A Utah lawmaker plans to introduce a bill during the 2006 legislative session calling for a special prosecutor to tackle mortgage fraud cases, the Utah Standard-Examiner reported today.

State Rep. Paul Ray, R-Clinton, who is himself a commercial loan officer for Utah’s Zions Bank, told the Standard-Examiner that a boom in Utah’s real estate market has made the state ripe for mortgage fraud.

“It (the boom) spurs a lot of this because Utah is a hot market,” Ray told the Standard-Examiner. “It brings in people who want to make a quick buck.”

Ray said the state legislature has taken some steps to protect consumers from mortgage fraud and in 2003 approved a bill that requires loan officers to become licensed and regulated by the Utah Mortgage Commission, the Standard-Examiner reported.

Mortgage fraud is on the upswing, with the number of suspicious activity reports to the Federal Bureau of Investigation in 2004 almost triple those in 2003, according to a report by the FBI released in May.

States are taking action to counter this trend, with Georgia’s new Residential Mortgage Fraud Act having been signed into law May 5 by Georgia Gov. Sonny Perdue. The Act defines the criminal offense of residential mortgage fraud.

Utah Chief Deputy Attorney General Kirk Torgensen said he supports Ray’s proposed bill and described mortgage fraud as a serious problem in the state, the Standard-Examiner reported.

Under Ray’s bill, the special prosecutor would work with a special state and federal task force formed in April 2004 to investigate mortgage fraud, media accounts said.

The task force comprises representatives from the FBI, the federal Office of the Inspector General, the U.S. Department of Housing and Urban Development, the U.S. Postal Inspection Service, the Utah Insurance Department’s Fraud Division, the Utah Attorney General’s Office, and Utah Bureau of Investigation.

The task force currently has 45 active mortgage fraud investigations underway, FBI Supervisory Special Agent Jim Malpede told the Standard-Examiner.

In 2004, there were 255 complaints of mortgage fraud in Utah that involved funds from federally insured lending institutions representing losses of about $11.1 million, Malpede told the Standard-Examiner, and as of June 30, there were 136 cases for losses of about $5.8 million, putting the state on track to possibly exceed last year’s figures.


Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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