This is one of the biggest causes that contributed to the financial crisis. Where, the lack of ethical standards within the industry, helped to cause a number of executives from: loan officers to real estate appraisers, to engage in predatory and illegal lending tactics. Where, many would falsify the income, credit histories or out right lie to borrows about the mortgages they were receiving, along with the terms. This perpetuated the crisis as millions of bad loans were given to borrowers who did not qualify or could not afford the mortgage, if there was a change in interest rates or the economic landscape. ("Financial Reform") to prevent this situation in the future, the regulation of the entire real estate industry should fall under the jurisdiction of the federal government. Where, the SEC or the Federal Reserve could oversea the proper training standards in the industry. Under this kind of system, they could establish a national licensing and continuing education standards for all of the different real estate professionals. You could then create a national database that will monitor the different professionals for ethical conduct, which can be given out to home owners. What would happen is, if a real estate professional was found to have engaged in unethical standards in the past, this information would be reported to the central database. During the different home owner education classes this information can be given to borrowers, so that they can ensure that they are working with someone who is of high ethical / professional standards. Over the course of time, this would create higher standards within the industry,...

While, those who engage in such unethical actions will be washed out of the real estate industry, as informed borrowers refuse to do business with them. (Phillips, 2008)
Clearly, the different federal and state home owner relief programs have become overwhelmed. To help fix the different problems within real estate industry, will require solutions that will address the long-term issues that are causing the problem. Two ways to effectively address this issue is: to provide incentives for borrowers to attend financial education classes and increasing the overall levels of ethical / professional standards within the real estate industry. Over the long-term, this will help buyers to understand how the different mortgages work and the laws surrounding them. This would work well with increased ethical / professional standards, as you are creating a system that rewards those who are honest within the real estate industry. At the same time, you are punishing those who engage in unethical actions. This is significant because it shows how you can have a balance between regulating the industry and allowing the markets to function independently.

Bibliography

"Financial Reform."New York Times. 2010. Web. 21 May 2010.

"Record Number of Foreclosures in 2009." International Business Times. 2010. Web. 21 May 2010.

Finney, Denise. "Mortgage Fraud." SF Gate. 2010. Web. 21 May 2010.

Phillips, Matthew. "The Monster that Ate Wall Street." Newsweek. 2008. Web. 21 May 2010.