HOUSE BILL No. 4409

March 6, 2007, Introduced by Reps. Amos, Pastor, Vagnozzi, Kathleen Law, Meadows, Spade, Leland, Emmons, Nitz, Acciavatti, Meltzer, Garfield, Knollenberg, Calley, Palmer, David Law, Hansen, Robertson, Gaffney, Hune, Steil, Rick Jones, Pearce, Wenke, LaJoy, Brandenburg, Huizenga, Hildenbrand, Shaffer, Palsrok, Moss, Rocca, Ball, Marleau, Moolenaar, Caul, Booher, Moore, Meekhof, Hoogendyk and Scott and referred to the Committee on Banking and Financial Services.

 

     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) In connection with the mortgage lending

 

process, a person who 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 any deliberate material misstatement,

 

misrepresentation, or omission.

 

     (b) Uses or facilitates the use of any deliberate material

 

misstatement, misrepresentation, or omission, knowing that it

 

contains a material misstatement, misrepresentation, or omission.

 


     (c) Receives any proceeds or any other money in connection

 

with a residential mortgage closing that the person knew resulted

 

from a violation of subdivision (a) or (b).

 

     (d) Conspires to violate any of the provisions of subdivision

 

(a), (b), or (c).

 

     (e) Files or causes to be filed with the register of deeds of

 

any county of this state any document the person knows to contain a

 

deliberate material misstatement, misrepresentation, or omission.

 

     (2) A crime of residential mortgage fraud under this section

 

shall not be predicated solely upon information lawfully disclosed

 

under federal disclosure laws, regulations, and 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 any county in which any act was performed in

 

furtherance of the violation.

 

     (c) In any county in which any person alleged to have violated

 

this section had control or possession of any proceeds of the

 

violation.

 

     (d) If a loan closing occurred, in the county in which the

 

closing occurred.

 

     (e) In any county in which a document containing a deliberate

 

material misstatement, misrepresentation, or omission is filed or

 

recorded with the register of deeds.

 


     (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 10 years or a fine of not more than

 

$50,000.00, or both.

 

     (b) If the violation involves engaging or participating in a

 

pattern of residential mortgage fraud or a conspiracy or endeavor

 

to engage or participate in a pattern of residential mortgage

 

fraud, imprisonment for not more than 20 years or a fine of not

 

more than $100,000.00, or both.

 

     (5) 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.

 

     (6) Each violation of this section constitutes a separate

 

offense.

 

     (7) 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.

 

     (8) This section shall not be construed to create additional

 

disclosure requirements beyond those otherwise required by law.

 

     (9) Property of any kind 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.

 

     (10) As used in this section:

 

     (a) "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. Documents involved in

 

the mortgage lending process include, but are not limited to,

 

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 required disclosures.

 

     (b) "Pattern of residential mortgage fraud" means 1 or more

 

material misstatements, misrepresentations, or omissions made

 

during the mortgage lending process that involve 2 or more

 

residential properties and that have the same or similar intents,

 

results, accomplices, victims, or methods of commission or

 

otherwise are interrelated by distinguishing characteristics.

 

     (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.