Wow, what a week, and technically it’s not even over, yet. From talking with nearly a dozen different reporters from national and regional newspapers and magazines about the problems associated with real estate and mortgage fraud, to working on finalizing and submitting chapters to the publisher for my new book, as well as working on workshop proposals for the National Association of REALTORS Annual Conference and going to work every day to help customers and my amazing staff with the daily grind that is the real estate market (phew, that was a mouthful)… it has been one nutty week, to say the least.

Still though, the coverage of real estate fraud indictments, convictions, and related legislative efforts keep coming, and the state of Ohio seems to be leading the charge. From this morning’s online edition of The Cincinnati Post:

Mortgage Broker Pleads Guilty in Real Estate Flipping Scheme

By Jon Newberry, Post Staff Reporter

Another Cincinnati area mortgage broker has agreed to plead guilty to criminal charges arising from a real estate “flipping” scheme, this one allegedly defrauding mortgage lenders of more than $872,000, according to U.S. Attorney Gregory Lockhart’s office.

Clarence D. Harris of Cincinnati was charged with conspiracy to commit bank, mail and wire fraud and filing a false tax return earlier this month. He has agreed to cooperate with the ongoing investigation. He’s scheduled to appear before U.S. District Court Judge Herman Weber on Feb. 28, according to Internal Revenue Service spokesman Craig Casserly.

Harris’s approach was similar to other flipping schemes that have been uncovered by law enforcement officials, including the IRS, the FBI and the U.S. Postal Inspection Service. Prosecutors said the schemes involved people purchasing real estate at a low value and then recruiting a buyer for the property, usually someone who otherwise couldn’t afford it or who was interested in buying it as an investment.

False documents would be created, including pay stubs, W-2 forms, bank statements and employment verifications, and a falsely inflated property appraisal would be obtained.

My colleague Rachel Dollar at MortgageFraudBlog.com got a hold of Harris’ plea agreement and provides a deeper look into what the former mortgage broker did (click here to read Rachel’s overview).

Also this week, more great news out of Ohio… this time though it’s on the legislative side of the coin… news about a Bill in the Ohio Senate that would hold mortgage brokers more accountable for their actions. From Wednesday’s online edition of the Cincinnati Enquirer:

Bill To Aid Homeowners

Lawmakers rebuffed efforts Wednesday to protect mortgage brokers and lenders from lawsuits, instead inserting more borrower-friendly provisions in a bill aimed at lowering Ohio’s foreclosure rate. The [sic: Ohio] Senate voted 29-4 to send the bill [sic: Sub. S. B. No. 185] clamping down on predatory lending practices to the House. Sen. Tom Niehaus, R-New Richmond, was one of the four who voted no.

Ohio’s foreclosure rate is the worst in the nation. Despite federal investigations of mortgage fraud in Greater Cincinnati and Dayton, and questions about the rising foreclosure rate across the state, the General Assembly has studied the issue for a couple of years but enacted no laws.

House Speaker Jon Husted called the bill a good foundation. The suburban Dayton Republican said he hadn’t studied all the specifics but wants to ensure the bill stays focused on stopping fraudulent practices without hampering business. The bill adds mortgage brokers and lenders that aren’t otherwise covered by federal banking regulations to Ohio’s consumer protection act, requires more licensing for those in the industry and increases enforcement authority of local prosecutors and the state attorney general.

The Ohio Chamber of Commerce learned late of a provision that requires brokers and lenders to act in the best financial interests of their customers – similar to requirements for stock brokers and insurance agents. But instead of removing the requirement as the chamber suggested, a Senate committee Wednesday strengthened it, prohibiting brokers and lenders from asking customers to sign papers saying the lenders don’t have to act in the borrowers’ best interest.

From this week’s news, it looks like Ohio’s moving in the right direction. Click here for the full text version of Ohio Senate Bill 185… it’s a long read, but it’s also well worth it!