With foreclosures, housing vacancies, and mortgage fraud at all-time highs, it's no secret that the residential real estate sector is struggling. These intertwined problems are threatening the stability of entire neighborhoods, making the search for effective responses crucial.[IMAGE]
As part of this search, the ""Bureau of Justice Assistance"":http://www.ojp.usdoj.gov/BJA/ brought together experts from around the country to examine possible solutions to these challenges. As a document of their conversation, the ""Justice Department's Office of Justice Programs"":http://www.ojp.usdoj.gov/flash.htm released a report Friday outlining the various strategies that were discussed.
The report, ""A Full Response to an Empty House: Public Safety Strategies for Addressing Mortgage Fraud and the Foreclosure Crisis"":http://www.ojp.usdoj.gov/BJA/pdf/CCI_Foreclosure_Crisis.pdf, is intended to serve as a guide to government and law enforcement officials across the U.S. who are seeking to addresses these growing issues in their own communities.
A theme running through all of the innovative responses to mortgage fraud, foreclosures, and vacant properties was collaboration. Task forces, inspection teams, and training initiatives all require collaboration among different agencies, public and private entities, and even different industries, the report said.
Participants also agreed that it is important to invest in prevention by creating public awareness about mortgage fraud, educating potential investors about the laws and regulations pertaining to property ownership, and warning homeowners who are facing foreclosure of the existence and prevalence of foreclosure rescue scams.
While the value of prevention was emphasized, participants didn't rule out prosecution, particularly in cases of mortgage fraud. For prosecutors to succeed, however, they need to understand the ins and outs of mortgage fraud, the report said.[COLUMN_BREAK]
As for housing vacancies, participants said it is vital to vigorously enforce the housing code and redevelop vacant properties. According to the report, securing and maintaining abandoned housing is the baseline, and the next step is returning the property to productive use.
Finally, participants said it is vital to advocate for new legislation. Several cited the need for legislation on a national level, including laws allowing the sharing of information that, under current law, is deemed confidential.
""A real serious problem is that a lot of the laws that were designed to protect consumer privacy give cover to the bad guys because they know banks can't talk to each other,"" one participant said. ""We need to figure out a way to let banks talk to each other about bad actors . . . They need to have an explicit protection for doing that.""
Others called for federal legislation to help improve the timeliness of information reported to the three national consumer reporting agencies to prevent scammers, like those involved in mortgage fraud, from exploiting ""the gap in time that occurs between when a loan is made and when it appears on a credit report.""
In addition to outlining strategies, participants also highlighted challenges. One challenge everyone shared was the difficulty of identifying property owners. This was due to the circuitous path mortgages have taken in recent years, morphing from loans generated and retained by local banks to financial instruments that are bundled and sold to investors around the world.
Another shared challenge was the cost of doing business. The recession that launched the housing crisis has also pinched law enforcement budgets. Thus, just as governments are called upon to respond to a rising number of vacant properties, they are less equipped to do so. Given that, collaboration becomes even more important, the report said.
In their final analysis, participants shared a sense of the possible, concluding that with creativity, knowledge, and determination, law enforcement agencies can respond effectively to mortgage fraud and the foreclosure crisis, helping their neighborhoods weather the storm by adapting the strategies that best suit their resources and local needs.