Stopping Transactions which Operate to Promote Fraud, Risk, and Underdevelopment Act or the STOP FRAUD Act - Amends federal criminal law to make it unlawful for any mortgage professional (as defined by this Act) to execute, or attempt to execute, a scheme or artifice to: (1) defraud any natural person or financial institution in connection with the offer of consumer credit secured by an interest in real property, or in personal property used or expected to be used as a principal dwelling; or (2) falsely obtain any money or property from a natural person in connection with an extension of consumer credit secured by an interest in real property, or in personal property used or expected to be used as the principal dwelling of such natural person.
Provides for: (1) fines and/or imprisonment for violations of such provisions; and (2) a private right of action.
Includes within the definition of "financial institution" for specified federal monetary transaction provisions the Federal National Mortgage Association (Fannie Mae), the Government National Mortgage Association (Ginnie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), mortgage appraisers, real estate accountants, real estate attorneys, real estate brokers, mortgage underwriters, mortgage processors, mortgage settlement and title companies, mortgage brokers, mortgage loan originators, and any other mortgage professional engaged in the mortgage industry.
Amends the Housing and Urban Development Act of 1968 to authorize the Secretary of Housing and Urban Development to provide tenants, homeowners, and other consumers with mortgage fraud counseling.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2280 Introduced in Senate (IS)]
109th CONGRESS
2d Session
S. 2280
To stop transactions which operate to promote fraud, risk, and under-
development, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 14, 2006
Mr. Obama (for himself, Mr. Durbin, and Mr. Menendez) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To stop transactions which operate to promote fraud, risk, and under-
development, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stopping Transactions which Operate
to Promote Fraud, Risk, and Underdevelopment Act'' or the ``STOP FRAUD
Act''.
SEC. 2. MORTGAGE FRAUD.
(a) In General.--Chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
``Sec. 1351. Mortgage fraud
``(a) In General.--It shall be unlawful for any mortgage
professional to knowingly execute, or attempt to execute, a scheme or
artifice--
``(1) to defraud any natural person or financial
institution in connection with the offer or extension of
consumer credit (as such term is defined in subsections (e) and
(h) under section 103 of the Truth in Lending Act (15 U.S.C.
1602(e) and (h))), which credit is, or is to be, secured by an
interest--
``(A) in real property; or
``(B) in personal property used or expected to be
used as the principal dwelling (as such term is defined
under section 103(v) of the Truth in Lending Act (15
U.S.C. 1602(v))) of the natural person to whom such
consumer credit is offered or extended; or
``(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any money or property, including
without limitation in the form of fees or charges, from a
natural person in connection with an extension of consumer
credit secured by an interest--
``(A) in real property; or
``(B) in personal property used or expected to be
used as the principal dwelling of such natural person;
``(b) Penalty.--Any person who violates paragraph (1) shall be
fined not more than $5,000,000, or imprisoned not more than 35 years,
or both.
``(c) Private Right of Action by Persons Aggrieved.--Any person
aggrieved by a violation of this section, or any regulation under this
section may, but shall not be required to, file suit in any district
court of the United States having jurisdiction of the parties to such
suit--
``(1) without respect to the amount in controversy;
``(2) without regard to the citizenship of the parties; and
``(3) without regard to exhaustion of any administrative
remedies.
``(d) Rule of Construction.--Nothing in this section shall be
construed to modify, lessen, or otherwise affect any other provision of
this title relating to the rights afforded to financial institutions.
``(e) Definition.--As used in this section, the term `mortgage
professional' includes real estate appraisers, real estate accountants,
real estate attorneys, real estate brokers, mortgage brokers, mortgage
underwriters, mortgage processors, mortgage settlement companies,
mortgage title companies, mortgage loan originators, and any other
provider of professional services engaged in the mortgage process.''.
(b) Table of Sections.--The table of sections for chapter 63 of
title 18, United States Code, is amended by inserting after the item
relating to section 1350 the following:
``1351. Mortgage fraud.''.
(c) Conforming Amendment.--Section 3293(2) of title 18, United
States Code, is amended by striking ``or 1343'' and inserting ``, 1343,
or 1351''.
SEC. 3. MANDATORY REPORTING REQUIREMENTS.
(a) Definition of Financial Institution.--Section 5312(a)(2)(U) of
title 31, United States Code, is amended by--
(1) inserting ``and companies'' after ``persons'';
(2) inserting ``, transactions,'' after ``closings''; and
(3) inserting after ``settlements'' the following: ``,
including the Federal National Mortgage Association, the
Government National Mortgage Association, the Federal Home Loan
Mortgage Corporation, mortgage appraisers, real estate
accountants, real estate attorneys, real estate brokers,
mortgage underwriters, mortgage processors, mortgage settlement
and title companies, mortgage brokers, mortgage loan
originators, and any other mortgage professional engaged in the
mortgage industry''.
(b) Regulations.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
issue regulations to implement the amendments made in
subsection (a).
(2) Content of regulation.--A regulation required under
paragraph (1) shall include a requirement that any suspicious
activity by an individual or entity described in section
5312(a)(2)(U) be reported to the Secretary of the Treasury.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to implement the regulations
issued under subsection (b).
SEC. 4. LAW ENFORCEMENT AND INDUSTRY COMMUNICATION.
(a) In General.--Not later than 18 months after the date of
enactment of this Act, the Attorney General, in consultation with the
Secretary of the Treasury, shall establish a system by which mortgage
brokers, lenders, and other authorized mortgage professionals may
register and receive updates from Federal law enforcement agencies on--
(1) suspicious activity trends in the mortgage industry;
and
(2) mortgage fraud-related convictions.
(b) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to establish and maintain the
system required under subsection (a).
SEC. 5. DEBARRED OR CENSURED MORTGAGE PROFESSIONAL DATABASE.
(a) Establishment.--
(1) In general.--Not later than 18 months after the date of
enactment of this Act, the Attorney General shall establish a
Debarred or Censured Mortgage Professional Database that may be
accessed by authorized banks and mortgage professionals to
determine the Federal and State bar status of mortgage
professionals regulated by any Federal or State agency.
(2) Private certification boards.--Any widely accepted
private certification board shall have authority to access,
maintain, and update the Debarred or Censured Mortgage
Professional Database established in paragraph (1) for purposes
of adding or removing the information of any mortgage
professional contained in such Database.
(3) Definition of widely accepted private certification
board.--Not later than 18 months after the date of enactment of
this Act, the Attorney General, in consultation with the
Secretary of the Treasury, shall determine the definition of
the term ``widely accepted private certification board''.
(b) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to establish and maintain the
database required under subsection (a).
SEC. 6. HOUSING COUNSELING.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), is amended by adding at the end the following:
``(g) Counseling for Mortgage Fraud.--
``(1) In general.--The Secretary is authorized to provide,
or contract with public or private organizations to provide,
information, advice, counseling, and technical assistance to
tenants, homeowners, and other consumers with respect to
mortgage fraud, as such activity is described in section 1351
of title 18, United States Code.
``(2) Preference for states with higher incidents of
mortgage fraud.--In distributing any funds authorized under
paragraph (3), the Secretary shall give preference to those
States with the highest rates of mortgage fraud, as such rates
are determined by--
``(A) the Director of the Federal Bureau of
Investigation; and
``(B) mortgage industry statistics.
``(3) Authorization of appropriations.--There are
authorized to be appropriated $10,000,000, to implement the
provisions of this subsection.''.
SEC. 7. STATE APPRAISAL DEMONSTRATION PROJECTS.
(a) In General.--Not later than 18 months after the date of
enactment of this Act, the Secretary of Housing and Urban Development
shall provide grants to State appraisal agencies to improve the
monitoring and enforcement of housing appraisal regulations in that
State.
(b) Application.--Each State appraisal agency seeking a grant under
this section shall submit an application to the Secretary of Housing
and Urban Development at such time, in such manner, and containing such
information as the Secretary may require.
(c) Preference for States With Higher Incidents of Mortgage
Fraud.--In distributing any grant amounts authorized under this
section, the Secretary of Housing and Urban Development shall give
preference to those States with the highest rates of mortgage fraud, as
such rates are determined by--
(1) the Director of the Federal Bureau of Investigation;
and
(2) mortgage industry statistics.
(d) Authorization of Appropriations.--There are authorized to be
appropriated $10,000,000, to implement the provisions of this section.
SEC. 8. LAW ENFORCEMENT GRANTS TO STATE AND LOCAL LAW ENFORCEMENT
AGENCIES.
(a) In General.--Not later than 18 months after the date of
enactment of this Act, the Attorney General shall provide grants to
assist State and local law enforcement agencies in--
(1) establishing and improving mortgage fraud task forces;
and
(2) improving communications regarding mortgage fraud cases
between such agencies and other Federal, State and local law
enforcement agencies.
(b) Application.--Each State or local law enforcement agency
seeking a grant under this section shall submit an application to the
Attorney General at such time, in such manner, and containing such
information as the Attorney General may require.
(c) Authorization of Appropriations.--There are authorized to be
appropriated $40,000,000, to implement the provisions of this section.
SEC. 9. ADDITIONAL DOJ FUNDING.
In addition to any other amounts otherwise authorized to be
appropriated under this Act, there are authorized to be appropriated to
the Attorney General $5,000,000, to increase mortgage fraud
investigation efforts undertaken by the Department of Justice.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S1177-1178)
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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