Snyder signs mortgage fraud laws

On Thursday, Republican Gov. Rick Snyder signed a package of bills to make mortgage fraud a felony in the state of Michigan.

The new laws make it a crime to provide false information on a loan application, and also makes it a crime to file fraudulent documents in connection with property purchases.

“Tougher penalties are needed to protect against scammers who think nothing of bilking unsuspecting homeowners and lenders out of tens of thousands of dollars,” Snyder said. “This legislation makes it clear – mortgage fraud will not be tolerated. Try to steal someone’s house, go to prison.”

The signing resulted in a barrage of praise from lawmakers.

“As Michigan residents struggle to keep a roof over their heads, I am doing everything I can to protect them from being taken advantage of, whether it’s by the banks, the courts or crooked companies,” said Sen. Tupac Hunter (D-Detroit), Minority Vice Chair of the Senate Banking and Financial Institutions Committee that generated the package. “Mortgage fraud and other corrupt behavior only exploits the state’s housing crisis and will continue until the appropriate laws are in place to stop them, and making mortgage fraud illegal is a good first step.”

Both Hunter and Snyder pointed to a 2010 FBI report noting the high prevalence of mortgage fraud in the state:

According to the 2010 FBI Mortgage Fraud report, Michigan was among the top 10 states in terms of mortgage fraud activity, with Detroit having the fifth highest number of pending mortgage fraud investigations nationwide. Since 2005, the Wayne County Deed and Mortgage Fraud Task Force has been forced to initiate hundreds of deed and mortgage fraud prosecutions using existing inadequate laws with convictions often resulting in only minor fines and probation.

But not everyone is happy with the new laws.

Ingham County’s Register of Deeds Curtis Hertel Jr. says the laws do not do enough to address the reality of the problem on the ground. Since April, Hertel has been leading the charge in the state over robo-signed documents filed in every county in Michigan.

Robo-signing is a process by which people are paid to sign the name of a person charged with the authority to execute legal documents, often initiating foreclosure proceedings or evictions after foreclosures.

The first round of signatures Hertel found were from “Linda Green.” She was uncovered originally by the television news program “60 Minutes.”

But as Hertel dug in deeper, he found that at least one Michigan attorney was allegedly robo-signing documents. After Michigan Messenger reported that Orlans Associates attorney Marshall Isaacs had been placed on a Massachusetts robo-signing list, Hertel referred Isaacs to the office Republican Attorney General Bill Schuette. Schuette has not commented on the investigation, and Orlans Associates has issued a blanket denial.

“As a person on the ground fighting illegal foreclosures I appreciate the new tools. That being said, it does not go far enough. As long as we have a system where a foreclosure process and sheriff sale can happen without any third party review of the legality of said sale, we will have a broken system,” says Curtis Hertel, Jr. the Ingham County Register of Deeds. “The reality of the situation is most people dont get a review of all the documents until after the sheriff sale. At this point their credit has been ruined by what could be a fraudulent process. Passing this law gives me hope the governor and legislature will realize they have to go farther to protect the due process rights of all citizens in the foreclosure process.”