The US Senate on Tuesday voted 92-4 in favor of Senate bill 386, called the Fraud Enforcement and Recovery Act, which provides $490m over the next two fiscal years for mortgage fraud investigation. The legislation allows $75m in fiscal year 2010 and $65m in fiscal year 2011 for the FBI to use its resources to go after suspected fraudsters. Furthermore, $50m goes to the US Attorneys’ office. Up to $40m in funding goes to the Justice Department, to be shared among the criminal, civil and tax divisions. The legislation also would provide $30m each fiscal year to the Inspector General for the Department of Housing and Urban Development for investigation of fraud cases. The bill authorizes the use of funds for any investigation, prosecution or administration purposes involved with reducing crimes against federal assistance programs including mortgage fraud, securities fraud and financial institution fraud. It covers mortgage loan companies not federally regulated or insured. “These companies remain outside the scope of traditional fraud statutes. This bill corrects that,” said Arlen Specter, according to a MarketWatch bulletin. The Republican Senator said on Tuesday he is switching party affiliations before the upcoming primary election in May 2010. He will run on the Democratic ticket.   Senate Democrats currently possess one seat short of an influential 60-member majority. Critics of Specter’s move, primarily his former cohorts in the Republican Party, say such status will give Democrats Carte Blanche in creating government policy. Write to Diana Golobay at [email protected].

More: