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