[Congressional Record Volume 152, Number 18 (Tuesday, February 14, 2006)]
[Senate]
[Pages S1177-S1178]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. OBAMA (for himself, Mr. Durbin, and Mr. Menendez):
  S. 2280. A bill to stop transactions which operate to promote fraud, 
risk, and under-development, and for other purposes; to the Committee 
on Banking, Housing, and Urban Affairs.
  Mr. OBAMA. Mr. President, today, I am introducing new legislation to 
address a growing problem in our country, one that is robbing thousands 
of Americans of their dream of homeownership, and costing the mortgage 
industry hundreds of millions of dollars each year.
  I am talking about the problem of mortgage fraud--the practice of 
defrauding individuals of their rightful property, and using tricks and 
schemes to steal from banks and other financial institutions. Mortgage 
fraud comes in a variety of forms, from inflated appraisals to the use 
of straw buyers, but the net result is the same: financial institutions 
lose out to the tune of approximately $1.01 billion each year, and 
consumers lose their savings, their good credit, and their homes.
  Although the data in this area is limited, mortgage fraud is clearly 
on the rise. According to the FBI, mortgage fraud cases were up 25 
percent last year, and 400 percent since 2002. Further, in 2004, the 
mortgage industry noted 12,000 cases of suspicious activity, three 
times the amount reported in 2001. This is due largely to the housing 
boom which is driving up housing prices across the country. Nearly $2.5 
trillion in mortgage loans were made during 2005, and the number is 
only expected to rise this year.
  But mortgage fraud is about more than just dollars and statistics; 
it's about real people, real homes, and real lives. My hometown Chicago 
Tribune has featured a series of articles about mortgage fraud in 
Illinois, which, along with Georgia, South Carolina, Florida, Missouri, 
Michigan, California, Nevada, Colorado and Utah, is among the FBI's 
top-ten mortgage fraud `hot spots.'
  The stories highlight, for example, the plight of the good folks on 
May Street in Chicago, who saw a block's worth of homes go boarded up 
in the span of a just few years, as swindlers

[[Page S1178]]

racked up hundreds of thousands of dollars in bad loans, and left 
shells of houses behind. The Tribune stories highlighted the plight of 
75-year-old Ruth Williams, who had to spend her personal funds to clear 
the title to her home after fraudsters secured $400,000 in loans on 
three buildings they didn't own. And two doors down from Ms. Williams, 
Corey Latimer can't sell his building or borrow against it, because a 
lending company hasn't released a phony mortgage that Corey didn't 
authorize.
  Law enforcement, consumer groups and many in the mortgage industry 
are doing what they can to combat fraud, and I applaud their good work. 
Now, Congress needs to come to the table and do its part.
  I, along with Senator Durbin and Senator Menendez, am introducing the 
STOP FRAUD Act today to address the critical problem of mortgage fraud. 
STOP FRAUD (Stopping Transactions which Operate to Promote Fraud, Risk 
and Under-Development) would provide the first Federal definition of 
mortgage fraud and authorize stiff criminal penalties against 
fraudulent actors. STOP FRAUD requires a wide range of mortgage 
professionals to report suspected fraudulent activity, and gives these 
same professionals safe harbor from liability when they report 
suspicious incidents. It also authorizes several grant programs to help 
State and local law enforcement fight fraud, provide the mortgage 
industry with updates on fraud trends, and further support the 
Departments of Treasury, Justice and Housing and Urban Development's 
fraud-fighting efforts.
  The STOP FRAUD Act will build upon the good work of the FBI, the 
Treasury Department, HUD, consumer groups, many in the mortgage 
industry, and State and local law enforcement, giving them the tools 
they need to stop mortgage fraud in its tracks. The cost of this bill 
is well worth the benefit to American taxpayers and companies, and it 
has been endorsed by a range of law enforcement and consumer groups. 
The Illinois Attorney General's office and the Chicago Police 
Department have told me how valuable this bill would be to their 
enforcement efforts, and ACORN, the Center For Responsible Lending, the 
National Association of Consumer Advocates, the National Community 
Reinvestment Coalition, National Consumer Law Center, and U.S. PIRG 
said in a recent letter that this bill would ``help protect consumers 
from fraudulent and abusive practices in the mortgage industry.''
  The STOP FRAUD Act is a tough, cost-effective, and balanced way to 
address the serious problem of mortgage fraud in our country. I urge my 
colleagues to join me in this important effort.
                                 ______