Mortgage fraud felony moves forward

The Senate is getting serious about punishing mortgage fraud.

On Tuesday, it tentatively approved SB134 to make such fraud a felony, and to authorize hiring more state investigators to pursue potential cases.

"As soon as we hire those people, their docket will be full" for months, said Sen. Sheldon Killpack, R-Syracuse, sponsor of the bill. "Utah is in the top 10 in the nation for mortgage fraud" cases, he said.

Killpack added that the state simply has not had the manpower to pursue the backlog of potential mortgage fraud cases that has grown amid the national subprime mortgage crisis, where people often were talked into mortgages they could not afford or terms were misrepresented to them.

Besides formally outlawing mortgage fraud and making it a felony, the bill would also authorize the state to hire a mortgage fraud prosecutor along with a paralegal and two investigators to handle such cases.

Killpack noted that Utahns have been able to pursue civil penalties against fraudulent lenders, but also wants criminal penalties clearly in place and enforced.

The bill passed unanimously in the Senate on second reading, but still faces a final vote on third reading before it is sent to the House for consideration.