Blunt outlines plan to criminalize mortgage fraud, prevent foreclosures

Blunt’s proposals would strengthen penalties against fraudsters who submit false information to obtain home mortgage loans and those who target homeowners on the verge of foreclosure proceedings.

A bill prefiled by Sen. Charlie Shields, a St. Joseph Republican, would make mortgage fraud a felony in Missouri punishable with prison time and hefty fines. Similar legislation has been enacted in Georgia and Colorado, two states consistently identified as hotspots for the white-collar crime.

Shields sponsored Senate Bill 727, which defines mortgage fraud as knowingly misrepresenting or omitting factual information during the mortgage lending process.

The bill is currently before the Senate Judiciary and Civil & Criminal Jurisprudence Committee.

As the legislative session moves forward, Shields said he expects the bill to change based on suggestions from the Missouri Department of Insurance, Financial Institutions and Professional Registration and other legislators.

Shields said he consulted real estate appraisers, including his campaign treasurer, about the impact mortgage fraud and inflated property values are having on the housing market.

“They will tell you about the constant pressure on them to over-appraise,” he said.

Blunt also has urged lawmakers to give the state real estate and real estate appraisers commissions the authority to suspend or revoke licenses of real estate professionals involved in mortgage fraud schemes.

The FBI is investigating numerous reports of such schemes in the Springfield area, and a statewide task force led by Rich Weaver, deputy commissioner of the Missouri Division of Finance, is assisting in the investigations.

Weaver told Springfield Business Journal in December that co-conspirators in mortgage fraud schemes include appraisers, mortgage brokers, real estate agents and other intermediaries who have been promised kickbacks from the illegally obtained loans.

Under Blunt’s proposal, Weaver’s division would have the power to issue cease-and-desist orders to stop mortgage fraud or exploitative business practices against homeowners in danger of defaulting on home loans.

Blunt’s plan also calls for new requirements that would provide at-risk homeowners with a statement that includes the hotline number – (888) 246-7225 – as a resource for avoiding foreclosure.

“Information is power,” DIFP Director Doug Ommen said in a news release. “This hotline will ensure that Missouri homeowners at risk of foreclosure have all the information they need to strengthen their ownership.”[[In-content Ad]]