Florida's Mortgage Fraud Task Force

Article provided by Frank A. Rubino, Esq.

Even before the national subprime problem became a full-blown crisis in 2007-2008, mortgage fraud was a serious problem in Florida. According to the Mortgage Asset Release Institute, Florida ranked second in the nation for reported mortgage scams in 2008. Industry statistics indicated that one in ten mortgage applications included some form of misrepresentation.

Given the rampant problems with mortgage and foreclosure rescue fraud in several state officials are currently engaged in a multifaceted crackdown. Although this is not a new effort, this crackdown continues to have significant implications for buyers, sellers and lenders in Florida.

With more and more Floridians facing foreclosure, more lending applications are under careful scrutiny. In turn, investigations and prosecutions related to mortgage fraud are constantly underway.

Government Attempts to Crackdown on Mortgage Fraud

Leading the charge in 2007, Attorney General Bill McCollum created a cross-agency Mortgage Fraud Task Force to address mortgage fraud and the related issue of mortgage rescue fraud. Since the founding of the Task Force, the attorney general's office has brought criminal charges against at least 40 people for mortgage fraud, and many more cases are being investigated by the task force and its participating agencies.

Bolstering the efforts of the AG's office, the Florida Legislature has also responded. The Foreclosure Rescue Fraud Prevention Act took effect on October 1, 2008. The law was intended to restrict the operations of loan medication and foreclosure prevention companies that promise to help homeowners avoid foreclosure and save their homes, accept up-front fees for doing so, and then take no effective action.

Two years into the attempted crackdown, though, Florida agencies are still figuring out how to collaborate effectively.

In the spring of 2009, both the AG's office and another state agency were building cases against a Miami-based company called Lincoln Lending. On the very same day that the attorney general brought mortgage fraud charges against the company, investigators from the Florida Office of Financial Regulation were on site at the company. The AG's legal action temporarily delayed the work of the other agency in obtaining the records needed for its own investigation.

This incident served as a catalyst for Attorney General McCollum to initiate closer cross-agency collaboration to address mortgage and foreclosure rescue fraud in Florida. In addition to the attorney general's office and financial regulators, this effort includes law enforcement groups, prosecutors, and the state bar.

There will now be a more concerted effort to triage cases. This will involve:

  • Allocating resources based on the seriousness of the complaints
  • Streamlining the complaint process
  • Educating consumers about their rights

The attorney general describes this as an "all hands on deck" or team approach to fighting mortgage and financial rescue fraud. Companies engaging in practices drawing the attention of the participating agencies will now face a playing field in which the other side is committed to a full court press against fraud.

For those who have been accused of fraud or who are under investigation for alleged fraud, though, this means that they must be particularly cautious. Anyone facing an investigation should speak to a knowledgeable criminal defense attorney as soon as possible, to ensure that their rights and interests can be fully protected.