A new law increases penalties for deceptive housing lenders. Those who commit mortgage fraud will have to shell out more money in fines if they are caught. State Sen. Jacqueline Collins (D-Chicago) says raising the fines from $25,000 to $75,000 per mortgage fraud offense should help deter deceptive lenders.
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“What we found [was] that when we had the fines at $25,000, most of those involved in the fraud saw it only as a cost of doing business, so by increasing it to $75,000 we’re hoping that it really puts teeth into the penalty and really there is a punitive effect on raising the penalty or the fine,” Collins said.
Manny Flores, director of the Division of Banking under the Illinois Department of Financial and Professional Regulation, says the new law will also strengthen the ability of the department to investigate and prosecute mortgage fraud throughout the state. The fine also applies to short sale lenders and brokers. “We’re seeing an increase now where individuals are trying to get from under their mortgage they can no longer afford, we are seeing individuals who are representing themselves as short sale facilitators and these individuals frankly, what we’re seeing is a lot of scams,” Flores said. “They are not looking out for the best interest of the borrower and they are also not looking out for the best interest of the actual lender. They’re taking advantage of these loopholes and what we’re trying to do is, we’re closing them.”
Collins says exercising oversight over the areas of mortgages, loan modifications and short sales will help as the state looks to slow the rate of foreclosures.The governor signed this measure into law Friday.