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HB-6432, As Passed House, September 19, 2006

SUBSTITUTE FOR

HOUSE BILL NO. 6432

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.

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.

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.

House Bill No. 6432 (H-3) as amended September 19, 2006

(b) The defendant demonstrates that it enforces the written

policy described in subdivision (a).

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 part 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.

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.