actions by the division numbered 144 in fiscal 2007, ballooned to 402 in fiscal 2008, then settled to 356 in fiscal 2009, many of those from activity and investigations begun in 2008.
Fines in 2008 topped $418,000, more than twice 2009's total, including two people fined $80,000 and $77,500 for fraud and another $56,000 for theft.
"Fraudsters look for ways to con victims when times are both good and bad," Sabey said.
"When the economy was strong, most complaints focused on mortgage and loan fraud. Now that the economy has slowed, bad actors are looking at foreclosure and short sales fraud to take advantage of consumers ...
"These bad actors know how to use modern technology to accomplish their fraud schemes. It is much easier now to create realistic-looking documents that appear to be originals."
Sabey said officials are also seeing more real estate and mortgage loan professionals getting out of the business.
The division was approaching 47,000 licensees in 2007, a number that has settled back to 35,000 to date.
More than 5,600 new real estate types signed up in 2007, compared with 2,200 in 2009.
The numbers for the mortgage loan industry were more than 3,600 in 2007 compared with 1,000 in 2009.
All those numbers detail activity outside the domain of banks and credit unions, which are governed by the state Department of Financial Institutions and federal agencies.
Bank regulators don't license individuals, but rather charter and examine institutions, of which there are several hundred in Utah.
Most disciplinary actions on about 80 complaints a month remain confidential, officials said.
"It's a fair statement -- complaints have been down with the current downturn," said Michael Jones, DFI's chief examiner who supervises the department's 37 bank examiners.
In today's economy, he said, DFI's institutions are dealing with solvency issues, not fraud or mismanagement. "They're working through their issues."
Following are examples of enforcement actions by Sabey's division:
* After a lengthy investigation in 2009, Annagay Shorten, of South Ogden, had her mortgage broker license revoked and was fined $50,000 on Jan. 6 for multiple violations involving fees and documents over a long period. Further detail will not be available publicly until the division's April 2010 quarterly newsletter is published.
* November 2009: The license was revoked for Layton's E-Money Solutions Mortgage. Jeanie Budge, as agent for the entity, agreed to the revocation and a $25,000 fine and agreed not to sell the entity. The company closed FHA loans without being FHA approved and misled borrowers and lenders into thinking the loans were being handled by a loan officer with another company.
* June 2008: Benjamin Gale, a Provo real estate agent, had his license revoked and was fined $80,0000 for falsifying transaction details and forging documents, as well as forging the signatures of both property sellers and buyers. His mortgage lender license was also revoked.
* October 2008: Another Provo real estate agent, Reed Smith, had his license revoked and was fined $77,500 for 31 acts of misconduct. He used false listing information to artificially inflate the value of homes in an exclusive development area.
* November 2008: Magna mortgage loan officer Cofrey Thornton had her license revoked and was fined $50,000. She submitted fictitious loan documents for a nonexistent person for a home purchase, creating a better credit rating than her own. She then occupied the home she couldn't have purchased on her own credit.
* August 2008: A Colorado real estate agent, Donald Sanders II, had his Utah license revoked over a local transaction. He was fined $10,000 and ordered to "never again apply to the division for a real estate license" after he signed as both the buyer and seller on a real estate contract.
The subject of a revocation can apply for reinstatement after five years.
Summaries of disciplinary actions are the Division of Real Estate's Web site at www.realestate.utah.gov.
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