With so many reports of mortgage fraud in the news lately, the United States Senate voted this week to hire hundreds more FBI agents and prosecutors to investigate. There’s an estimate 5,000 allegations of fraud reported each month.
This comes after recent news of the CFO of Freddie Mac’s alleged suicide. The Securities and Exchange Commission is currently investigating Freddie Mac. Documents they’ve requested have been provided and employees have been made available for interviews.
Senators Patrick Leahy of Vermont (a Democrat) and Chuck Grassley of Iowa (a Republican) sponsored this bill. The bill is expected to cost about $265 million a year over the next two years. President Obama and supporters believe the bill will pay for itself because of the fines and penalties imposed on these fraudulent companies. The bill passed in a 92-4 vote.
The House will be voting on the bill as early as next week. Congress is trying to encourage lenders to offer mortgages where borrowers put down a 20% down payment and the loan is a 30-year fixed one. They’re hoping to discourage other creative financing measures.
Hopefully this is a step in the right direction. It can prevent another recession. Do you believe that it’s the right thing to do for Congress to step in? What types of punishments do these mortgage fraud companies deserve? Should they be eligible for automatic shutdowns of their companies if they’re discovered?