The Senate has passed a bill that expands the bank fraud statutes to cover independent mortgage companies and mortgage brokers and increases funding for federal investigations of mortgage and financial fraud by $165 million.
By a vote of 92-4, the Senate approved the Fraud Enforcement and Recovery Act that also expanded federal fraud laws to cover funds involving the $700 billion Troubled Asset Relief Program (TARP) that is being used to capitalize banks and deal with problem assets.
The bill (S. 386) expands the definition of "finance institutions" to ensure mortgage brokers and mortgage companies are held fully accountable under the federal fraud laws. It also makes it a crime for brokers and mortgage bankers to make materially false statements or to willfully overvalue properties to influence any action by a mortgage lending business.
The Obama administration supports the bill and the House of Representatives is working on a similar bill.
"The legislative enhancements would help the Department of Justice to combat mortgage fraud, securities and commodities fraud, money laundering and related offenses, and to protect taxpayer money that [has] been expended on recent economic stimulus and rescue packages," the White House told the Senate in a statement of administration policy.