Archambault Promises Crackdown on Mortgage Fraud
Monday, August 02, 2010
His campaign warned that today’s tough credit market is “fertile soil for scam artists” who take advantage of homeowners and buyers. “Current banking practices much change now,” Archambault said. “Home foreclosures, devaluation of property values and the unavailability of credit will continue as a result of market manipulation and fraud if banking laws and regulation remain unchanged and violations go without prosecution.”
He praised sitting Attorney General Patrick Lynch U.S. Attorney Peter Neronha for forming the Rhode Island Mortgage Fraud Task Force, but said the state needs to do more to address the problem.
“As Attorney General, I will aggressively go after mortgage fraud and other practices that hurt homeowners and I will seek the legal changes needed to be most effective,” Archambault said.
Today, his campaign is releasing a detailed, six-point plan for cracking down on mortgage fraud. A major focus of his efforts will be increasing licensing requirements and expanding criminal background checks for those in the mortgage lending business. He also wants to convene a special grand jury to examine mortgage fraud and create a statewide database of all mortgage loans, making it easier to identify fraud.
The Six Point Plan
1. Require Criminal Background Checks. Archambault proposes closing the loophole in state law that allows mortgage brokers and loan officers to skip criminal background checks and licensing rules if they work as a sub-contractor for a bank or mortgage company.
2. Felonies for Mortgage Fraud. Brokers, lenders, and underwriters who sign off on loan applications and approvals would face a felony with jail time if fail to verify an applicant's income, encourage applicants to lie about their income, or supply false documents.
3. Licenses for All Those Signing Off On Loans. Currently, underwriters and mortgage brokers who work with applicants for a mortgage must have a state license to do the work—but not the mid-level managers who do the final sign-off on the loans, according to Archambault.
4. Uniform Appraisal Standards. Created in the wake of the crash in the housing market, appraisal management companies were supposed to be a buffer between lenders and brokers. It’s a well-intentioned reform, the Archambault campaign says, but the appraisers those companies hire to work in Rhode Island need to be certified, prove that they are familiar with the local housing market, and follow uniform, statewide appraisal standards.
5. Convene a Special Grand Jury. “We know that Rhode Island has one of the worst mortgage fraud problems in the country, yet there have been very few people prosecuted for it,” Archambault said. “As Attorney General, I will launch a thorough investigation and convene a special grand jury to review the evidence. I will look at the role of mortgage companies, banks and closing attorneys in facilitating this costly and illegal practice and prosecute.”
6. Establish a Statewide Database of Mortgage Loans. The database would list all loans issued in the state and all the parties involved in it—brokers, lenders, and appraisers. Those seeking a mortgage would not be listed by name, only by their loan number. The idea behind the database is to make it easier to pinpoint potential cases of fraud.
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