With Congress looming over the lending sector and ready to pass more laws, the Mortgage Bankers Association has released a report arguing instead for better enforcement of existing laws.
An Office of Mortgage Fraud Enforcement should be created under the U.S. Department of Justice, the group said in its report, "Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts." The trade association thinks enough rules are on the books to prevent abuses but said law enforcement has not taken mortgage fraud as a serious crime.
“By developing a centralized body of expertise, federal capabilities and a continual focus will be assured,” the report read. “It could be argued that the lack of such a focus until recently has let mortgage fraud become a path to profit for fraudsters. Mortgage fraud has the same or greater potential to inflict financial harm as a bank robbery, but the more hidden nature of the crime makes its perpetration easier, its detection harder, and its prosecution more difficult and apparently less appealing to some law enforcement personnel.”
The Empire State Mortgage Bankers Association does not have a position on the idea but its president, Jonathan Pinard, sees an advantage to the Justice Department officials monitoring mortgage fraud.
“They would have the weight of federal law behind them so you wouldn’t have to worry about individual state laws being more serious or less serious,” Pinard said.
He said association members have complained about authorities not investigating when lenders are the victims. The state’s role is to protect consumers so it will look into borrowers' complaints against lenders, while prosecutors often set minimums in losses, floors that must be reached to trigger investigations, Pinard said.
Read the full report here.