Neil Barofsky, special inspector general for TARP, is sounding a warning about the potential for fraud within the Treasury's mortgage modification program. Meanwhile, United States Senator Charles E. Schumer, joined by all five NYC district attorneys, introduced legislation Monday calling on the federal government to infuse $100 million into fighting the recent wave of housing scams. “The recent foreclosure and refinancing crisis, following a sharp increase in home values created a perfect storm for these housing scammers to swoop in and fleece homeowners," Schumer (D-NY) said. "With this bill, these criminals will be stopped.” Schumer's Fighting Real Estate Fraud Act of 2009 establishes a grant program in the Department of Justice for local District Attorney’s offices around the nation, which authorizes $100 million in grants for hiring specialized staff for offices that need additional resources to combat mortgage fraud. Across the country, federal and local prosecutors are simply on overload, he said. The creation of Real Estate Fraud Units is meant to resolve these issues by employing staffers who will be able to focus exclusively on real estate crimes and prosecute scammers. Just last month, Schumer secured $875,000 toward the creation of such a Real Estate Fraud Unit at the Brooklyn DA’s office. "Our mortgage fraud hotline in Brooklyn rings off the hook with cries from homeowners who have been scammed out of their most precious possession," said Brooklyn DA Charles Hynes. "This legislation and the grant funding will go a long way towards protecting those victims and prosecuting those who prey on them." Over the past several years, the NYC Kings County District Attorney’s Office has been flooded with referrals of mortgage and deed fraud cases from local politicians, homeowner advocacy groups, attorneys, state agencies and individual homeowners. While several investigations and prosecutions were undertaken, much of the increasing work load was referred elsewhere, Schumer said in a press release. Often times, victims of mortgage fraud were referred to civil court to battle the scams. "Civil court is the wrong place for this," Schumer told the New York Times in an interview. "It takes too long and it's expensive." The majority of housing fraud cases involve some degree of criminal conduct, whether it be theft of a home by way of a forged deed or falsification of borrower assets by a mortgage broker. But uncovering the evidence of criminality requires investigative resources that are currently not readily available to victims around the nation, according to the NYC district attorneys. "Increased prosecution of housing frauds is a necessary weapon in the arsenal of government programs to end the crisis currently manifesting itself in the foreclosure wave," reads a report from Schumer's office. "Prosecutions can result in jail sentences for the offenders and restitution for the victims, which currently is very rare." Barofsky's focus, on the other hand, is on fraud prevention according to his quarterly report to Congress today. In it, he makes several recommendations to combat the potential for fraud within the Treasury's mortgage modification program. Barofsky urges the Treasury to "build certain fraud protections into the mechanics of the program," suggesting there are very little, if any, currently in place. Further, the report recommends third-party verifications of residence and income, conducting a closing-like procedure in which the identities of participants are confirmed, and delaying modification incentive payments to servicers. In addition, the oversight agency said the Treasury should proactively educate homeowners about the nature of the program, publicize that no fee is necessary to participate in the program, and collect and maintain a database of the names and identifying information for each participant in each mortgage modification transaction. SIGTARP reported seeing potential for corporate and securities fraud instances, insider trading, public corruption and other fraudulent schemes in a number of TARP programs. SIGTARP's hot line, established to record instances of suspected violations, has so far received 200 tips, including "serious allegations of fraud," the report said. To keep ahead of alleged fraud and to prevent future cases, SIGTARP made a number of recommendations to the Treasury. "Simply put, the American people have a right to know how their tax dollars are being used," the report says. SIGTARP recommended requiring TARP recipients -- through the Capital Purchase Program (CPP), Public-Private Investment Program (PPIP), Term Asset-Backed Securitis Loan Facility (TALF) or any other program -- to report exactly how they use the funds. The PPIP, in particular, is "inherently vulnerable" to fraud, waste and abuse in fund managers' conflicts of interest, collusion between participants and money laundering, the report said. Greater oversight, transparency and due diligence would serve to ensure such conflicts of interest don't exist among fund managers. Write to Kelly Curran at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. Diana Golobay contributed to this article.