Senate votes to hire officials targeting mortgage fraud

WASHINGTON -- The Senate voted Tuesday to hire hundreds more FBI agents and prosecutors to investigate the estimated 5,000 allegations of mortgage fraud reported each month.

The 92-4 bipartisan vote came as a House panel considered an anti-predatory lending bill that attempts to ban the type of subprime mortgage loans that contributed to the nation's economic slide. It also came as the former head of a one-time leading mortgage lender, American Home Mortgage Investment, agreed to pay nearly $2.5 million to settle allegations of accounting fraud.

"As foreclosures menace more and more hardworking homeowners, they become more desperate for help," said Senate Majority Leader Harry Reid, D-Nev. "Unfortunately, schemers, swindlers and scam artists are all too happy to pounce."

The Senate bill, sponsored by Sens. Patrick Leahy, D-Vt., and Chuck Grassley, R-Iowa, is estimated to cost more than $265 million a year for the next two years. Supporters, including President Obama, say the legislation would more than pay for itself because of the fines and penalties that would result from more aggressive government investigations.

Bill supporters anticipate that the money would hire another 160 special FBI agents and more than 200 support staff, including forensic analysts. Currently, the FBI has fewer than 250 special agents assigned to financial fraud cases, despite caseloads that have more than doubled in the past three years.

Under the bill, the Justice Department would hire 200 more prosecutors and civil enforcement attorneys, along with 100 support staff.

Other government entities in line to receive money include the Secret Service, Postal Inspection Service and the inspector general for the Housing and Urban Development Department.

An amendment by Sens. Chuck Schumer, D-N.Y., and Richard Shelby, R-Ala., added $21 million to the bill's original $245 million-a-year total for the Securities and Exchange Commission to boost its enforcement capabilities.

The measure covers the 2010 and 2011 budget years, which begin Oct. 1.