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.




     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


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




     (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.