The state with the most mortgage fraud is doing something about it.
Legislators in Georgia recently passed a bill to increase penalties and enforcement against mortgage fraud perpetuators.
The Senate 100 bill, which makes it a felony to flip residential properties and thus provides a specific law against such activity, was recently passed in the House and sent to Georgia’s governor, according to the Georgia General Assembly.
Under the bill, a felony conviction for a first-time mortgage fraud offender is punishable by one to 10 years in prison, and/or a fee up $5,000. For repeat offenders, the prison term is three to 20 years, and/or fine up to $100,000. Each fraudulent property transaction constitutes a separate offense.
“Fraud involving residential mortgages is at an all-time high in the United States and in Georgia,” the General Assembly said in the bill. “Mortgage lending institutions and borrowers have suffered hundreds of millions of dollars in losses due to residential mortgage fraud.”
Not only have neighborhoods plagued by mortgage fraud been deteriorated, the General Assembly added, but fraudulently inflated property values in the neighborhoods have resulted in substantial increases in property taxes.
According to the Mortgage Asset Research Institute, Georgia is the top mortgage fraud state.
Anne Fulmer has seen first hand the damaging effects of fraud. Fulmer, who is president of the Georgia Real Estate Fraud Prevention & Awareness Coalition, saw her suburban Atlanta neighborhood destroyed as a result of fraud schemes.
“To some, mortgage fraud may be something they see on a profit and loss statement, but to me, it’s my children, my family, my friends and my community,” Fulmer reportedly said at a recent mortgage fraud summit. “When flipping schemes moved into my neighborhood, we witnessed an increase in violence, increased property assessment taxes and a deterioration of the quality of the neighborhood.”
Fulmer recently helped unveil a scheme operated from mid-1999 through March 2004 that caused lenders losses of about $20 million through numerous loans that were obtained by using stolen identities, false Social Security numbers or payment to straw borrowers and false documentation.
The bill classifies mortgage fraud as knowingly misstating, misrepresenting or omitting information to any party involved in the mortgage lending process, receiving proceeds or any other funds in connection with a residential mortgage closing that is known to be fraudulent, conspiring or endeavoring to violate any of the previous, or filing cases with the official registrar of deeds in any Georgia county any fraudulent document.
