As Arizonans know, the mortgage crisis hit our state particularly hard. When the bubble burst, many were left with homes they could no longer afford, and foreclosure became the unfortunate reality.
The housing crisis has hurt many people, but it has provided an opportunity for one group to thrive: scammers. Some profited from predatory lending practices during the boom, while others now prey on those who are looking to save their homes by offering fraudulent refinancing or foreclosure prevention schemes. Other illegal activity includes home “stripping,” when a home’s fixtures, sometimes even the electrical outlet covers, are removed during the foreclosure process.
Arizona has seen more than its share of real estate crimes. It ranked sixth on the Federal Bureau of Investigation’s list of states with the highest incidences of real estate fraud last year.
Unfortunately, Arizona, like other states, had limited resources to protect homeowners and combat real estate fraud.
To provide state and local prosecutors with more resources to root out real estate scams, I joined Senator Chuck Schumer of New York to introduce the Fighting Real Estate Fraud Act of 2009. Our bill would provide up to $200 million to state and local prosecutors’ offices so that they can hire staff dedicated to the problem.
Under our bill, real estate fraud includes, but is not limited to, crimes involving purposeful misrepresentations or forgeries, scams, and home stripping. The bill leaves plenty of flexibility for local, state and tribal prosecutors to target any real estate-related crimes that are prevalent in their jurisdiction.
The bill authorizes the Department of Justice to award competitive grants to local prosecutors, state attorneys general, and Indian tribes so that they can create “real estate fraud units” to investigate and prosecute crimes.
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.
Uncovering the evidence of criminality, however, requires investigative resources that are not now readily available to victims.
While this bill will help states and localities crack down on real estate fraud, it is also important for individuals to be mindful that scammers continue to seek out victims. So, before making any significant commitment, homeowners and others should exercise caution. For example, those concerned about foreclosure should know that the Department of Housing and Urban Development has organized an assistance program for homeowners in distress. The program, called Hope Now, offers counseling services that may be useful to you. You can learn more about this program by visiting: http://www.hopenow.com, or calling 1-888-995-HOPE. This voluntary program has helped hundreds of thousands of Americans having trouble paying their mortgage.
Real estate fraud is a crime, and too often the fraud has gone unpunished. I hope the resources authorized by the Fighting Real Estate Fraud Act will help change that.
Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his website at www.kyl.senate.gov or his YouTube channel at www.youtube.com/senjonkyl.