FOR IMMEDIATE RELEASE: April 20, 2009
SCHUMER, ALL FIVE NYC DISTRICT ATTORNEYS UNVEIL NEW LEGISLATION TO CRACK DOWN ON FLOOD OF NEW MORTGAGE SCAMS BY CREATING ELITE MORTGAGE FRAUD UNITS IN DA'S OFFICES ACROSS THE COUNTRY
DA's Don't Have the Resources or Manpower to Fight New Wave of Mortgage Scams Amid Foreclosure Crisis,
New National Legislation Would Send Millions to DA's Offices in NY and Recreate Federally Funded Mortgage Fraud Unit Soon to be Opened Brooklyn DA's Office in DA offices Across the Country
United States Senator Charles E. Schumer, joined by Manhattan District Attorney Robert Morgenthau, Kings County DA Charles Hynes, Queens DA Richard A. Brown, Bronx DA Robert T. Johnson, and Richmond County DA Daniel Donovan, today announced he is introducing new legislation to better protect homeowners from the recent wave of housing scams that are plaguing New Yorkers and 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. 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. Last month, Schumer secured $875,000 toward the creation of a Real Estate Fraud Unit through the 2009 Omnibus Appropriations Act at the Brooklyn DA’s office. 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 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.”
"I congratulate Senator Schumer for having the foresight to introduce The Fighting Real Estate Fraud Act of 2009. Earlier this month I announced an indictment of a man for forging documents in an attempt to steal a Harlem brownstone and two years ago we convicted another for stealing over $800,000 in a mortgage financing scam, also involving a Harlem brownstone. With the help of grant money from this Act we will be able to open additional investigations and prioritize these important cases,” said Manhattan DA Robert Morgenthau
"Our mortgage fraud hotline in Brooklyn rings off the hook with cries from home owners 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," said Brooklyn DA Charles Hynes.
“Mortgage fraud is an escalating problem that leaves many victims in its wake – not the least of whom are oftentimes elderly homeowners whose properties go from being owned free and clear to being sold out from under them. While we have made some headway in prosecuting these cases, the problem is just too large to be addressed sufficiently with our current resources. Funding for a specialized unit would be a terrific addition in our continued efforts to battle these cases. I applaud and welcome Senator Schumer’s efforts in this regard,” Queens District Attorney Richard A. Brown said.
“While the vigorous prosecution of these economic predators is necessary in order to protect hard working citizens, even the preliminary stages of these investigations can be labor intensive and costly (gathering financial and other records, identifying suspects, and at times, assessing the competence of the victims). Therefore, we would greatly appreciate this federal assistance being proposed by Senator Schumer. It would be particularly welcome during these tough economic times when we are being asked to do more with less,” said Bronx DA Robert T. Johnson
“For far too many New Yorkers, the American Dream of homeownership has turned into a nightmare of foreclosure. In some cases, families have fallen victim to con-artists promising easy homeownership, or even worse, some families already facing foreclosure desperately turned to scammers offering financial relief, only to wind up in a worse-off situation. Where crimes have been committed, prosecutors are committed to pursuing justice. But to pursue these crimes, we need the resources to conduct the exhaustive investigations that are required. This bill, proposed by Senator Schumer, will go a long-way to helping us restore the American Dream for so many who have been victimized,” said Richmond County DA Daniel Donovan
In March, Schumer secured funding for the establishment of a Real Estate Fraud Unit at the Brooklyn DA’s office through the 2009 Omnibus Appropriations Act. Over the past several years, the Kings County District Attorney’s Office had been flooded with referrals of mortgage and deed fraud cases from local politicians, homeowner advocacy groups, attorneys, state agencies, and individual homeowners. While several investigations and prosecutions were undertaken, much of the increasing work load was referred elsewhere, making the system extremely unorganized and confusing. The Brooklyn DA’s office did not handle many of the cases due to lack of investigative and prosecutorial resources. Victims of mortgage fraud were generally referred to civil court to battle the scams because many groups believe this will allow victims to resolve their individual situations. Unfortunately, not enough headway had been made to combat the huge mortgage scam crisis that was taking over Brooklyn and New York City.
Increased prosecution of housing frauds is a necessary weapon in the arsenal of government programs 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. The Real Estate Fraud Unit in the Kings County DA’s Office’s Rackets Division was needed to address the problem.
After the establishment of the Brooklyn Real Estate Fraud Unit, Schumer recognized that the housing scam epidemic reached far beyond the borders of Brooklyn and will now introduce The Fighting Real Estate Fraud Act of 2009 that would protect homeowners nationwide.
Nationwide, mortgage fraud and deed theft cost homeowners $4 billion to $6 billion annually, according to the F.B.I. In New York City, housing fraud has wiped out tens of millions of dollars for thousands of predominantly black and Latino homeowners in large parts of Brooklyn, Queens and Staten Island.
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 fight real estate fraud. Under this bill, real estate fraud includes crimes involving misrepresentations and forgeries to general applications, tax returns, and financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, and credit reports. The Attorney General is authorized to make grants on a competitive basis through the Bureau of Justice Assistance to DA’s offices to assist them in investigating and prosecuting real estate fraud. The bill authorizes $100 million in grants for FY2010 and each year through FY2013. These grants will be used for hiring specialized staff to offices in need of specialized resources to combat scams.
Schumer added, “The recent foreclosure and refinancing crisis, following a sharp increase in home values created a perfect storm for these housing scammers to swoop in and fleece homeowners. With this bill, these criminals will be stopped.”