May 11, 2009
Daniel King

 

Both the Senate and the House passed legislation to give the federal government more power to prosecute mortgage and financial fraud and create a commission to investigate the causes of the economic crisis. Senate Bill 386, known as the Fraud Enforcement and Recovery Act of 2009 (“FERA”), amends the federal criminal code to include within the definition of “financial institution” a mortgage lending business or any person or entity that makes, in whole or in part, a federally related mortgage loan and defines “mortgage lending business” as an organization that finances or refinances any debt secured by an interest in real estate, including private mortgage companies and their subsidiaries, and whose activities affect interstate or foreign commerce.

FERA authorizes appropriations to the Attorney General for investigations, prosecutions, and civil and administrative proceedings involving federal assistance programs and financial institutions and allocates such funds among various departments of the Department of Justice to investigate mortgage fraud. FERA also amends the False Claims Act to expand liability for making false or fraudulent claims to the federal government and expands the False Claims Act relating to intervention by the federal government in civil actions for false claims.