Michigan House Republicans on Monday unveiled a bill package to help stop the increasing number of mortgage fraud cases in the state by making the crime a felony and freeing millions of dollars to investigate and fight mortgage scams.
State Reps. Rick Baxter, Fran Amos and Jim Marleau unveiled the bills at news conferences in Lansing and Oakland County. The state’s mortgage fraud losses have skyrocketed from almost $9 million in 2003 to $26 million in 2005, according to the FBI.
“The only thing worse than Michigan’s current economic crisis is a criminal who uses that crisis to victimize people,” said Baxter, R-Concord. “Many families and especially senior citizens looking to refinance their homes have been tricked and cheated out of property they’ve owned for years, and anybody who would do such a horrible thing belongs behind bars.”
House Bill 6267, introduced by Baxter, allows money in the Real Estate Enforcement Fund to be used by the state Attorney General’s Office to investigate and enforce mortgage fraud punishments. The money, about $3 million, is currently restricted for prosecuting unlicensed activity.
“Michigan’s poor economy has created fertile ground for mortgage fraud scams that can steal away people’s homes,” said Amos, R-Waterford. “Refinancing your home to help pay bills can be a viable option, but unfortunately the world is still full of individuals looking to capitalize off the misfortunate of others.”
The state’s struggling economy has given rise to a particular form of mortgage fraud, the group said. Many residents are refinancing their homes to help pay bills, but some unscrupulous lenders are deceiving them into signing over their titles.
Amos’ bill, which makes mortgage fraud a felony, also provides prosecutors with the flexibility necessary to try the cases more efficiently because mortgage fraud crimes can overlap many legal jurisdictions.
The legislative package targets several types of mortgage fraud including equity skimming, mortgage-related identity theft, and the widespread use of property flipping, which involves purchasing property and artificially inflating its value through false appraisals.
The package also includes a Marleau bill to prevent an appraiser from modifying appraisals in exchange for repeat or future business. The bill creates a felony for appraisal fraud on any level, including influencing appraisers.
A total of 80 percent of all fraud losses involve some collaboration by industry insiders.
The FBI has ranked Michigan as one of the Top Ten “Hot Spots” nationwide for mortgage fraud. The FBI has made the crime a priority because the fraud hurts the overall economy and negatively affects consumers through increased interest rates and bank fees.
Read the Inman News White Paper, “Inside real estate’s fraud crisis: Schemes that hijack the American Dream.“