Georgia on Their Minds as States Fight Mortgage Fraud.

NOVATO, CA -- Arthur Prieston, chairman of The Prieston Group, predicts that the fall legislative session will bring the addition of many more states to adopt standardized language for anti-fraud laws.

"We have many state legislatures recognizing fraud and its seriousness," said Mr. Prieston, who has worked on resolving mortgage fraud for more than 20 years. "A lot of laws are modeled after the Georgia bill and the federal Obama bill to curb mortgage fraud. The Georgia law has become the blueprint for other state legislation. Other laws based on the Georgia model were introduced in New Jersey, Oklahoma and Utah."

Specifically, the Georgia law and the other similar proposed laws basically all make mortgage fraud a crime, according to Mr. Prieston. This means fraud can occur anytime when someone knowingly makes or includes any misstatement or misrepresentation during the mortgage lending process. It happens when proceeds or funds are received with a residential mortgage closing that this person knew resulted from a violation. It also occurs through the filing if deeds or any document that may contain deliberate statements or omissions with the official registrar.

Effective July 1, Colorado amended its theft statute to provide that if a person committed "theft by deception" and the underlying factual basis included the "mortgage lending process," the minimum fine must include the amount of money resulting from the theft. The court can only accept a plea for an offense involving the mortgage lending process if the agreement includes restitution to the victim, said Mr. Prieston. The new law also includes private right of action against the perpetrator, regardless of whether the perpetrator is convicted.

"In this Colorado law, mortgage lending process adds 'perfecting and releasing the mortgage' to the Georgia definition," he said. "Other states have pending legislation that are more properly anti-predatory lending-type laws, rather than anti-mortgage fraud laws. These laws, such as pending legislation in Michigan, are against the lenders rather than those who obtain loans from lenders by fraud."

The Prieston Group, which provides pre-funding quality control, due diligence, lender training and ongoing education in best practices, is boosting its educators, training and quality lending advisors fivefold over the next five months and working on its detection system. The company also provides lender representation and warranty insurance. TPG clients include banks, thrift institutions, mortgage companies, secondary market investors, securities issuers and financial companies. The Prieston Group is working to see which lenders are at risk based on their product types, geographic dispersion, number of purchases they have had, how they are internally structured and how much ...