Daily Real Estate News  |  June 12, 2007  |   Ariz.: Law Change Makes Mortgage Fraud a Felony
The Arizona legislature has voted to make mortgage fraud a felony, punishable by up to three years in prison for a first offense, with tougher penalties if there is evidence of a larger conspiracy.

The law is in response to the cash-back schemes described by state regulators in which buyers used inflated appraisals to obtain mortgages for more than homes are worth, splitting the resulting cash among real estate practitioners, appraisers, and mortgage brokers.

Felicia Rotellini, superintendent of the Department of Financial Institutions and head of a mortgage fraud task force of state and federal agencies, applauded passage of the law. "When mortgage fraud is clear, and the penalties are evident, the fraudsters will accept a plea bargain much more readily. This is because the facts themselves will prove the case," Rotellini says.

Georgia, Nevada, and Colorado have similar laws on the books.

Source: The Associated Press, Paul Davenport (06/11/2007)