Steve Archambault, Democratic candidate for Attorney General recently unveiled a six point plan to combat mortgage fraud and protect Rhode Island consumers.
In 2008, Rhode Island led the nation in mortgage fraud according to the Mortgage Asset Research Institute and "today's tough credit market provides fertile soil for scam artists, the problem may be even worse," says Archambault.
He is targeting current banking practices that have contributed to historically low home values, causing financial pain for borrowers in the state.
"Current banking practices must change now," said Archambault, who currently serves as a councilman in Smithfield, Rhode Island.
"Home foreclosures, devaluation of property values and the unavailability of credit will continue as a result of market manipulation and fraud if banking laws and regulation remain unchanged and violations go without prosecution."
As Attorney General, he stresses he will "aggressively go after mortgage fraud and other practices that hurt homeowners."
Archambault noted that the recent formation of a Rhode Island Mortgage Fraud Task Force to be led by US Attorney Peter Neronha and Attorney General Patrick Lynch was a step in the right direction and he would certainly continue it as Attorney General. But that changes in current laws and regulations were needed to provide maximum impact.
As part of his "Six Point Plan," as AG, he would close the "net branch" loophole.
"Currently, mortgage brokers and loan officers as well as former owners of former broker operations can avoid criminal background checks and license requirements by signing a "net branch" agreement to work as a sub-contractor to a major bank or mortgage company," he said.
"To fix this loophole, all loan officers and mortgage brokers must be subject to a criminal background check and comply with all other requirements."
The candidate would impose requirements for brokers, lenders and underwriters to sign-off on all loan applications and approvals and strengthen state penalties on those that supply false pay documents or encourage applicants to exaggerate their income.
He would require licenses for all people with signing authority for loans. In Rhode Island, he says, "the people within mortgage companies and banks that do final sign-off on loans are currently not required to be licensed and tested on their knowledge and competency."
According to Archambault, attention must be given to the problem of market manipulation to promote lower home property valuation, which is directly depressing the housing market.
"There needs to be a uniform set of appraisal standards and tougher licensing requirements for appraisers. Appraisers that work in Rhode Island must be required to show sufficient familiarity with the marketplace in order to opine on an appraisal," he said.
The candidate hopes to "convene a special grand jury" specifically charged with examining mortgage fraud as well as establish a state-wide mortgage loan data base in order to better pinpoint potential cases of fraud.
This database would include all mortgage loans issued in the State of Rhode Island and lists all the parties involved in the loan including brokers, lenders and appraisers.
Archambault, who serves as a Councilman in Smithfield, would bring a broad legal background to the Attorney General's office. His experience as a police officer, local Prosecutor and defense Attorney gives him a first-hand understanding of all the elements of the criminal justice system.
