Mortgage Bankers Association • Mortgage Fraud
State law could increase the funding allocated to state regulators with authority to regulate and examine lenders, brokers, real estate agents, appraisers, etc. to assist them in detecting and punishing mortgage fraud.
Any State Mortgage Fraud Law Should Target Mortgage Fraud. As discussed above, there are important differences between mortgage fraud and predatory lending. Given these differences, measures that address one often are inappropriate for the other. Legislation intended to address mortgage fraud should not also attempt to address predatory lending. If a state legislature determines that predatory lending legislation is necessary and appropriate, it should address this issue under separate statutory provisions that focus on the predatory lending practices the legislature believes need to be addressed. Any attempt to deal in the same statutory framework with two distinct behaviors — mortgage fraud, as historically defined ,and so called predatory lending — could jeopardize the effective prevention of both.
Mortgage fraud remains a growing problem, affecting both those who make loans and those who receive loans. As this paper demonstrates, the necessary legal framework, both statute and case law, exists to prosecute those who knowingly and willingly seek to defraud lenders. What is currently missing, however, are the necessary resources to investigate and prosecute mortgage fraud. MBA strongly supports efforts to provide those resources and stands ready to work in cooperation with legislators and regulators in all levels of government to eliminate this problem that hurts lenders, honest borrowers and entire communities.
Any State Mortgage Fraud Law Should Be Consistent With Current Federal Law. Mortgage fraud is a problem nationwide. Mortgage fraud schemes often are not confined within the borders of any one state. The ability of law enforcement officials from the federal government and various states to work together would be enhanced if the officials were operating under similar statutory regimes. To facilitate intergovernmental cooperation in combating mortgage fraud, any new laws should mirror existing law — in particular, the existing federal law.
Mortgage Bankers Association
© Mortgage Bankers Association 2007. All Right Reserved.