Mo. House votes to toughen penalties for mortgage fraud

JEFFERSON CITY, Mo. (AP) -- Legislation creating a specific state crime of mortgage fraud and expanding civil penalties for it passed the Missouri House without any dissent Thursday.

But some lawmakers complained that the legislation doesn't go far enough. That's because it doesn't include any measures regulating the sub-prime mortgage industry or providing relief to people facing foreclosure of their homes because they cannot afford their loan payments.

The legislation creates a state felony of mortgage fraud, punishable by up to seven years in prison.

It also grants expanded powers to the state appraisers and real estate commissions and the state finance division to investigate allegations of mortgage fraud, pursue civil penalties in court and to revoke people's professional licenses.

Courts could impose civil fines of up to $2,500 for each violation of mortgage fraud. The Division of Finance could impose fines of up to $5,000 on people working as mortgage brokers after being prohibited from doing so by the division.

The bill defines mortgage fraud to include making false statements or failing to inform borrowers of material facts. Also included in the definition are attempts to influence real estate appraisals through extortion or bribery.

"It does clean up some of the bad actors -- people who were trying to lure people into schemes under the promise of `we've got a deal for you,"' said sponsoring Rep. David Pearce, R-Warrensburg.

The bill passed the House 153-0 and now goes to the Senate, which passed a similar version of the bill last month.

Several lawmakers suggested the bill also should have included greater protections for consumers, particularly those who have taken out subprime loans and now cannot afford to make the payments on their homes. Some suggested a moratorium on foreclosures.

"We need real consumer protection, aggressive, tough reform. And unfortunately, though this is a little something, it is not anywhere near enough," said Rep. Jeff Harris, D-Columbia.

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Mortgage bills are HB2188 and SB1059.

On the Net:

Legislature: http://www.moga.mo.gov