Arizona House Bill 2040 passed the Senate 26-0 on Monday. Sponsored by Sen. Jay Tibshraeny, R-Chandler, HB2040, if passed by Gov. Napolitano, will make Arizona one of the first states to make mortgage fraud a crime.
Mortgage fraud in Arizona and across the nation has had a significant impact on the real estate and mortgage markets. One of the reasons for passing this bill is to stem the recent trend of illegal cash back at close of escrow transactions. Mortgage fraud had negatively impacted Phoenix neighborhoods by falsely inflating home values and causing an increase in foreclosures with the cash back schemes.
A first time mortgage fraud offender could face three years in prison with repeat offenders looking at sentences up to 10 years. Currently Georgia, Nevada, and Colorado have similar laws on the books. Mortgage fraud has been called the most significant white collar crime of the century. Arizona ranks in the top 10 for state in both foreclosures and mortgage fraud.
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