Steve Archambault, Democratic Candidate for Attorney General, today 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 (M.ARI) and in today's tough credit market which provides fertile soil for scam artists, the problem may be even worse. Archambault also targeted current banking practices that have contributed to historically low home values, causing real financial pain for so many Rhode Islanders and hurting our economy.

Steve Archambault said, "Current banking practices must change now. 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, I will aggressively go after mortgage fraud and other practices that hurt homeowners and I will seek the legal changes needed to be most effective," Archambault added.

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.

The components of Archambault's plan are summarized below:

Six Point Plan

1) 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. It is time to close this loophole that lets shady operators continue in business. To fix this loophole, all loan officers and mortgage brokers must be subject to a criminal background check and comply with all other requirements. I will seek state legislation to make this needed change.

2) 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: The all too common practice of failing to verify income and encouraging applicants to lie about their income and thereby qualify for a mortgage they can't afford must be stopped. We need stronger penalties. Mortgage fraud must be made a felony punishable with jail time. Broker, lender and underwriter negligence must be met with a loss of license. I will seek state legislation to accomplish these goals.

3). Require licenses for all people with signing authority for loans 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. As a result, this final safety check can be compromised. I will seek legislation requiring licenses that include competency testing for all people with authority to approve a loan.

4) Set uniform appraisal standards and require reviewers at Appraisal Management Companies to be certified appraisers. Problems of the past were created (i part) by overstated property values, which created market risk for both the buyer and lender. Currently the problem is 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. In addition, the reviewers at the Appraisal Management Companies that now control most of the appraisal market do not currently need to be certified appraisers. We must require that they too be certified. I will seek legislation requiring the Rhode Island Department of Business Regulation to put forward these standards and hold appraisers accountable for their opinions.

5) Convene a Special Grand Jury specifically charged with examining mortgage fraud. We know that Rhode Island has one of the worst mortgage fraud problems in the country, yet there have been very few people prosecuted for it As Attorney General, I will launch a thorough investigation and convene a special grand jury to review the evidence. I will look at the role of mortgage companies, banks and closing attorneys in facilitating this costly and illegal practice and prosecute.

6) Establish a state-wide mortgage loan data base in order to better pinpoint potential cases of fraud A database that includes all mortgage loans issued in the State of Rhode Island and lists all the parties involved in the loan including brokers, lenders and appraisers will enable oversight to see if patterns emerge that indicate possible fraud and bad lending practices. This data base can help provide an early warning system for problems. Lenders would be required to report any payment defaults or foreclosures. Companies with high percentages of defaults or foreclosures would be audited to see if there are negligent or fraudulent practices at work.

Background on Archambault

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.

To learn more about Steve Archambault and how he will serve the people of Rhode Island as our next Attorney General, visit www.archambaultforattorneygeneral.com.