Future and Global Population Growth

Real Estate Ethics and Fraud Introduction Good ethics is a key necessity in any given profession. Ethics takes into account a system of moral guidelines governing the suitable conduct and actions of an individual or a group. Notably, ethical standards are centered on an individual’s belief of what is right and what is wrong versus the legal benchmark, which is basically, what is written down in law.

In essence, ethics can be explained as the moral principles and criteria that steer individuals on what they ought to do and ought not to do. Chiefly, the law orders what persons is and is not permitted to do. Sustaining good ethics is being in line with the principles of correct moral conduct in an incessant manner (Walker and Ivanhoe, 2007). In spite of the requirement for all real estate professionals to be ethical, real estate fraud is a reality.

Real estate fraud takes into account when an individual or an entity partakes in the misrepresentation or utilization of fabricated information to take advantage of a different party in the course of a real estate sale or purchase. It is imperative to note that majority of the fraud cases in real estate encompass some sort of mortgage loan fraud, which is deemed to be poor lending practices (Pivar and Harlan, 1995). One of the key aspects of real estate ethics and fraud is poor lending rates.

Predatory loan practices as they are better known take into account when a lender undertakes abusive lending practices by not permitting consumers to gain accessibility to mortgage credit equitably. Clients are handed a loan for which they end up paying significantly more than they ought to and this could place the consumer’s home at risk of foreclosure owing to the reason that they are unable to afford their mortgage payments.

Basically, this alludes to any sort of lending practice that imposes prejudicial or abusive loan terms on a borrower. In addition, it encompasses any kind of practice that persuades a borrower to give in to unfair terms by means of deception, coercion, exploitation or deceitful actions for a loan that a borrower either does not need or is unable to afford (Hill and Kozup, 2011). Ethical Violations The article by Reynolds (2012) especially discusses the aspect of poor lending rates in regard to unethical practices and fraud in real estate.

More specifically, the article delves into the manner in which the minority groups in the United States fall victim to predatory lenders. To begin with, the author points out an instance where banks capitalized on black and Latino families in order to generate fast revenue (Reynolds, 2012). Notably, these borrowers had been steered into high-cost loans and then charged unnecessary and extreme fees.

Furthermore, the author goes ahead to elucidate the way in which individuals of color together with their communities as a whole were pursued and subsequently singled out by real estate agents who are presently profiting from their loss. The unethical activities and fraud undertaken is by purchasing properties cheap and thereafter renting them out at inflated prices (Reynolds, 2012).

Statistics conducted indicated that middle income to upper income generating African American women in approximately 80 percent of 100 cities in the United States have a likelihood of receiving a high-cost subprime loan as compared to other groups in the society. In fact, the article goes ahead to indicate that an employee from Wells Fargo clearly stated that they intentionally sold shoddy mortgages to prospective African-American homeowners.

In general, research has shown that individuals from the Latino and African American communities have a 30 percent more likelihood of receiving high-rate subprime loans as compared to white borrowers in the United States (Reynolds, 2012). Ramifications of Ethical Violations These real estate unethical prices and fraud have a significant impact on the clients. Reynolds (2012) indicates that clients from the African American community are experiencing major foreclosures, lack of money and also credit as a result of being swindled by financial systems that they initially deemed to be trustworthy and dependable (Reynolds, 2012).

For instance, a client by the name Carolyn Holbrook aged 67 indicates that she is presently undergoing therapy and counseling in order to deal with the anguish faced because of losing her townhouse. Furthermore, Avis Jones-DeWeever, who plays the role of the executive director of the National Council of Negro Women fervently points out that real estate fraud has resulted in significant losses of wealth from the black community, an extent to which will set them back generations of progress (Reynolds, 2012).

Governmental statistics indicate that between the 2006 and 2008 financial years, real estate clients from the both Latino as well as African American communities experience a loss of approximately $200 billion in assets as a result of the foreclosures. Furthermore, between the fiscal years 2009 and 2012, these families potentially experienced an additional loss of $370 billion (Reynolds, 2012). Ethical violations can give rise to a deteriorating reputation for an entity that might lead to loss of consumers and personnel.

As indicated in the article, Wells Fargo is one of the organizations that have faced severe ramifications of ethical violations. The company has to part with $175 million in order to settle federal allegations that its employees partook in real estate fraud in steering borrowers into high-cost loans and thereafter charged them excessive fees. Flipping is a major issue in real estate fraud. In this particular activity, the real estate agent trues to buy a property at a low price and thereafter resells it very fast at a significantly higher price.

This usually entails the use of false documents given to the lender and is therefore deemed to be fraud (Hill and Kozup, 2007). This is the case in the article where consumers have been bamboozled by agents who are buying up properties cheap and renting them out at inflated prices (Reynolds, 2012). Conclusion Real estate fraud and unethical violations are real in the real estate market. One of the major instances of fraud in the real estate industry is predatory lending.

As aforementioned, predatory lending takes into account any dishonest and deceitful actions carried out by a lender to lure, persuade and help.