SCHUMER, KYL OFFER $200M PROPOSAL TO CREATE MORTGAGE FRAUD UNITS AT DISTRICT ATTORNEY OFFICES ACROSS THE COUNTRY
Amid Foreclosure Crisis, Local Prosecutors Lack the Resources, Manpower to Fight New Wave of Mortgage Scams
New National Legislation Would Empower DOJ To Award Competitive Grants To States and Localities Seeking to Establish ‘Real Estate Fraud Units’
WASHINGTON, DC—U.S. Senators Charles E. Schumer (D-NY) and Jon Kyl (R-AZ) announced new legislation Tuesday to better protect homeowners from the recent wave of mortgage scams by providing up to $200 million over two years for State and local prosecutors offices to battle real estate fraud. The bill authorizes the Justice Department to award competitive grants to prosecutors’ offices that seek to hire specialized staff—including investigators, forensic accountants, and attorneys—to combat such scams.Across the country, prosecutors, homeowner advocacy groups and state agencies have had trouble investigating and prosecuting mortgage fraud cases due to lack of staff and funding. The creation of “real estate fraud units” within State and local prosecutors’ offices will resolve these issues by employing staffers who focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.
“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.”
“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.”
Nationwide, mortgage fraud and deed theft cost homeowners $4 billion to $6 billion annually, according to estimates of the F.B.I. Increased prosecution of housing frauds is a necessary step to end the crisis currently manifesting itself in the foreclosure wave. Prosecutions can result in jail sentences for the offenders and restitution for the victims, which currently is very rare. 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. But uncovering the evidence of criminality requires investigative resources that are currently not readily available to victims.
Schumer and Kyl’s bill, known as the Fighting Real Estate Fraud Act of 2009, establishes a competitive grant program in the Department of Justice for State, local, and tribal prosecutors to fight real estate fraud. 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.
CONTACT:
Brian Fallon (Schumer), 202-224-7433, Ryan Patmintra (Kyl), 202-224-2206
