[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2280 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 2280

 To stop transactions which operate to promote fraud, risk, and under-
                  development, and for other purposes.


_______________________________________________________________________


                   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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. 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''.

SEC. 2. MORTGAGE FRAUD.

    (a) In General.--Chapter 63 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1351. Mortgage fraud
    ``(a) In General.--It shall be unlawful for any mortgage 
professional to knowingly execute, or attempt to execute, a scheme or 
artifice--
            ``(1) 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--
                    ``(A) in real property; or
                    ``(B) 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
            ``(2) 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--
                    ``(A) in real property; or
                    ``(B) in personal property used or expected to be 
                used as the principal dwelling of such natural person;
    ``(b) 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.
    ``(c) 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--
            ``(1) without respect to the amount in controversy;
            ``(2) without regard to the citizenship of the parties; and
            ``(3) without regard to exhaustion of any administrative 
        remedies.
    ``(d) 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.
    ``(e) 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.''.
    (b) 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.''.
    (c) Conforming Amendment.--Section 3293(2) of title 18, United 
States Code, is amended by striking ``or 1343'' and inserting ``, 1343, 
or 1351''.

SEC. 3. MANDATORY REPORTING REQUIREMENTS.

    (a) Definition of Financial Institution.--Section 5312(a)(2)(U) of 
title 31, United States Code, is amended by--
            (1) inserting ``and companies'' after ``persons'';
            (2) inserting ``, transactions,'' after ``closings''; and
            (3) 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''.
    (b) Regulations.--
            (1) 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).
            (2) 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.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to implement the regulations 
issued under subsection (b).

SEC. 4. LAW ENFORCEMENT AND INDUSTRY COMMUNICATION.

    (a) 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--
            (1) suspicious activity trends in the mortgage industry; 
        and
            (2) mortgage fraud-related convictions.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to establish and maintain the 
system required under subsection (a).

SEC. 5. DEBARRED OR CENSURED MORTGAGE PROFESSIONAL DATABASE.

    (a) Establishment.--
            (1) 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.
            (2) 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.
            (3) 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''.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to establish and maintain the 
database required under subsection (a).

SEC. 6. 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:
    ``(g) Counseling for Mortgage Fraud.--
            ``(1) 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.
            ``(2) 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--
                    ``(A) the Director of the Federal Bureau of 
                Investigation; and
                    ``(B) mortgage industry statistics.
            ``(3) Authorization of appropriations.--There are 
        authorized to be appropriated $10,000,000, to implement the 
        provisions of this subsection.''.

SEC. 7. STATE APPRAISAL DEMONSTRATION PROJECTS.

    (a) 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.
    (b) 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.
    (c) 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--
            (1) the Director of the Federal Bureau of Investigation; 
        and
            (2) mortgage industry statistics.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated $10,000,000, to implement the provisions of this section.

SEC. 8. LAW ENFORCEMENT GRANTS TO STATE AND LOCAL LAW ENFORCEMENT 
              AGENCIES.

    (a) 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--
            (1) establishing and improving mortgage fraud task forces; 
        and
            (2) improving communications regarding mortgage fraud cases 
        between such agencies and other Federal, State and local law 
        enforcement agencies.
    (b) 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.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated $40,000,000, to implement the provisions of this section.

SEC. 9. 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.
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