In an effort to combat fraud by mortgage brokers, a state senator introduced legislation Feb. 24 to increase penalties faced by corrupt brokers. The Santa Monica Daily Press reported that Sen. Fran Pavley, D-Santa Monica, introduced a bill moving mortgage fraud from a misdemeanor crime in California to a felony punishable by two to four years in prison for a single crime. Those accused of engaging in a pattern of fraudulent behavior could face up to five years in prison. The bill would also allow police and prosecutors to get real estate records through a court order, which is intended to expedite the process. It's backed by the California District Attorneys Association.
Pavley told the newspaper that the current misdemeanor law doesn't do enough to deter mortgage fraud, which rose by an astounding 1,400% between 2000 and 2008. The Los Angeles region is the FBI service area with the most mortgage fraud complaints in the nation, and California ranks fourth in suspected mortgage fraud per capita. And, Pavley pointed out, many victims of mortgage fraud by brokers are elderly, low-income or people with limited English skills who are easier to mislead into taking out "subprime" mortgages they can't afford. Georgia was once the state with the most per-capita mortgage fraud, the article said, but similar bill passed in 2005 has substantially decreased mortgage fraud.
Mortgage brokers, who act as a conduit between buyers and lenders, commit mortgage fraud when they intentionally submit false information to lenders, buyers or both. Examples of mortgage fraud against lenders include lying about the borrower's income and inflating the appraised value of a home. Examples of fraud against buyers includes misleading them about the terms of a loan, waiting until after closing to disclose important information about the loan or inserting hidden clauses into a contract. These are all examples of abusive and unfair predatory lending, some of which might violate California state law and the federal Truth in Lending Act. And as Pavley said, dishonest brokers are most likely to target immigrants, the elderly and other groups that are not likely to be sophisticated about the complex mortgage process.
At Howard Law LLP, our Orange County predatory mortgage lending lawyers aggressively protect our clients from deceptive and unfair lending practices. We help clients who believe they were lied to or substantially misled when they bought or refinanced their homes. In a Fullerton predatory lending lawsuit, we can help you recover all of the payments and closing costs you made on the illegal, predatory loan, as well as attorney costs and other fees related to the case itself. Even better, establishing that a loan was predatory allows you to save your home from foreclosure in many cases. And our Westminster predatory mortgage lending attorneys offer free consultations to all potential clients. To set one up, please contact us as soon as possible through our Web site or call us toll-free at 1-800-872-5925.