Senator Introduces Bill to Fight Real Estate Fraud

In an effort to crack down on new mortgage scams, US Senator Charles E. Schumer announced the introduction of new legislation to protect homeowners from the recent wave of housing scams that are plaguing homeowners across the country.

The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to battle real estate fraud said a statement from Schumer’s office

The bill authorizes $100 million in grants for hiring specialized staff, such as investigators, forensic accountants, and attorneys, to offices demonstrating need for increased resources to combat mortgage scams.

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Across the country, district attorneys, homeowner advocacy groups, state agencies and homeowners have had trouble investigating and prosecuting mortgage fraud cases due lack of staff and funding. The creation of Real Estate Fraud Units will help resolve these issues by employing staffers who will be able to focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.

“Housing scams are a nationwide problem and they require a nationwide solution,” Senator Schumer said. “Homeowners in New York and across the country have suffered for too long because of scam artists who feel they can take advantage of people without any repercussions. These fraud units will help protect homeowners from these criminals and ensure that rather than walking away from their crimes, they are prosecuted to the fullest extent of the law.”

Last month, FBI director Robert Mueller told a Senate Judiciary Committee that mortgage fraud cases under investigation by his agency were up about 63% in the last year.  "The schemes have evolved with the changing economy, targeting vulnerable individuals, victimizing them even as they are about to lose their homes," said Mueller.

The FBI has more than 2,600 cases open, with most of them involving losses of more than $1 million, Mueller said. That’s more than triple the number of three years ago and up from 2,400 cases Mueller said were open in May.

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  • Here we go again. If there is a perceived problem, throw money at it and it will go away.

    The first questions to address are how much of this fraud actually falls within the jurisdiction of the federal government. While there is little question that fraud exists and homeowners are being taken advantage of, it is necessary to evaluate what is really needed and what can actually be done.

    Funding a few million to catalogue and categorize these cases seems like money well spent. The work should be done by a qualified and experienced independent third party in such matters like a law firm. Yes, the cost of this initial work could be done for less if done the way Senator Schumer proposes but it is also true that money spent within a bureaucracy rarely comes back with an unbiased opinion about where things actually stand. It may be the independent firm can provide guidance on reducing the size of this massive project or may find that the monies are insufficient to really do anything if spent in the way being proposed.

    Senator Schumer strongly endorsed Sarbanes Oxley but what did it accomplish? Did it indicate the current meltdown? Did it expose Madoff or Stanford? Was the SEC so distracted by the paper blitz that this paper oversight created that it did not have the staff available to look into the real schemes and problems?

    Without some outside analysis, we could see 10% or more of this money dedicated to an extensive evaluation of HECMs. I believe that at least one lawmaker will attempt to use these funds to make that lawmaker's case. Once launched there is a propensity to dig deeper and deeper until they find something, anything to justify their ill conceived investigation harming the image of our industry further.

  • While not quite as negative as The Critic, I agree on some points. If the money given to local DA offices is used wisely, and fairly, and not as a witch hunt specifically targeted to make a political point or to garner voter support, it would be of some value. This assumes that the locals can't already do this on their own.
    How will the money be distributed? To the districts with the highest problems in “the real estate” area, the ones in politically friendly (read the “correct' political party), you get the point; who knows. But wait, there's more, we need a special commission to decide who gets what, or it ain't fair, says the party out of power. A potential mess, but I'm an optimist and I hope it gets some real scammers, and hopefully their enablers.
    In the mean time any industry should be hearing the footsteps of do-gooders like Sen. Schumer. Clean up your own house as much as possible and act as professionally as possible; there may be a new sheriff in town.

  • Amazing: The smell of money will attract the financial sharks. The more things change, the more they remain the same. If thieves actually receive long jail sentences, perhaps some of the money will be well spent. Personally, I would rather see one hundred million dollars fund local non-profit groups (Churches, Synagogues, Temples, and, Mosques (Not every Muslim wants to duplicate 9/11 I am sure.) and such Orgnizations as Habitat
    For Humanity to fix those Senior's homes where repairs are necessary to make an FHA HECM work and there are no funds at closing. One would think lessons would be learned by all of us: Now I understand Wall Street is bundling Life Setttlement acqusitions to sell to Investors. Is that a sound step in our National financial life. I wonder?

  • jamesanelson
    I agree, If there were fewer crooks preying on seniors and others, you would be selling more RMs and others would be selling more “appropriate products”. (Yes, there are too many crooked insurance people out there, too.)
    Perhaps our first duty as a society is to protect the helpless, which unfortunately, includes many seniors. It's too bad the politicians have to take the lead, they don't always do a good job.
    On Wall Street, it is often: take a bad idea and bundle it, then sell it to someone. Oh, and really use a lot of leverage so we make megabucks.

  • Politicians do really try for the most part but fall short due to actual knowledge of how their proposed bills actually affect the consumers. They need people like us who work with consumers who may be hurt by the shortcomings of the laws. Good intentions without proper research may help a few and hurt many unintentionally. If only they knew who to trust for that education. At least we know NRMLA is there trying. Lets hope we get someone to take note of the issues as we see them.

  • Oh just paint me negative. I, like the Critic, have seen little from Congress or other legislative and other overseeing bodies (as well as those who salivate at the idea of having oversight) of our industry that indicates they appreciate how much help reverse mortgages provide to seniors in today's tight credit and mortgage market. While some CFPs and financial professionals decry reverse morgages as the loans of last resort, they cannot stop the financial bleeding of their senior clients that drives those same clients to seek our help.

    I appreciate the hard work of NRMLA, but there only so many professional lobbying fingers available to them to stick in the dikes. Again, Peter, how do we help?

    I would like to say a big thank you to John and RMD for alerting us to all the leaking dikes out there that require attention. Without a daily publication like RMD around, we would not know the daily changes happening in our industry, where the bad press is springing from, nor would we be able to glean what little positive press there is out there from all the finger pointing.

    I am not suggesting here that Sen. Schummer is intending by this legislation to target the reverse mortgage industry. I do, however, agree that somewhere along the legislative and investigative line, the reverse mortgage industry is going to receive yet another faceful of mud. We, as a target, are so tempting. Nonpowerful ogres preying on a protected portion of the population — oh we are sitting ducks (pardon to dduck12).

  • Politicians do really try for the most part but fall short due to actual knowledge of how their proposed bills actually affect the consumers. They need people like us who work with consumers who may be hurt by the shortcomings of the laws. Good intentions without proper research may help a few and hurt many unintentionally. If only they knew who to trust for that education. At least we know NRMLA is there trying. Lets hope we get someone to take note of the issues as we see them.

  • Louise321
    McCaskill and her ilk are just bullies as was her predecessor McCarthy. They target you because you can't fight back effectively. They pick out the bad examples and recycle questionable statements and conclusions others have made and then holler “the sky is falling”.
    I'll give people like Sen. Schumer the benefit of the doubt. They may be trying to legislate and appropriate for the greater good. Unfortunately, your industry has “mortgage” in its name and that's like the guy whose name is Hitler. Its easy, especially when your trying to cover your own inadequacies to paint him with the same brush as the original name holder. I'd point out that in my little corner of the country, we had Gov. Spitzer who found crooks everywhere he looked. He tripped and so did a NJ governor: both gone.
    A senator from CT got a “friendly” rate on his mortgage (he didn't know) and the Head of the house tax committee didn't know he had certain assets and forgot to pay certain taxes. Oh, its ok though, since the ethic's committee is checking into it. My conclusion is, there is a lot of trying to cover their smelly trails by exaggerating and posturing.
    Hang in there. Surely you have some good senior stories you could send to lawmakers and regulators.

  • Oh just paint me negative. I, like the Critic, have seen little from Congress or other legislative and other overseeing bodies (as well as those who salivate at the idea of having oversight) of our industry that indicates they appreciate how much help reverse mortgages provide to seniors in today’s tight credit and mortgage market. While some CFPs and financial professionals decry reverse morgages as the loans of last resort, they cannot stop the financial bleeding of their senior clients that drives those same clients to seek our help.rnrnI appreciate the hard work of NRMLA, but there are only so many professional lobbying fingers available to them to stick in the dikes. Again, Peter, how do we help?rnrnI would like to say a big thank you to John and RMD for alerting us to all the leaking dikes out there that require attention. Without a daily publication like RMD around, we would not know the daily changes happening in our industry, where the bad press is springing from, nor would we be able to glean what little positive press there is out there from all the finger pointing.rnrnI am not suggesting here that Sen. Schumer is intending by this legislation to target the reverse mortgage industry. I do, however, agree that somewhere along the legislative and investigative line, the reverse mortgage industry is going to receive yet another faceful of mud. We, as a target, are so tempting. Nonpowerful ogres preying on a protected portion of the population — oh we are sitting ducks (pardon to dduck12).rnrn

  • I'm from the great state of New York and as everyone knows if there is a T.V. camera around Chuck's face will be in it.
    Another 100 million down the drain. It's easy to sponsor a bill and smile for the camera's. I really wonder what good this will do. He should be made accountable for every penny spent and the return on this investment of taxpayer money!
    What's another 100 mil when these idiots are putting us
    in debt for Trillions!

  • Louise321rnMcCaskill and her ilk are just bullies as was her predecessor McCarthy. They target you because you can’t fight back effectively. They pick out the bad examples and recycle questionable statements and conclusions others have made and then holler “the sky is falling”. rnI’ll give people like Sen. Schumer the benefit of the doubt. They may be trying to legislate and appropriate for the greater good. Unfortunately, your industry has “mortgage” in its name and that’s like the guy whose name is Hitler. Its easy, especially when your trying to cover your own inadequacies to paint him with the same brush as the original name holder. I’d point out that in my little corner of the country, we had Gov. Spitzer who found crooks everywhere he looked. He tripped and so did a NJ governor: both gone.rnA senator from CT got a “friendly” rate on his mortgage (he didn’t know) and the Head of the house tax committee didn’t know he had certain assets and forgot to pay certain taxes. Oh, its ok though, since the ethic’s committee is checking into it. My conclusion is, there is a lot of trying to cover their smelly trails by exaggerating and posturing. rnHang in there. Surely you have some good senior stories you could send to lawmakers and regulators.

  • I’m from the great state of New York and as everyone knows if there is a T.V. camera around Chuck’s face will be in it.rnAnother 100 million down the drain. It’s easy to sponsor a bill and smile for the camera’s. I really wonder what good this will do. He should be made accountable for every penny spent and the return on this investment of taxpayer money!rnWhat’s another 100 mil when these idiots are putting us rnin debt for Trillions!

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