Recent breakdowns in U.S. financial markets have prompted congressional interest in criminal provisions available to federal prosecutors in cases involving mortgages. Because the role of weak mortgage loans in the economic downturn involves complex and systemic factors, criminal prosecution will necessarily be only one part of a broader governmental response. Numerous federal agencies enforce laws and regulations designed to stabilize markets and ensure the integrity of financial transactions within their respective areas of jurisdiction. Thus, regulatory reform will likely be an important response to the downturn. However, although regulations might provide an adequate means of enforcement in many situations, criminal provisions support prosecution in egregious cases involving criminal intent. This report focuses on federal criminal provisions relevant to prosecutions of mortgage fraud and related criminal actions. Mortgage fraud, per se , is not a federal crime. However, several federal criminal provisions – most notably mail and wire fraud, financial institutions fraud, and a number of crimes involving false statements – may encompass various fraudulent activities at issue in mortgage fraud cases. The mail and wire fraud statutes have a relatively broad application and are perhaps most likely to apply to those at the high end of the mortgage transaction ladder. Various provisions criminalizing false statements will also apply in some circumstances. In addition, financial institutions fraud provisions apply to instances in which an entity against whom a fraud is perpetrated falls within the definition of "financial institution" under federal law. Money laundering, conspiracy, and racketeering provisions may provide additional grounds for federal criminal liability. Other statutes, such as securities fraud provisions, may apply to fraudulent transactions within the secondary mortgage market. Finally, some provisions criminalize violations of federal regulations, creating an important connection between regulatory reforms and the scope of authorities for federal criminal liability. Looking forward, legislative proposals address a perceived need to expand the scope of federal statutory authority for mortgage fraud prosecutions. Although the U.S. Constitution's ex post facto clauses prohibit the states and federal government from imposing retroactive criminal penalties, Congress may choose to amend existing law to enhance liability for future crimes and deter fraud which targets people who are newly vulnerable to foreclosure proceedings in the current market or to ensure that wrongdoers are held liable in future situations. The Fraud Enforcement and Recovery Act of 2009 (FERA, S. 386 ), versions of which have been passed by the Senate and House, would, in addition to authorizing funding for prosecution efforts and other measures, expand federal criminal law authorities for combating mortgage fraud and related crimes. The many relevant federal criminal statutes, discussed infra , are indicative of the various types of activities related to mortgages that might constitute criminal fraud. However, despite the diversity of schemes and motives, mortgage fraud can be broadly described as involving material misstatements, misrepresentations, or omissions made with an intent to deceive an individual or entity in connection with a mortgage. It is also possible to describe general categories and trends. For example, the Federal Bureau of Investigation has drawn a general distinction between fraud-for-housing and fraud-for-profit schemes. Fraud for housing is committed by an individual, usually a borrower, for the purpose of fraudulently obtaining (or maintaining ownership of) a property. A common fraud-for-housing scenario involves false statements made to obtain a mortgage loan. Although the aggregate impact of all fraud-for-housing activity might be high, the impact of each individual fraud will typically be limited to a single property. Such crimes are generally prosecuted at the state level. Fraud for profit typically involves an ongoing scheme and an "industry insider" such as a mortgage broker or loan processor. Types of fraud-for-profit schemes that the FBI has identified as having "currently rising" incidences include equity skimming, property flipping, mortgage related identity theft, and foreclosure rescue scams. One example of equity skimming involves entities which offer to improve a homeowner's credit or help with mortgage payments by placing title to a home with a third-party "straw borrower," ostensibly to increase the original borrower's credit but actually to draw on the home's equity through the straw borrower. New York State law enforcement authorities brought charges against five people in connection with one such scheme in the Hamptons on Long Island. Similarly, foreclosure rescue scams advertise help with a foreclosure process but collect fees without providing any actual assistance. Property flipping involves "purchasing properties and artificially inflating their value through false appraisals" – a process which is typically repeated several times, until the property ultimately enters foreclosure. Because of the connection between deficient mortgage lending, the collapse of the burgeoning market for mortgage-backed securities, and the ultimate collapse of key financial institutions, many appear to include corporate and institutional fraud in discussions of the mortgage fraud problem. For example, in the context of testimony regarding the FBI's mortgage fraud investigations, the FBI's Deputy Director has referred to "mortgage and related corporate fraud" and to "mortgage fraud and related financial institutions fraud." This broad approach to the issue results in the inclusion of some activities which are best described as belonging to a criminal law category other than mortgage fraud but which, if kept separate, could result in an incomplete picture of the role of mortgage fraud. These related types of corporate, financial institutions, or securities fraud might relate to mortgages in one of at least two ways. First, a financial institution's officer or employee might play an "industry insider" role in a mortgage fraud scheme, for example by approving a loan but hiding pertinent information from the lending institution, thus participating directly in mortgage fraud. Alternatively, an employee might have committed an action constituting corporate, securities, or financial institutions fraud in relation to mortgage-backed financial instruments, utilizing mortgage assets that might or might not have been fraudulently obtained, for example by intentionally misstating the value of a mortgage-backed security to shareholders or to the Securities and Exchange Commission. Regardless of the categorization of fraudulent activities, many believe that mortgage fraud has played an important role in the recent economic downturn. A Senate Judiciary Committee report states: While the full scope of the fraud that helped trigger the economic crisis is still unknown, we do know a great deal about what went wrong. As banks and private mortgage companies relaxed their standards for loans, approving ever riskier mortgages with less and less due diligence, they created an environment that invited fraud. Private mortgage brokers and lending businesses came to dominate the home housing market, and these companies were not subject to the kind of banking oversight and internal regulations that had traditionally helped to prevent fraud. In other words, although such fraud is not the only cause of the crisis, fraudulently obtained mortgages, home loan scams, and other mortgage fraud activities likely contributed to instability in the mortgage markets, which in turn spurred breakdowns in financial markets dependent on mortgage-backed securities. Many perceive mortgage fraud and related behavior as a pervasive issue, indirectly affecting the nation's and world's economy and directly affecting thousands, and perhaps even millions, of homeowners. The FBI Deputy Director noted that "the current financial crisis has produced one unexpected consequence: it has exposed prevalent fraud schemes that have been thriving in the global financial system." In response to "rising public anger" in the wake of the economic downturn, some have called for increased mortgage fraud prosecutions on both the state and federal levels. Such calls prompt questions regarding the respective roles of federal and state prosecutors. For schemes perpetrated for the purpose of defrauding a federal regulatory agency, federal prosecutors are likely to have sole prosecutorial authority. For other schemes, including schemes involving federally regulated institutions, federal and state prosecutors are likely to have overlapping prosecutorial jurisdiction. In those situations, generally speaking, the federal focus is on the prosecution of relatively large fraudulent schemes. However, state prosecutors are not limited to prosecution of smaller schemes and often pursue fraud involving institutions or industry insiders. As discussed, numerous federal regulatory agencies play vital roles in the enforcement and supervision of financial institutions. Since the recent financial downturn, some agencies have implemented regulatory reforms on their own initiative, whereas others have implemented new regulations in response to congressional mandates. For example, as part of the 2009 omnibus spending legislation, Congress directed the Federal Trade Commission to initiate a rulemaking proceeding to regulate mortgage loans pursuant to its existing regulatory authority within 90 days of the act. Regulatory agencies also often partner with the Justice Department during criminal investigations, although the discretion to pursue criminal prosecution at the federal level ordinarily rests with the Justice Department. Since the breakdown in financial markets, resources for federal criminal investigations and prosecutions have shifted or expanded to emphasize mortgage fraud. The Federal Bureau of Investigation (FBI) has more than 2,000 active mortgage fraud investigations and has increased the number of mortgage fraud investigators. The United States has obtained guilty pleas in some cases involving "straw borrower" schemes. In addition, in June 2008, the Department of Justice conducted "Operation Malicious Mortgage," wherein U.S. Attorneys, with help from the FBI and others, brought charges against more than 400 defendants involved in lending fraud, foreclosure rescue scams, and mortgage-related bankruptcy schemes. In addition, the Treasury and Justice Departments have announced that the Obama Administration will initiate a coordinated crackdown on foreclosure-rescue and mortgage loan modification fraud in an effort to protect homeowners from new frauds that might be perpetrated to take advantage of individuals "during these challenging times." The role of mortgage fraud in the economic downturn has prompted concerns regarding the adequacy of existing federal criminal statutes. In particular, noting the large role that private (i.e., non-federally-chartered) mortgage lending businesses played in the residential mortgage market during the years preceding the recent financial crisis, some perceive a need for an expansion of federal criminal liability to encompass actions perpetrated to defraud such institutions. Such proposals have noted that false statements and schemes to defraud a private mortgage lending businesses currently escape liability under several traditional federal fraud statutes.