Sen. Barack Obama’s STOP FRAUD Act
I was in total shock when I stumbled on Sen. Barack Obama’s proposed legislation STOP FRAUD Act S. 1222.
The implications for the real estate industry are terrifying. It would have been more appropriately named “Stop Real Estate Sales Act” because that is exactly what it will do.
It lumps real estate and mortgage professionals in a vague all inclusive manner to expose them to civil and criminal litigation for fraud on any transactions that utilized sub-prime loans. Penalties can be as high as $5,000,000 and up to 35 years imprison or both.
(1) CRIMINAL PENALTIES- Any mortgage professional who violates subsection (a) shall be fined not more than $5,000,000, or imprisoned not more than 35 years, or both.
(2) CIVIL PENALTIES- Any mortgage professional who violates subsection (a) shall be liable for an amount equal to the sum of all finance charges and fees paid or payable by the natural person, financial institution, or purchaser who was defrauded unless the mortgage professional demonstrates that such violation is not material.
The Stop Fraud Act defines a “mortgage professional” as;
(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.
This Will Open the Flood Gates On Litigation Against REALTORS®
Any one that has been foreclosed on would be able to sue their real estate agent and/or real estate broker for fraud in addition to asking criminal charges are brought forward.
This Bill also contains mandatory reporting for “any suspicious activity by an individual or entity”. Now we really go down a slippery slope here. I have been involved in real estate litigation before. The case of “if I did not know I should have known” was brought forward by the plaintiff’s attorney. Now while I did prevail, I would be at risk any time I walked into a court room.
By rising the bar on possible offenses to the level of fraud it would considerable lengthens the timeline on statutes of limitations. In the state of Missouri the statute of limitations on fraud is 10 years. In some instances in can be expanded to 15 years. The State only requires that I keep records for 5 years and the IRS only requires 3 years so how am I to defend litigation on a 10 year old transaction?
If Sen. Barack Obama’s Stop Fraud Act is passed it will also raise interest rates and make home loans extremely difficult to obtain. Mortgage companies and banks will scrutinize borrowers like NEVER before.
The main stream media has really dropped the ball on this story. Sen. Barack Obama introduced this Bill back in April of 2007. This is actually Sen. Barack Obama’s second attempt to pass such a bill. His first attempt was Bill S. 2280 [109th]: STOP FRAUD Act introduced Feb. 14, 2006. So if you know anyone involved in the real estate or mortgage industry, PLEASE sent them a link to this blog and make them aware of the professional danger they may be exposed to.
To read the Bill in it’s entirety you can do so at the PREN Real Estate Forums.
~Rhonda McMillan
Broker
March 2nd, 2008 at 6:31 pm
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.
Susan Kishner
March 2nd, 2008 at 6:46 pm
Great post. I’ve never read your blog, but was referred to it though a member of a real estate forum. Nice catch on the definition of a ‘mortgage professional.’
March 2nd, 2008 at 7:50 pm
Susan we’re glad to have you. I will be tracking this as I have already found a lot more. So stay tuned.
Joe and Colleen Lane – Thank you. It looks like Sen. Barack Obama has other plans for the real estate industry so check back often.
And PLEASE spread the word.
~Rhonda
March 3rd, 2008 at 1:55 pm
I read your blog and then read the bill. Many aspects in the bill need to be worked out. When I checked last, this bill was still in sub-committee, so now is the time to get changes made. NAR has lobbyists in Washington. Their job is to work for NAR and get bills like this amended, changed or stopped. I suggest every REALTOR® contact NAR and your congressman and make your concerns felt. It time that those fees you pay to NAR to go to work.
The changes I think are appropriate are: 1) removing real estate agents from the bill and restrict it to those submitting and processing the loans; 2) Specifically defining “defraud” in relation to loan processing 3) Adding a section that offer protect for when markets change.
March 3rd, 2008 at 4:15 pm
Just goes to show you how liberal Obama really is. He is all about protecting the clueless and the lazy from the hard working honest citizens of this country.
March 4th, 2008 at 8:03 am
I just hope it’s not too late. It seems so many Americans are blinded to the reality of Barack - just because he knows how to put on a good show. This is just one of many reasons why I’m afraid to see what will happen to this country if he should become president. God only knows what other things this man has in mind - all in the name of proving he can change something. AMERICANS NEED TO WAKE UP AND SMELL THE . . . . CHANGE ISN’T ALWAYS GOOD. And realistically with all the economic hard times we have - we need someone who is going to find a way to cut government spending and stop giving other countries breaks when our own is suffering. While I agree something is definitely needed - I don’t believe he can make a positive difference in the US. Okay - maybe I’m getting off topic now - so I’ll stop - for now . . .
I’m in Ohio and I know us and Texas are voting today. So I guess we’ll see what happens next - very soon.
Thanks for making people aware of this!!
March 7th, 2008 at 9:09 am
Rhonda, Excellent job on your Real Estate Blog. I too hope its not to late as this country starts to move into one of the toughest times in our history. IMHO it is now a choice of who will do us the least amount of damage. I personally feel that I have had enough from the Clinton Camp and I can truly say that even though I voted for him I’m not very happy with Bush either.
We do need a new leader I just don’t see he or she currently as my choice!
Sorry for ranting Rhonda thanks for making us aware. I think you right it will make the Foreclosure Tsunami look like child’s play and open this country to more litigation issues.
Hmmm well Obama like most politicians comes from a legal background. I think that very well could be the root of our countries problems.