Today’s Riverside Press-Enterprise ran a story that should concern all of us. Homeowner Fraud Exacerbates the Mortgage Crisis hit it right on the head. The article detailed numerous ways that homeowners defraud mortgage lenders and run down their own neighborhoods by dumping their homes. These people aren’t down on their luck; they just see a chance for a quick buck and don’t have a problem with everyone else bearing the brunt of their investment choices.

But what is most alarming is the fact that state and local governments in California and Oregon make it very difficult for lenders to get their money back, even if the homeowner committed fraud or could afford to honor his / her obligations.

According to writer Leslie Berkman, “wrongdoers are further insulated by California law, which greatly restricts a lender’s ability to sue borrowers to collect the money they’ve lost in a foreclosure or short sale.”

And those who are supposed to protect us from fraudsters are apparently more interested in playing politics. Despite the fact that according to the FBI the vast majority of home loan fraud is perpetrated by homeowners against lenders, local district attorneys are more interested in appeasing voters and “protecting” them from big bad banks. For example, Larry Roberts, who heads the real estate fraud unit of the San Bernardino DA’s office, indicated they have little interest in prosecuting homeowners who lie to their lenders to get loans. His office is more interested in prosecuting “scammers who profit by deceiving consumers…than it is in catching consumers who defraud a lender with the intention of buying or keeping a home.” Makes a nice commercial but what is really affecting real estate and the economy is the big fraud, the one no one wants to be seen going after, the rip-off engineered by “regular folks.”

So the fraudsters can trash our neighborhoods and make it more expensive and difficult to get home financing–as long as they continue to vote. We need to put the pressure on officials to force the deadbeats who are not insolvent to make good on their mortgages. And we need to bring back the stigma of foreclosure–blowing off your mortgage isn’t cool or cute or clever. It’s as much stealing from the little old lady down the street as if you held a gun to her head and emptied her purse.