The state of Utah is ramping up its efforts to target the increasing problem of mortgage fraud, and Gov. Jon M. Huntsman Jr. Friday signed into law two measures aimed at punishing those who engage in such fraud.

Senate Bill 134 establishes definitions for criminal activity involving fraud, including making mortgage fraud a crime, as well as establishing penalties. House Bill 346 addresses fines and disciplinary actions that may be imposed on individuals involved in illegal real-estate activity. The measures come as mortgage fraud has been identified by some economists as a factor in the current housing downturn that has swept the nation and weakened the economy.

"You could make the argument that mortgage fraud and mortgage deals of various kinds are at the heart of our national economic downturn," Huntsman said. "This legislation defines mortgage fraud so that prosecutors can pursue any perpetrator of fraudulent activity and hold them accountable."

Mark Steinagel, director of the state Division of Real Estate, said the new laws will give the state the tools needed to target one of the top crimes currently plaguing Utah.

Steinagel said the state developed a mortgage fraud task force this past fall, and these new laws will bolster their efforts. The Senate bill provides funds for a mortgage-fraud prosecutor within the attorney general's office, he said.

Steinagel said his division will target the worst offenders first, to "shut them down, put them in prison and get the message out that this is unacceptable."

The division will also work in conjunction with local prosecutors and law enforcement to expand their reach and make as big an impact as possible, he added.

In addition to the prosecutor, Steinagel said, the division was also budgeted a fraud investigator, who will work with the mortgage-fraud task force.

He said the penalties imposed on those convicted will be based on the amount of financial gain the perpetrator received through the fraudulent activity and include automatic revocation of any state certified lincensure. He noted that criminal penalties will include fines ranging from $2,500 for a misdemeanor up to $10,000 for someone convicted of a second degree felony.

Individuals could also be sentenced to as much as fifteen years in prison for a major offense. House Bill 346 increased the penalties for violation of the state's licensing laws, he said.

The laws will go into effect May 6, while funding for the new personnel will be available at the start of the new fiscal year, on July 1.

Last year, Utah ranked fifth nationwide for mortgage fraud according to the 2007 annual report by the Mortgage Asset Research Institute for the Mortgage Bankers Association. The report stated that the most common types of fraud included misstating income or employment history and falsifying financial information. The top state for mortgage fraud was Florida, followed Nevada, Michigan, California and Utah.

"Fraud was a contributing factor to the housing bubble," Steinagel said. "As a governmental body, we can't solve all of the reasons for the challenges in the housing market. Our job is to regulate the industry and take action against the bad actors."

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