Bills introduced earlier this month in Congress slipped quietly under the radar screens of most of the popular press. But that doesn't diminish their importance.

In the Senate, legislation by Barack Obama (D-Ill) with Dick Durbin (D-Ill) and Robert Menendez (D-NJ) calls for a comprehensive set of reforms to combat mortgage fraud. And in the House, a measure offered by Reps. Steve Chabot (R-Ohio) and Bart Gordon (D-Tenn.) would strengthen the property rights protections afforded owners under the Fifth Amendment.

The Senate bill, entitled "Stopping Transactions which Operate to Promote Fraud, Risk and Underdevelopment Act" (the STOP Fraud Act for short), would boost funding for federal enforcement, create new criminal penalties for fraudulent activities in mortgage lending and brokering, establish reporting requirements and increase funding for counseling.

The bill also would establish a national database to act as a clearinghouse of information about mortgage professionals who have been disciplined by state or federal regulators.

Several provisions in the measure embrace actions long advocated by the lending community. For example, they have practically pleaded with the Department of Housing and Urban Development, which would get $10 million under the measure, to develop anti-fraud programs and step up its enforcement efforts.

It also would require the FBI to update lenders about fraudulent activity and individual criminals in an orderly fashion through the national data base. Currently, information is passed along on an irregular basis via industry websites that post whatever data they can find.

But the bill would also require lenders to report suspicious activity, a step that, for the most part, they have been loathe to take. However, the bill does grant whistle-blowers immunity from liability, so lenders are more likely to embrace the requirement.

In the House, meanwhile, the bill by Reps. Chabot and Gordon, "The Property Rights Implementation Act," would ensure that property owners get their day in federal court if they object to losing their homes or land under the doctrine of eminent domain. Significantly, the bill is cosponsored by House Judiciary Committee Chairman Jim Sensenbrenner (R-Wis.).

The Fifth Amendment provides that no person shall "be deprived of life, liberty or property without due process of law; nor shall private property be taken for public use without just compensation." But under the current system, owners must exhaust their legal rights in state courts before they can appeal to Uncle Sam.

That presents owners with a so-called "takings claim" with an "untenable paradox," says David Pressly, a home builder from Statesville, N.C., and the president of the National Association of Home Builders, because bringing the case to state court and having a takings claim heard -- even under state law -- often precludes the property owner from review by the federal courts.

"A property owner is, in effect, blocked from using the federal courts to enforce the Fifth Amendment's just compensation guarantee," Pressly explains. "As a result, property owners throw up their hands and give up without ever getting a fair hearing in federal court."

Whereas all other civil rights cases can be brought directly to federal court, those raising a Fifth Amendment takings claim can not. For example, an adult book store owner who challenges a municipal land-use regulation based on the First Amendment's free speech protection has direct access to federal court. But if he contests the same regulation raising the Fifth Amendment, he must take his claim to a state court.

"This bill would finally put the Fifth Amendment back on par with the rest of the Bill of Rights," says the housing industry leader. "Congress has passed laws to ensure that citizens alleging a violation of their constitutionally protected rights have access to federal courts. Fifth Amendment takings cases should be treated no differently."

Published: February 22, 2006

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.