Missouri Mortgage Fraud Target of New Task Force

According to the Kansas City Star, Missouri officials on Tuesday announced the formation of a task force to better coordinate efforts to root out and punish mortgage fraud in the state.

A key intent of this Missouri mortgage task force is to improve sharing of information between regulators - the Insurance Consumer Affairs Division, the Real Estate Commission and the Real Estate Appraisers Commission.

“Mortgage fraud affects lenders, mortgage brokers, Realtors, appraisers and, most importantly, consumers,” stated Doug Ommen, director of the Missouri Department of Insurance, Financial Institutions & Professional Registration.

Ommen said the task force was one outcome of a major reorganization last fall that allowed for improved sharing of information.

“[Regulators] were working on the issue, but they were working on it from their own particular perspective. There was little communication. It became clear we need a group to meet frequently to look at complaints coming in,” he said.

The task force will be led by Richard Weaver, deputy director for the Division of Finance.

The effort takes place against a backdrop of growing concern nationally. Many bad credit mortgage loan providers, who were all-too willing to make risky loans at high interest rates in boom times, are now facing rising defaults threatening their very existence.

Recent estimates place the annual losses caused by Missouri mortgage fraud at more than $4 billion, more than triple the estimates of a year ago.

Investigators have rated Missouri sixth nationally in the number of cases involving fraudulent home mortgage lending.

Indictments have been returned in the Kansas City housing market, as well as in St. Louis and Springfield. Search warrants were recently served in Columbia related to a mortgage fraud investigation.

Ommen said he has asked the task force to develop “common-sense solutions” to stop the fraud that is contributing to rising foreclosures.

He said the effort might look at tighter regulation, stricter underwriting, broader licensing requirements and improved education programs.

Sen. Charles Shields, a St. Joseph Republican, has introduced a bill that would criminalize the act of participating in mortgage scams.

The Mortgage Bankers Association Tuesday said it had jointly approved with the FBI a mortgage fraud warning notice to be used by its members.

Ommen said a big challenge to stopping fraud is that it usually involves a clandestine web of conspirators that include an unethical mortgage broker, appraiser, investor, real estate agent and lender.

“What this group is looking for are ways to identity the problems at an earlier stage,” he said.

SOURCE: Kansas City Star