US Senator Charles E. Schumer, joined by Westchester County District Attorney Janet DiFiore and Rockland County District Attorney Thomas Zugibe, today announced he is introducing new legislation to better protect homeowners from the recent wave of housing scams that are plaguing Hudson Valley residents 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 Attorneys' 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. Across New York, 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. Such crimes include 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. Such scams have become increasingly common as foreclosures rise and homeowners become more desperate in the face of growing financial challenges.
"Housing scams are one more byproduct of difficult financial times, and we must make sure that district attorneys' offices have the resources they need to beat back these con artists," Senator Schumer said. "Homeowners in the Hudson Valley 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."
"Mortgage Fraud investigations are resource intensive, time consuming and can take months of forensic accounting work," Westchester District Attorney Janet DiFiore said. "By Senator Schumer having the foresight to request money from the Federal Government through The Real Estate Fraud Act of 2009 for specialized staff our ability to investigate and prosecute Mortgage Fraud will be greatly enhanced. Here in Westchester, in just the past year we prosecuted two cases, a disbarred lawyer was sent to state prison for four and one half to nine years for misrepresentations which lead to a two million dollar mortgage fraud perpetrated on two different banks and second case a mother and son were sentenced to state prison for stealing the equity of a house left to their disabled cousin."
In a weak economy and with mortgage rates at an all time low, instances of mortgage fraud are on the rise across the Hudson Valley. Whereas in the pastmortgage fraud cases were rare in Rockland County, there are currently 24 open investigations that have been identified over the past six months. The Westchester DA's office has experiences a similar rise in cases. 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.
In a common scam, a company with an official sounding name will charge borrowers in danger of default upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off. The shadiest operators, consumer advocates say, can actually force borrowers out of their homes by persuading them to sign over the title or grant power of attorney. Nationwide, mortgage fraud and deed theft cost homeowners $4 billion to $6 billion annually, according to the F.B.I. Currently the FBI is investigating about 2,100 mortgage fraud cases, a 400 percent increase from five years ago.
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 Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorneys' 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."