Sen. Charles E. Schumer (D-New York) ""introduced new legislation"":http://schumer.senate.gov/new_website/record.cfmxid=311654 on Monday that he says will better protect homeowners from the recent wave of housing scams spreading throughout the country. The bill would provide local prosecutors with federal funding to beef up their anti-fraud efforts.
Schumer argues that cities don't have the resources or manpower to fight mortgage fraud amid the still-growing foreclosure crisis. To combat this deficit, his Fighting Real Estate Fraud Act of 2009 would establish a competitive grant program through the Department of Justice for the creation of dedicated mortgage fraud units in local district attorney's offices across the United States. The bill authorizes $100 million to subsidize the hiring of specialized staff, such as investigators, forensic accountants, and attorneys, for those offices that need additional resources to combat mortgage scams.
Last month, Schumer secured $875,000 in federal funding for the Brooklyn district attorney’s office to set up a similar real estate fraud task force. His proposed nationwide program is modeled after the Brooklyn project.
Brooklyn district attorney Charles Hynes, said, ""Our mortgage fraud hotline in Brooklyn rings off the hook with cries from homeowners who have been scammed out of their most precious possession. This legislation and the grant funding will go a long way towards protecting those victims and prosecuting those who prey on them.""
According to Schumer, mortgage scams are now a nationwide problem that requires a nationwide solution. He argues that increased prosecution of housing frauds is a necessary weapon in the arsenal of government programs to end the foreclosure crisis, and points specifically to real estate crimes involving misrepresentations and forgeries of general applications, tax returns, financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, and credit reports.
Citing FBI statistics, Schumer said mortgage fraud and deed theft cost homeowners upwards of $6 billion annually.
The Senate is expected to vote on a separate bill this week that, for the first time, would expand bank fraud statutes to also apply to independent mortgage companies and mortgage brokers.
Both chambers of Congress are making mortgage fraud a primary legislative concern. The House Financial Services Committee is scheduled to hold its final hearing on mortgage reform Thursday, which will specifically address anti-predatory lending laws.