Local Governments Combating Real Estate Fraud with Higher Transaction Fees

The collapse of the housing market has left many local governments around the country scrambling to handle the accompanying spike in real estate fraud cases. Few states have been hit as hard as California, which currently boasts eight of the ten worst projected housing markets for 2009.¹ The California Department of Real Estate has reported a significant increase in the number of real estate fraud cases statewide.² The increased case load has prompted several local governments in the state to approve new or increased recording fees on real estate transactions to combat fraud.

Stanislaus County recently approved an increase to such fees, in part due to the fact that the number of reported fraud cases there has tripled since 2006.³The

Local Governments Combating Real Estate Fraud with Higher Transaction Fees

Board of Supervisors approved an increase to the Real Estate Fraud Fee from two dollars to three dollars for virtually all real estate transactions filed in the county.

California reported the highest number of fraud cases in the country in the last quarter of 2008. The dollar value of the 4th quarter cases alone topped a billion dollars.⁴ The most commonly reported types of real estate fraud include home improvement scams, equity fraud, flipping, fraudulent loan origination and equity skimming. With the number of reported fraud cases expected to continue to climb in 2009, the number of local governments seeking to address the issue by imposing new or increased real estate transaction fees is likely to climb as well.

The following is a list of several other examples of local governments implementing real estate fraud fees to address budget shortfalls:

• Riverside County, CA to Hold Public Hearing of Resolution Authorizing Increase to Fees for the Real Estate Fraud Prosecution Trust Fund
• Orange County, CA to Hold Public Hearing and Consider Adoption of Recording Fee for Real Estate Fraud Protection Trust Fund
• Monterey County, CA to Consider Adoption of Resolution Regarding Real Estate Recording Fees
• Alameda County, CA to Hold Public Hearing of Recording Fees for Real Estate Fraud Investigation and Prosecution
• Santa Clara County, CA to Consider Resolution Authorizing Increase in Recording Fees to Fund Investigation of Real Estate Fraud Crimes

1. ^{http://www.calitics.com/showDiary.do?diaryId=7730}
2. ^{http://lansner.freedomblogging.com/2008/09/27/insider-qa-told-real-estate-fraud-is-on-the-rise/3898/}
3. ^{http://www.ordinancewatch.com/ow_blog.cfm?user_id=7746&id=12475}
4. ^{http://blownmortgage.com/2009/02/09/mortgage-fraud-increases-in-2008/}