Well I am anxiously awaiting Rhonda’s blog post on this bill that Sen. Barack Obama has named the “STOP FRAUD Act”. Rhonda did let be know that I misquoted her at the beginning of this thread. Barack Obama’s proposed legislation states;
Quote:
(1) CRIMINAL PENALTIES- Any mortgage professional who violates subsection (a) shall be fined not more than $5,000,000, or imprisoned not more than 35 years, or both.
(2) CIVIL PENALTIES- Any mortgage professional who violates subsection (a) shall be liable for an amount equal to the sum of all finance charges and fees paid or payable by the natural person, financial institution, or purchaser who was defrauded unless the mortgage professional demonstrates that such violation is not material.
|
Unfortunately Sen. Obama “STOP FRAUD Act” ties in real estate brokers and other real estate professionals in several areas of the Bill with excepts such as;
Quote:
|
(e) Definition- As used in this section, the term `mortgage professional' includes real estate appraisers, real estate accountants, real estate attorneys, real estate brokers, mortgage brokers, mortgage underwriters, mortgage processors, mortgage settlement companies, mortgage title companies, mortgage loan originators, and any other provider of professional services engaged in the mortgage process.'
|
As you can see, this is NOT limited to the Mortgage Industry.
Sen. Barack Obama’s Bill Would Cause a Litigation Tsunami
Among the obvious problems this will cause if passed is severe mortgage tightening and a tsunami of lawsuits filed by irresponsible home buyers that will occur if in the fact possible offenses of a transaction have been broadened to include the term “fraud”.
Additionally if Barack Obama pushes the “STOP FRAUD Act” through the statute of limitations is going to be substantially extended in most states for these offenses if you are charged or sued for fraud. In Missouri the statute of limitations on filing a case for fraud is 10 years. In some cases this can extend to 15 years.
Now the IRS requires that we keep records for three years. Missouri licensing law requires that we keep records on transactions for 5 years. Thanks to Sen. Barack Obama if this law is passed you may want to keep your records for 15 years in the even you have to mount a defense. And keep in mind that most E&O Policies will not cover “Fraud”.
~Mack