Mortgage Fraud Fight Gets $200 Million Boost

Battling real estate fraud has moved to the front lines as Sens. Schumer, a Democrat, and Kyl, a Republican, join forces.
Mortgage Fraud Fight Gets $200 Million Boost
Sen. Chuck Schumer (L) speaks with Sen. Kent Conrad (R) before a markup hearing of the Senate Finance Committee September 30, 2009 in Washington, DC. Win McNamee/Getty Images
Charlotte Cuthbertson
Updated:

<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/shoe91275136.jpg" alt="Sen. Chuck Schumer (L) speaks with Sen. Kent Conrad (R) before a markup hearing of the Senate Finance Committee September 30, 2009 in Washington, DC. (Win McNamee/Getty Images)" title="Sen. Chuck Schumer (L) speaks with Sen. Kent Conrad (R) before a markup hearing of the Senate Finance Committee September 30, 2009 in Washington, DC. (Win McNamee/Getty Images)" width="320" class="size-medium wp-image-1825964"/></a>
Sen. Chuck Schumer (L) speaks with Sen. Kent Conrad (R) before a markup hearing of the Senate Finance Committee September 30, 2009 in Washington, DC. (Win McNamee/Getty Images)
NEW YORK—Battling real estate fraud has moved to the front lines as Sens. Charles Schumer, a Democrat, and Jon Kyl, a Republican, join forces to announce the creation of anti-fraud units. Mortgage fraud and deed theft costs the country $4 billion to $6 billion annually, according to FBI estimates.

“While the amount of mortgage fraud cannot be precisely determined, industry experts agree that there is a direct correlation between fraud and distressed real estate markets,” the FBI 2008 report states.

The Fighting Real Estate Fraud Act of 2009, will help fund specialists who will focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes, according to the joint statement by the senators.

The Justice Department will administer the $200 million slated for the units.

“The housing crisis has spawned a cottage industry of refinancing and foreclosure prevention scams. This bill will put a stop to the criminals who are trying to swoop in and take advantage of desperate homeowners,” Senator Schumer said. “Housing scams are a national problem and they require a national solution. These fraud units will help protect homeowners and ensure that those who try to prey on them are prosecuted to the fullest extent of the law.”

The majority of housing fraud cases involve some degree of criminal conduct, such as theft of a home through a forged deed, a foreclosure rescue scam where a victim unwittingly signs over ownership of the house, falsification of borrower assets by a mortgage broker, or falsification of an appraisal report in order to close a loan that the borrower cannot actually afford, the statement said.

“Arizona ranked sixth on the FBI’s list of states with the highest incidences of real estate fraud in 2008,” Senator Kyl said. This grant program will give state prosecutors the resources needed to investigate and target those who fraudulently profited from predatory lending practices during the housing boom, as well as those who are illegally stripping homes during the downturn of the market.”

Under this bill, real estate fraud includes crimes involving purposeful misrepresentations, forgeries, and omissions to general applications, tax returns, and financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, credit reports, and any actions that may defraud a secured creditor.

The Attorney General is authorized to make grants on a competitive basis through the Bureau of Justice Assistance to assist prosecutors in investigating and prosecuting real estate fraud. The bill authorizes $100 million in grants for two years. These grants will be used for hiring specialized staff to offices in need of specialized resources to combat scams.

The top states for mortgage fraud during 2008 were California, Florida, and Georgia, according to the FBI. Their report said several schemes have the potential to spread if the current economic downward trend, as expected, continues into 2009 and beyond.

Increases in foreclosures, declining housing prices, and decreased demand place pressure on lenders, builders, and home sellers. These and other market participants are perpetuating and modifying old schemes, including property flipping, builder-bailouts, short sales, and foreclosure rescues. Additionally, they are facilitating new schemes, including reverse mortgage fraud, credit enhancements, condo conversion, loan modifications, and pump and pay in response to tighter lending practices, said the report.

 

Charlotte Cuthbertson
Charlotte Cuthbertson
Senior Reporter
Charlotte Cuthbertson is a senior reporter with The Epoch Times who primarily covers border security and the opioid crisis.
twitter