Legislation Aims to Tackle Mortgage Fraud
Seeking to clamp down on mortgage fraud, Sen. Charles Schumer of New York has asked the Obama administration for $100 million to help regional prosecutors combat the nationwide mortgage fraud problem (“Schumer Seeks Grants to Battle Mortgage Fraud,” The New York Times, April 20, 2009).
Schumer’s proposed legislation would give local prosecutors federal grants to bring individuals or organizations engaged in fraudulent activities to court. Prosecutors, already burdened with heavy caseloads, often don’t have the manpower to prosecute mortgage fraud crimes because “the cases are very labor intensive” and “involve paper trails that require a lot of prosecutors and analysts,” Schumer said during a press conference in New York City.
The thousands of troubled homeowners who are at risk of losing their homes are vulnerable to these scams offered by companies promising to help them avoid foreclosure, says Daniel Donovan Jr., district attorney of New York’s Richmond County, “Some families already facing foreclosure desperately turned to scammers offering financial relief, only to wind up in a worse-off situation.”
Mortgage Fraud Jumps 50 Percent
Nationwide, the number of mortgage fraud cases doubled in the first quarter of this year compared to the same time period last year, according to Mortgage.com’s FraudBlogger Index, a measure of mortgage fraud case activity (“Florida Ranks No. 3 in Mortgage Fraud,” South Florida Business Journal, April 27, 2009).
In Florida – ranked third in the nation for the amount of mortgage fraud activity seen this first quarter – mortgage fraud is so rampant that the state’s attorney general, Bill McCollum, has created a mortgage fraud task force. The task force already has more than 50 active investigations and at least a dozen pending lawsuits, including six that were filed under the Foreclosure Rescue Fraud Prevention Act, according to the attorney general’s website.
But of the $1.5 billion in mortgage fraud cases nationwide, the most notable cases haven’t been confined to Florida:
- A mortgage broker in Maryland used some of the proceeds from originating more than $30 million in fraudulent loans to pay for her $800,000 wedding, headlined by Patti LaBelle.
- A California mortgage broker, who admitted to originating $1 billion in fraudulent home loans in six states, was caught at the Canadian border with $70,000 stuffed into his boots.
- A Texas woman was convicted and sentenced to 99 years in prison for being the ringleader of a $3 million scheme involving her family. Her husband, sister, and daughter were also indicted.
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