Apr 28, 2009 12:45 pm US/Eastern
Senate Passes Bill Targeting Mortgage Fraud
WASHINGTON (AP) ―
The Senate voted Tuesday to hire hundreds more FBI agents and prosecutors to pursue after mortgage fraud, which lawmakers say is needed to investigate the estimated 5,000 allegations reported each month.
The 92-4 bipartisan vote came as a House panel considered an anti-predatory lending bill that attempts to ban the type of subprime mortgage loans that contributed to the nation's economic slide.
"As foreclosures menace more and more hardworking homeowners, they become more desperate for help," said Senate Majority Leader Harry Reid, D-Nev. "Unfortunately, schemers, swindlers and scam artists are all too happy to pounce."
The Senate bill, sponsored by Sens. Patrick Leahy, D-Vt., and Chuck Grassley, R-Iowa, is estimated to cost more than $265 million a year for the next two years. Supporters, including President Barack Obama, say the legislation would more than pay for itself because of the fines and penalties that would result from more aggressive government investigations.
Bill supporters anticipate that the money would hire another 160 special FBI agents and more than 200 support staff, including forensic analysts. Currently, the FBI has fewer than 250 special agents assigned to financial fraud cases, despite caseloads increasing more than doubling in the past three years.
Under the bill, the Justice Department would hire 200 more prosecutors and civil enforcement attorneys, along with 100 support staff.
Other government entities in line to receive money include the Secret Service, Postal Inspection Service and the inspector general for the Housing and Urban Development Department.
An amendment by Sens. Chuck Schumer, D-N.Y., and Richard Shelby, R-Ala., added $21 million to the bill's original $245 million-a-year total for the Securities and Exchange Commission to boost its enforcement capabilities.
The measure covers the 2010 and 2011 budget years, which begin Oct. 1.
Another amendment added $5 million to create a congressionally appointed, independent commission to investigate the cause of the economic crisis. The bill also calls for a new Senate committee focused on improving regulations.
In the House, North Carolina Democrats Reps. Melvin Watt and Brad Miller on Tuesday pushed their proposal to try to prohibit banks from lending to consumers considered at risk for default. Lenders would have to make a "reasonable and good faith determination" effort to determine whether the customer can pay back the money.
The bill, which could be voted by the full House as early as next week, encourages lenders to refocus their business on the kind of traditional 30-year, fixed-rate loans that require consumers pay 20 percent of their house upfront. Other mortgages would be restricted in how they are sold.
Proponents of the bill say that if banks are required to retain some of the risk of the mortgages they sell, they would be less likely to lend to consumers with bad credit histories.
The bill also tries to protect consumers from exorbitant interest rates by limiting the amount of money a mortgage broker can earn from selling high-rate loans.
The House Financial Services Committee was on track to approve the measure on Tuesday, despite industry concerns that the new regulations would restrict the flow of available credit.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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