From the Boston Globe:
Addressing Massachusetts’ rapidly escalating number of home foreclosures for the first time, Governor Deval Patrick yesterday proposed tougher enforcement and penalties in the mortgage markets, including criminal prosecution of lenders and brokers who fraudulently induce borrowers to take out home loans.
The governor also supports giving financial aid to borrowers who are victims of such fraud and are at risk of losing their homes.
Patrick said he would soon file legislation to make mortgage fraud a crime and also threw his support behind other proposals introduced at the State House, including raising fees on mortgage brokers and lenders and using the money to hire more government regulators to scrutinize the industry.
The goal of these various efforts would be to “make sure people don’t find themselves at risk of losing their home,” he said.
Regulators, including the US Comptroller of the Currency and Massachusetts Commissioner of Banks Steven V. Antonakes, have said some brokers and lenders may have committed fraud when they sold such loans, either by not clearly explaining to borrowers the true costs of their mortgages or by falsifying income figures to ensure borrowers qualified.
But state law does not explicitly identify mortgage fraud as a crime, which Massachusetts Attorney General Martha Coakley has said makes it difficult to prosecute criminal complaints against unscrupulous lenders. Under current law, mortgage fraud is defined as a civil offense, which carry lesser penalties.
Kevin Cuff, head of the Massachusetts Mortgage Bankers Association, said his organization would support proposals to prevent problems in the subprime industry as long as they do not restrict “legitimate uses of the lending marketplace and the access to credit to deserving homeowners.”