{ "id": "R40549", "type": "CRS Report", "typeId": "REPORTS", "number": "R40549", "active": false, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 348881, "date": "2009-05-11", "retrieved": "2016-04-07T02:31:18.721593", "title": "Mortgage Fraud: Federal Criminal Provisions", "summary": "Although criminal prosecutions will likely be only one part of a broader governmental response to the recent financial crisis, the perceived role of fraudulent activity in the downturn, and of mortgage fraud in particular, has spurred interest in the criminal provisions available to federal prosecutors. This report analyzes statutory sources of federal criminal liability for fraudulent actions taken in the primary mortgage market \u2013 i.e., fraud committed by borrowers, brokers, lenders, or others during the mortgage origination process. It also discusses some statutes implicated by fraudulent actions in the secondary mortgage market.\nIn general, federal regulation of financial institutions is handled by numerous regulatory agencies. However, criminal liability applies in instances involving criminal intent. Mortgage-related criminal schemes range from fraud committed by an individual borrower for the purpose of obtaining a loan to fraud-for-profit schemes that involve institutions or industry insiders. In general, federal criminal enforcement efforts have focused on schemes involving industry insiders.\nAlthough there is no one federal crime of \u201cmortgage fraud,\u201d many federal statutes may impose criminal liability for mortgage fraud and related schemes. Relevant federal provisions include, among others, those criminalizing mail and wire fraud, financial institutions fraud, and false statements, together with those that impose criminal penalties for violations of federal regulations. Money laundering, conspiracy, and racketeering provisions may provide additional bases for federal criminal liability. In addition, to a limited extent, securities fraud and corporate fraud provisions may apply to fraudulent actions taken in the secondary mortgage market.\nLooking forward, a debate has emerged regarding the adequacy of existing federal criminal provisions. Some have suggested that existing statutory authorities are sufficiently broad and that regulatory reforms are the most appropriate response. Others have argued that several key federal criminal statutes need to be expanded because they do not cover all mortgage companies. The Fraud Enforcement and Recovery Act of 2009 (FERA, S. 386), versions of which have been passed by the Senate and House, would expand the scope of existing criminal provisions, for example by expanding the definition of \u201cfinancial institution\u201d under U.S. criminal law to include mortgage lending businesses.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R40549", "sha1": "8a38e9d110f4d045d03ea1cfdf443406419bb9cf", "filename": "files/20090511_R40549_8a38e9d110f4d045d03ea1cfdf443406419bb9cf.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R40549", "sha1": "4f5c801043fcb8b748e01e0ef469314c8c50c617", "filename": "files/20090511_R40549_4f5c801043fcb8b748e01e0ef469314c8c50c617.pdf", "images": null } ], "topics": [] } ], "topics": [ "Economic Policy" ] }