II
109th CONGRESS
2d Session
S. 2280
IN THE SENATE OF THE UNITED STATES
February 14, 2006
Mr. Obama (for himself, Mr. Durbin, and Mr. Menendez) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
A BILL
To stop transactions which operate to promote fraud, risk, and under-development, and for other purposes.
Short title
This Act may be cited as
the Stopping Transactions which
Operate to Promote Fraud, Risk, and Underdevelopment Act
or the STOP FRAUD Act
.
Mortgage fraud
In general
Chapter 63 of title 18, United States Code, is amended by adding at the end the following:
Mortgage fraud
In general
It shall be unlawful for any mortgage professional to knowingly execute, or attempt to execute, a scheme or artifice—
to defraud any natural person or financial institution in connection with the offer or extension of consumer credit (as such term is defined in subsections (e) and (h) under section 103 of the Truth in Lending Act (15 U.S.C. 1602(e) and (h))), which credit is, or is to be, secured by an interest—
in real property; or
in personal property used or expected to be used as the principal dwelling (as such term is defined under section 103(v) of the Truth in Lending Act (15 U.S.C. 1602(v))) of the natural person to whom such consumer credit is offered or extended; or
to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property, including without limitation in the form of fees or charges, from a natural person in connection with an extension of consumer credit secured by an interest—
in real property; or
in personal property used or expected to be used as the principal dwelling of such natural person;
Penalty
Any person who violates paragraph (1) shall be fined not more than $5,000,000, or imprisoned not more than 35 years, or both.
Private right of action by persons aggrieved
Any person aggrieved by a violation of this section, or any regulation under this section may, but shall not be required to, file suit in any district court of the United States having jurisdiction of the parties to such suit—
without respect to the amount in controversy;
without regard to the citizenship of the parties; and
without regard to exhaustion of any administrative remedies.
Rule of construction
Nothing in this section shall be construed to modify, lessen, or otherwise affect any other provision of this title relating to the rights afforded to financial institutions.
Definition
As
used in this section, the term mortgage professional
includes
real estate appraisers, real estate accountants, real estate attorneys, real
estate brokers, mortgage brokers, mortgage underwriters, mortgage processors,
mortgage settlement companies, mortgage title companies, mortgage loan
originators, and any other provider of professional services engaged in the
mortgage
process.
.
Table of sections
The table of sections for chapter 63 of title 18, United States Code, is amended by inserting after the item relating to section 1350 the following:
1351. Mortgage fraud.
.
Conforming amendment
Section 3293(2) of title 18, United States Code, is
amended by striking or 1343
and inserting , 1343, or
1351
.
Mandatory reporting requirements
Definition of financial institution
Section 5312(a)(2)(U) of title 31, United States Code, is amended by—
inserting
and companies
after persons
;
inserting
, transactions,
after closings
; and
inserting after
settlements
the following: , including the Federal
National Mortgage Association, the Government National Mortgage Association,
the Federal Home Loan Mortgage Corporation, mortgage appraisers, real estate
accountants, real estate attorneys, real estate brokers, mortgage underwriters,
mortgage processors, mortgage settlement and title companies, mortgage brokers,
mortgage loan originators, and any other mortgage professional engaged in the
mortgage industry
.
Regulations
In general
Not later than 1 year after the date of enactment of this Act, the Secretary of the Treasury shall issue regulations to implement the amendments made in subsection (a).
Content of regulation
A regulation required under paragraph (1) shall include a requirement that any suspicious activity by an individual or entity described in section 5312(a)(2)(U) be reported to the Secretary of the Treasury.
Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to implement the regulations issued under subsection (b).
Law enforcement and industry communication
In general
Not later than 18 months after the date of enactment of this Act, the Attorney General, in consultation with the Secretary of the Treasury, shall establish a system by which mortgage brokers, lenders, and other authorized mortgage professionals may register and receive updates from Federal law enforcement agencies on—
suspicious activity trends in the mortgage industry; and
mortgage fraud-related convictions.
Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to establish and maintain the system required under subsection (a).
Debarred or censured mortgage professional database
Establishment
In general
Not later than 18 months after the date of enactment of this Act, the Attorney General shall establish a Debarred or Censured Mortgage Professional Database that may be accessed by authorized banks and mortgage professionals to determine the Federal and State bar status of mortgage professionals regulated by any Federal or State agency.
Private certification boards
Any widely accepted private certification board shall have authority to access, maintain, and update the Debarred or Censured Mortgage Professional Database established in paragraph (1) for purposes of adding or removing the information of any mortgage professional contained in such Database.
Definition of widely accepted private certification board
Not later than 18
months after the date of enactment of this Act, the Attorney General, in
consultation with the Secretary of the Treasury, shall determine the definition
of the term widely accepted private certification board
.
Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to establish and maintain the database required under subsection (a).
Housing counseling
Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x), is amended by adding at the end the following:
Counseling for mortgage fraud
In general
The Secretary is authorized to provide, or contract with public or private organizations to provide, information, advice, counseling, and technical assistance to tenants, homeowners, and other consumers with respect to mortgage fraud, as such activity is described in section 1351 of title 18, United States Code.
Preference for States with higher incidents of mortgage fraud
In distributing any funds authorized under paragraph (3), the Secretary shall give preference to those States with the highest rates of mortgage fraud, as such rates are determined by—
the Director of the Federal Bureau of Investigation; and
mortgage industry statistics.
Authorization of appropriations
There are authorized to be appropriated $10,000,000, to implement the provisions of this subsection.
.
State appraisal demonstration projects
In general
Not later than 18 months after the date of enactment of this Act, the Secretary of Housing and Urban Development shall provide grants to State appraisal agencies to improve the monitoring and enforcement of housing appraisal regulations in that State.
Application
Each State appraisal agency seeking a grant under this section shall submit an application to the Secretary of Housing and Urban Development at such time, in such manner, and containing such information as the Secretary may require.
Preference for States with higher incidents of mortgage fraud
In distributing any grant amounts authorized under this section, the Secretary of Housing and Urban Development shall give preference to those States with the highest rates of mortgage fraud, as such rates are determined by—
the Director of the Federal Bureau of Investigation; and
mortgage industry statistics.
Authorization of appropriations
There are authorized to be appropriated $10,000,000, to implement the provisions of this section.
Law enforcement grants to State and local law enforcement agencies
In general
Not later than 18 months after the date of enactment of this Act, the Attorney General shall provide grants to assist State and local law enforcement agencies in—
establishing and improving mortgage fraud task forces; and
improving communications regarding mortgage fraud cases between such agencies and other Federal, State and local law enforcement agencies.
Application
Each State or local law enforcement agency seeking a grant under this section shall submit an application to the Attorney General at such time, in such manner, and containing such information as the Attorney General may require.
Authorization of appropriations
There are authorized to be appropriated $40,000,000, to implement the provisions of this section.
Additional DOJ funding
In addition to any other amounts otherwise authorized to be appropriated under this Act, there are authorized to be appropriated to the Attorney General $5,000,000, to increase mortgage fraud investigation efforts undertaken by the Department of Justice.
