Congressman Introduces Mortgage E-Verify Act for GSE and FHA Mods
By: Carrie Bay
Rep. Kenny Marchant (R-Texas) has introduced a new bill, the Mortgage E-Verify Act. It would require a mortgagor to be verified under the E-Verify program as a condition for modification of a home loan held by Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration (FHA).
The E-Verify program is a voluntary, Web-based system run by the federal government to help businesses certify that potential employees are legally authorized to work in the United States.
Marchant, who is a member of the House Financial Services Committee, said, “My bill will potentially save millions by cutting down on fraudulent claims from illegal
immigrants and protect taxpayers from subsidizing the restructuring or renegotiation mortgages of illegal immigrants.”
According to Marchant, mandating the use of the E-Verify program to establish a homeowner’s legal status would help eliminate waste, fraud, and abuse, and bring integrity to the mortgage modification process.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) estimates that mortgage fraud increased 1,411 percent from 1997 to 2005. In addition, Marchant says two-thirds of fraud reports in the last decade have been the result of falsified statements on loan documents.
“My bill would curb these abuses and protect the taxpayers,” Marchant said.
On his Web site, Marchant cites a case in Nevada where a mortgage company branch manager conspired to manufacture and submit false employment and income documentation for borrowers, most of whom were illegal immigrants.
Fifty-eight of the 233 fraudulent FHA loans, totaling $6.2 million, have gone into default, costing HUD nearly $2 million. The branch manager was found guilty on 32 counts of submitting false information to HUD, and one count of conspiracy.
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