Bill Text: MI SB0043 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Consumer credit; lending practices; crime of residential mortgage fraud; establish. Amends 1931 PA 328 (MCL 750.1 - 750.568) by adding sec. 219d.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2011-10-25 - Assigned Pa 0205'11 With Immediate Effect [SB0043 Detail]
Download: Michigan-2011-SB0043-Engrossed.html
SB-0043, As Passed Senate, June 14, 2011
SUBSTITUTE FOR
SENATE BILL NO. 43
A bill to amend 1931 PA 328, entitled
"The Michigan penal code,"
(MCL 750.1 to 750.568) by adding section 219d.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 219d. (1) A person that knowingly, with the intent to
defraud, does any of the following is guilty of the crime of
residential mortgage fraud, punishable as provided in this section:
(a) Makes a false statement or misrepresentation concerning a
material fact or deliberately conceals or fails to disclose a
material fact during the mortgage lending process.
(b) Uses or facilitates the use of a false statement or
misrepresentation made by another person concerning a material fact
or deliberately uses or facilitates the use of another person's
concealment or failure to disclose a material fact during the
mortgage lending process.
(c) Receives or attempts to receive any proceeds or any other
money in connection with the mortgage lending process that the
person knows resulted from a violation of subdivision (a) or (b).
(d) Files or causes to be filed with the register of deeds of
any county of this state any document involved in the mortgage
lending process that the person knows to contain a deliberate
material misstatement, misrepresentation, or omission.
(e) Fails to disburse funds in accordance with the settlement
or closing statement for the mortgage loan.
(f) Conspires to violate subdivision (a), (b), (c), (d), or
(e).
(2) A crime of residential mortgage fraud under this section
shall not be predicated solely upon information lawfully disclosed
under federal disclosure laws, regulations, or interpretations
related to the mortgage lending process.
(3) For the purpose of determining venue of a prosecution
under this section, a violation of this section is considered to
have been committed in any of the following:
(a) In the county in which the residential property for which
the mortgage loan is obtained or sought is located.
(b) In the county in which an owner of the property for which
the mortgage loan was obtained or sought resides.
(c) In any county in which a material act was performed in
furtherance of the violation.
(4) A person who violates this section is guilty of a felony
punishable by 1 of the following:
(a) Except for a violation described in subdivision (b),
imprisonment for not more than 15 years or a fine of not more than
$100,000.00, or both.
(b) If the violation occurs in connection with the mortgage
lending process in which the loan value stated on documents used in
the mortgage lending process exceeds $100,000.00, imprisonment for
not more than 20 years or a fine of not more than $500,000.00, or
both.
(5) Each violation of this section constitutes a separate
offense.
(6) This section does not prohibit a person from being charged
with, convicted of, or punished for any other violation of law that
is committed by that person while violating this section.
(7) It is an affirmative defense to a prosecution of a
defendant for a violation of this section committed by an employee
or agent of the defendant if the defendant demonstrates all of the
following by a preponderance of the evidence:
(a) The defendant had in force at the time of the violation
and continues to have in force a written policy that includes at
least all of the following:
(i) A prohibition against conduct that violates this section by
employees and agents of the defendant.
(ii) Penalties or discipline for violation of the policy.
(iii) A process for educating employees and agents concerning
the policy and consequences of a violation.
(iv) A requirement for a criminal history check before
employing an employee or engaging an agent and a requirement that
the defendant will not employ or engage an individual whose
criminal history check reveals a previous conviction of a crime
involving fraud.
(b) The defendant demonstrates that it enforces the written
policy described in subdivision (a).
(c) Before the violation of this section, the defendant
communicated the written policy described in subdivision (a) and
the consequences for violating the policy to the employee or agent
who committed the violation.
(8) Property of any kind used or intended for use in the
course of, derived from, or received in connection with a violation
of this section by the person that violated this section is subject
to forfeiture in the same manner as provided in chapter 47 of the
revised judicature act of 1961, 1961 PA 236, MCL 600.4701 to
600.4709.
(9) All of the following apply if a person is convicted of a
violation of subsection (1) or of a lesser included offense in
connection with a completed residential mortgage loan transaction:
(a) Within 6 months of the date of the conviction, the
mortgagor who obtained the residential mortgage loan may request an
order described in subdivision (b) if the court makes all of the
following findings:
(i) The mortgagor was a victim of the residential mortgage
fraud and was not involved in any criminal activity.
(ii) The mortgagor did not knowingly apply for the residential
mortgage loan or execute the documents involved in the mortgage
lending process.
(b) If subdivision (a) is met, the court shall enter an order
indicating that the residential mortgage and other documents
involved in the mortgage lending process are invalid. The court
shall require that the victim of the residential mortgage fraud
record a certified copy of the order and a copy of the invalid
residential mortgage in the office of the register of deeds of the
county where the mortgaged residential property is located, and the
register of deeds shall record those documents as provided in
section 2935 of the revised judicature act of 1961, 1961 PA 236,
MCL 600.2935. The court shall designate in the order the person
responsible for paying the fee for recording those documents.
(c) If a mortgagor described in subdivision (a) requests an
order described in subdivision (b), and the residential mortgage or
any other documents involved in the mortgage lending process were
previously recorded, the prosecutor in the criminal proceeding
shall provide the circuit court with the name of the county in
which the document or documents were recorded and the liber and
page number or unique identifying reference number of the recorded
residential mortgage or other document or documents, and the court
shall include that information in the order.
(d) If a county register of deeds receives a certified copy of
an order and a copy of the invalid residential mortgage for
recording, the register of deeds shall make reference to the liber
and page number or unique identifying reference number of the
invalid residential mortgage in the index of the recorded
documents.
(e) If the circuit court enters an order described in
subdivision (b), before the order is recorded, the victim of the
residential mortgage fraud shall provide written notice to the
residential mortgage lender, and any successors or assigns of the
lender, that the court has entered the order. A lender and any
successor or assignee of a lender that receives a notice under this
subdivision may request a court hearing to contest the court's
order, but that person must request the hearing within 30 days
after receiving the notice.
(10) As used in this section:
(a) "Documents involved in the mortgage lending process"
includes, but is not limited to, mortgages; deeds; surveys;
inspection reports; uniform residential loan applications or other
loan applications; appraisal reports; HUD-1 settlement statements;
supporting personal documentation for loan applications such as W-2
forms, verifications of income and employment, bank statements, tax
returns, and payroll stubs; and any written disclosures required by
law.
(b) "Mortgage lending process" means the process through which
a person seeks or obtains a residential mortgage loan, including,
but not limited to, solicitation, application, or origination,
negotiation of terms, third-party provider services, underwriting,
signing and closing, and funding of the loan.
(c) "Person" means an individual, corporation, limited
liability company, partnership, trustee, association, or other
legal entity.
(d) "Residential mortgage loan" means a loan or agreement to
extend credit made to a person that is secured by a mortgage,
security interest, or other document representing a security
interest or lien on any interest in a 1-family to 4-family dwelling
located in this state. The term includes a renewal, extension, or
refinancing of a residential mortgage loan.
