Georgia House considers expanding mortgage fraud law

As part of the legislative agenda being promoted by Georgia’s new Attorney General Sam Olens, the Georgia House of Representatives is considering a bill that would expand Georgia’s mortgage fraud statute to include falsifying or altering documents used by banks in the foreclosure process.

The bill, known as House Bill 237, is expected to be approved by the House Judiciary Non-Civil committee and move to a floor vote as early as this week.

“There is an unacceptable level of inappropriate conduct that has hurt confidence of homeowners across the state and the country,” Olens explained in testimony before the committee.

According to Olens, Georgia’s mortgage fraud law, which was passed in 1995, does not cover foreclosure fraud by lenders and their law firms, leaving the Attorney General and local district attorneys little authority to investigate fraud claims reported to them by homeowners.

The main issue is behavior by lenders, loan servicers and law firms that has come to light during the foreclosure crisis. Allegations of “robo-signing” — one person signing thousands of foreclosure documents without verifying their accuracy, as is required by law — have arisen nationwide.

Olens has received more serious complaints, however — of lenders backdating mortgage transfers or even falsifying mortgage documents in order to make the foreclosure process go faster. The proposed bill would criminalize such activities as forgery.

The banking community supports the measure, although with small changes. Banks want to add language to the statute making it clear that, in order for the behavior to be criminal, it would have to be intentional, not the result of a mere mistake. Community banks would also like to limit some of the proposed subpoena powers because of the costs associated with copying subpoenaed records.

“That is clearly an improvement we want, but we do support the proposal,” said Georgia Bankers Association president Joe Brannen of the proposed revisions to the mortgage fraud statute. “It’s our responsibility to do (a foreclosure) right.”

Source: Atlanta Journal Constitution, “Foreclosure fraud proposal moving quickly in House,” April Hunt, February 27, 2011