Washington, DC—Senate Majority Leader Harry Reid made the following statement today after introducing an amendment to the Fraud Enforcement and Recovery Act that will provide counseling agencies the necessary resources to stop mortgage fraud before it starts:
“This housing crisis is the root of our larger economic crisis. As the mortgage mess rapidly worsens – and hurting more hardworking families – the implications for every other part of our economy are disastrous.
“Today we learned that the number of American families at risk of losing their homes skyrocketed in the past few months. The problem is significantly worse at the beginning of this year than it was at the same time last year. In Las Vegas alone, one in every 22 homes received a foreclosure notice between January and March. That’s seven times the national average.
“The American people know we must do more. The people of Nevada certainly know this – families in my state lose their homes at the worst rate in the nation. They know we must act now, before this emergency spins even further out of control.
“But the declining health of our housing market comes with serious side effects. As foreclosures rise, so do reports of fraud. According to one report, the Nevada Bureau of Consumer Protection now receives 100 complaints each month from homeowners identifying possible mortgage scams. One Nevada scam recently offered a 100-percent money-back guarantee. The scammer, unsurprisingly, didn’t hold up his end of the bargain. Another scheme charged homeowners heavy upfront fee and monthly charges on top of that – only later did they learn they were not getting any services in return.
“While we’re working to help the millions of desperate homeowners who need to modify their mortgages, countless swindlers are working to take advantage of them. And the way the system works now, we can’t keep up.
“The mortgage and corporate fraud bill will strengthen our ability to stop those who game the system on the backs of families who play by the rules and make an honest living. It gives law enforcement the necessary tools to probe, prosecute and punish those responsible for the frauds that exploit hardworking homeowners and endanger our economy.
“It is a strong start to solving a critical component of this crisis. But if we are going to protect families, it’s not enough to punish the perpetrators – we must also stop the scams before they start. That’s what the amendment I’ve submitted today does.
“This amendment complements the larger effort in the underlying bill in three important ways, with each component focusing on the areas where foreclosures are the highest:
· First, we will authorize more resources for advertising to help people avoid the mortgage-rescue scams that bilk homeowners of thousands of dollars by raising awareness of the problem and encouraging the use of legitimate, free counseling agencies there to help. Because many of these areas have large Latino populations, at least half of those resources will be used for Spanish-language advertising.
· Second, we will increase resources for HUD-certified housing-counseling agencies in those hardest-hit areas. Las Vegas, Reno and other reeling regions still need more help as this problem gets worse. This amendment will help the agencies staff up and meet the growing demand for their services.
· Third, we will send well-trained and experienced HUD officials to further support those agencies and other efforts by the federal government to combat the foreclosure crisis and prevent scams.
“Hardworking Americans have lost enough in this storm. They need not give thousands of dollars to con artists who will leave them with struggling with the same mortgage and even less money to pay it. They need not be duped into turning over the keys to their home only to be evicted later.
“To stabilize the economy, we must build on the Administration’s and our own prior efforts to stabilize the housing market. To do that, we must start by stopping fraud. Yes, we must put away the swindlers – but we must also do more to stop the vultures before they can prey on the most vulnerable.”