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Measure strengthens fraud laws, authorizes funding for Shaheen budget amendment to fight fraud in Federal Housing Administration programs

(Washington, D.C.) - U.S. Senator Jeanne Shaheen applauded Senate passage today of the bipartisan Fraud Enforcement and Recovery Act (FERA), which will protect taxpayer money involved in economic recovery efforts and help fight the kind of fraudulent crimes that contributed to the economic crisis by strengthening anti-fraud laws, closing legal loopholes and by authorizing additional funding for the Department of Justice, FBI and other law enforcement agencies to prosecute mortgage and corporate frauds. The legislation also authorizes funding for Shaheen's previously passed budget amendment, which will help protect taxpayers from the growing foreclosure crisis by enhancing the Department of Housing and Urban Development's (HUD) ability to investigate and remove fraudulent mortgage lenders from Federal Housing Administration (FHA) programs.

"Protecting taxpayer money from fraud and waste and punishing those whose illegal activities precipitated this economic crisis are key components to economic recovery, and that's exactly what the bipartisan Fraud Enforcement and Recovery Act does," said Shaheen. "I'm also pleased this legislation authorizes funding for my amendment to help increase the oversight and accountability of FHA programs and to help protect taxpayers by enhancing HUD's ability to investigate fraudulent lenders and remove them from taxpayer-backed programs. I'm glad the Senate came together in a bipartisan fashion to pass this important legislation, and I look forward to working with my colleagues on both sides of the aisle as we continue our efforts to strengthen our economy."

The incidence of fraud is rising rapidly with mortgage fraud claims increasing more than 10 times in the past six years, but the offices investigating white collar crime are severely understaffed. The FERA strengthens fraud enforcement by allowing the Department of Justice to prosecute fraud committed by all mortgage lenders, not just those that are regulated by the federal government, and the FERA fixes deficiencies in current fraud and money laundering statutes by closing legal gaps and addressing flawed court interpretations. The FERA will also help root out waste and fraud in government by strengthening the False Claims Act, correcting court opinions that have limited the scope of the law allowing government sub-contractors to escape responsibility for proven frauds. The FERA further authorizes an additional $245 million per year for the Justice Department, the FBI, and other investigative agencies to fight fraud. The funds authorized by the FERA will ultimately result in significant returns and possibly a net gain in revenue for the government through recovery and fines. The FERA passed the U.S. Senate with broad bipartisan support 92-4.

The FERA also authorized funding for Shaheen's budget amendment to increase HUD's ability to remove fraudulent mortgage lenders from FHA programs. The number of FHA-approved lenders has doubled over the past two years, and the FHA now insures one-third of all new mortgages. Recent reports of a rise in borrowers who haven't made even one payment suggest that fraudulent activity has increased among FHA-backed loans, potentially putting taxpayers on the hook for fraudulent lending practices. Shaheen's amendment will help protect taxpayers from fraudulent lending activity by increasing the capacity of HUD's Inspector General to investigate cases of FHA loan fraud. The amendment was co-sponsored by Senators Gregg (R-NH), Mikulski (D-MD) and Kaufman (D-DE) and passed the Senate by unanimous consent on April 1.