Mortgage Fraud 2011 Legislation

Last Updated: September 22, 2011

NCSL Staff Contact: Heather Morton, Denver, (303) 364-7700

This page addresses residential mortgage fraud issues. The legislation tracked under this category relates to creating a specific crime for mortgage fraud. To date, 10 states have pending legislation in the 2011 legislative session. Four states enacted legislation regarding mortgage fraud. Maryland clarified the authority of the commissioner of Financial Regulation to enforce the provisions of the Protection of Homeowners in Foreclosure Act (PHIFA) and the Maryland Mortgage Fraud Protection Act (MMFPA). Nevada revised provisions concerning the crimes of mortgage lending fraud and making a false representation concerning title to real property. Texas amended its Code of Criminal Procedure to authorize the prosecution of any criminal fraud offense involving a real estate transaction either in the county where the property is located or in any county in which part of the transaction occurred, including the generation of documentation supporting the transaction. The bill authorizes the prosecution of an offense of securing execution of any document by deception, an offense of simulating legal process, or an offense of refusal to execute the release of a fraudulent lien or claim that involves a real estate transaction in the county from which any material document was sent or in the county in which such a document was delivered. Washington changed the expiration dates of the mortgage lending fraud prosecution account and its revenue source.

NCSL Related Webpages:

DE | GA | MD | MI | NV | NJ | NYRI | TX | WA
STATES
BILL SUMMARY
Alabama
none
Alaska
none
Arizona
none
Arkansas
none
California
none
Colorado
none
Connecticut
none
Delaware

H.B. 59
Passed both houses 7/1/11
This bill provides for an Office within the Division of Consumer Protection to identify mortgage foreclosure fraud, to reduce foreclosure, and to promote financial literacy. In addition, the Office will receive calls from borrowers in default and make appropriate referrals to housing counselors or other agencies. The Outreach Coordinator will be responsible for acting as a liaison with servicers in some circumstances and participating as necessary in any mediation activity. The Office will exist for a period of three years from the date it is created pursuant to this bill.

District of Columbia
none
Florida
none
Georgia

H.B. 237
Passed House 3/2/11
This bill amends Article 5 of Chapter 8 of Title 16 of the Official Code of Georgia Annotated, relating to residential mortgage fraud, so as revise the definition of "mortgage lending process"; changes provisions relating to the offense of mortgage fraud; provides for investigative and subpoena powers of district attorneys and the attorney general relative to residential mortgage fraud.

S.B. 123
This bill revises provisions relating to foreclosure of security deeds; changes provisions relating to the transfer of security deeds; requires recording prior to foreclosure; provides for owners' rights to obtain payoff balances from creditors; changes provisions relating to the timing, contents, and manner of delivery of foreclosure notices; amends Title 16 of the Official Code of Georgia Annotated, relating to crimes, so as to change provisions relating to the crime of residential mortgage fraud; provides for the crime of residential foreclosure fraud and prescribes elements of the crime and penalties; provides for other matters related to the foregoing.

Guam
not available
Hawaii
none
Idaho
none
Illinois
none
Indiana
none
Iowa
none
Kansas
none
Kentucky
none
Louisiana
none
Maine
none
Maryland

H.B. 509
Signed by governor 4/12/11, Chapter 127
Clarifies the authority of the commissioner of Financial Regulation to enforce the provisions of the Protection of Homeowners in Foreclosure Act (PHIFA) and the Maryland Mortgage Fraud Protection Act (MMFPA) by exercising specified investigative and enforcement powers of the commissioner; authorizes the commissioner to seek a specified injunction; authorizes the commissioner to require a violator of PHIFA and MMFPA to take affirmative actions, including restitution, to correct the violation.

Massachusetts
none
Michigan

H.B. 4487
Prohibits residential mortgage fraud.

H.B. 4490
Revises statute of limitation for certain crimes relating to real property, including mortgage fraud.

H.B. 4495
Enacts sentencing guidelines for crime of mortgage fraud.

S.B. 43
Passed Senate 6/14/11
Amends the Michigan Penal Code to create the felony of residential mortgage fraud, and do the following: (i) Prescribes a penalty of up to 15 years' imprisonment and/or a maximum fine of $100,000 if the loan value were $100,000 or less; or imprisonment for up to 20 years and/or a maximum fine of $500,000 if the loan value exceeded $100,000. (ii) Allows forfeiture of property used in connection with a violation. (iii) Provides an affirmative defense for residential mortgage fraud committed by an employee or agent of a defendant, if the defendant had a policy meeting the bill's criteria. (iv) Allows a victim of residential mortgage fraud to request a court order invalidating the mortgage and other documents, if a person were convicted of residential mortgage fraud or a lesser included offense and other criteria were met.

S.B. 44
Passed Senate 6/14/11
Amends the Code of Criminal Procedure to include residential mortgage fraud in the sentencing guidelines.

S.B. 249
Passed Senate 6/14/11
Amends the Michigan Penal Code to increase the maximum prison term for false pretenses involving a value of $20,000 or more; and establishes increased penalties for violations involving a value of $50,000 to less than $100,000, or $100,000 or more.

S.B. 250
Passed Senate 6/14/11
Amends the sentencing guidelines in the Code of Criminal Procedure to reflect the penalties proposed by Senate Bill 249.

S.B. 251
Passed Senate 6/14/11
Revises statute of limitations on certain real property crimes, including false pretenses involving real property, forgery or uttering and publishing of an instrument affecting an interest in real property, or mortgage fraud.

Minnesota
none
Mississippi
none
Missouri
none
Montana
none
Nebraska
none
Nevada

A.B. 284
Signed by governor 5/20/11, Chapter 81
This bill revises provisions governing the recording of assignments of mortgages and deeds of trust; revises provisions governing the exercise of the power of sale under a deed of trust; revises provisions concerning the crimes of mortgage lending fraud and making a false representation concerning title to real property; provides civil and criminal penalties.

New Hampshire
none
New Jersey

A.B. 644
This bill, the “Truth in Mortgaging Act,” creates the crime of residential mortgage fraud. Under the terms of the bill, a person is guilty of the crime of residential mortgage fraud when, with the intent to defraud, that person knowingly makes, or causes to be made, any false, fictitious, fraudulent or misleading statement of material fact in, or omits a material fact from, or causes a material fact to be omitted from, any record or other document, in writing, electronically, orally or in any other form, during the mortgage lending process, with the intention that it be relied on by a mortgage lender, borrower or any other party to the mortgage lending process, or knowingly uses or facilitates the use of any such misleading statement or omission. A "material fact" includes but is not limited to: (1) any fact relating to the value of the real property that provides the collateral to secure the repayment of a residential mortgage loan; and (2) any fact relating to the current or expected income, financial obligations, or employment of a person who seeks or obtains a residential mortgage loan, relevant to the person’s ability to repay the loan. This bill provides that a person who commits the offense of residential mortgage fraud is guilty of a crime of the third degree and subject to imprisonment for a term of three to five years and to a fine not to exceed $15,000, or both. The bill also provides that a person who engages in a pattern of residential mortgage fraud is guilty of a crime of the second degree and subject to imprisonment for a term of five to 10 years and to a fine not to exceed $150,000, or both. Each residential property transaction subject to the act shall constitute a separate offense and shall not merge with other crimes. In addition, where an assignment judge determines that the infraction is de minimus, the assignment judge may dismiss the prosecution of residential mortgage fraud. In order to facilitate uniform enforcement, the bill directs the attorney general to develop prosecution guidelines for dissemination to each of the county prosecutors within 180 days of the effective date of the act.

S.B. 1679
This bill creates the crime of residential mortgage fraud. This bill provides that a person who commits the offense of residential mortgage fraud is guilty of a crime of the third degree and subject to imprisonment for a term of three to five years and to a fine not to exceed $15,000, or both. The bill also provides that a person who engages in a pattern of mortgage fraud is guilty of a crime of the second degree and subject to imprisonment for a term of five to 10 years and to a fine not to exceed $150,000, or both. Each residential property transaction subject to the act shall constitute a separate offense and shall not merge with other crimes. In addition, where an assignment judge determines that the infraction is de minimus, the assignment judge may dismiss the prosecution of mortgage fraud. In order to facilitate uniform enforcement, the bill directs the attorney general to develop prosecution guidelines for dissemination to each of the county prosecutors within 180 days of the effective date of the act.

New Mexico
none
New York

A.B. 3327
Makes a scheme to defraud a person in obtaining a credit loan secured by an interest in real property a felony; applies to reverse redlining situations; provides for various felony grades depending on the amount of money involved.

A.B. 4924
S.B. 300
Establishes offenses relating to criminal street gang enterprises and the abatement of premises used for the activities of such enterprises, including residential mortgage fraud.

A.B. 5323
Establishes offenses relating to criminal street gang enterprises and the abatement of premises used for the activities of such enterprises; provides for disposition of forfeiture moneys where the person against whom a forfeiture action is commenced is a member of a criminal street gang enterprise, includes residential mortgage fraud.

S.B. 3781
Passed Senate 6/7/11
Relates to unauthorized entities, unregistered mortgage brokers and mortgage fraud; establishes additional penalties against unlicensed or unregistered persons or entities engaging in activities after receiving a cease and desist notice; relates to the crime of mortgage fraud.

North Carolina
none
North Dakota
none
Ohio
none
Oklahoma
none
Oregon
none
Pennsylvania
none
Puerto Rico
none
Rhode Island

H.B. 5642
This act increases the penalties for residential mortgage fraud, and extends the statute of limitations for certain offenses.

S.B. 832
This act increases the penalties for residential mortgage fraud, and extends the statute of limitations for certain offenses.

South Carolina
none
South Dakota
none
Tennessee
none
Texas

H.B. 1343
Passed House 4/7/11
S.B. 485
Signed by governor 6/17/11, Chapter 389
Amends the Code of Criminal Procedure to authorize the prosecution of any criminal fraud offense involving a real estate transaction either in the county where the property is located or in any county in which part of the transaction occurred, including the generation of documentation supporting the transaction. The bill authorizes the prosecution of an offense of securing execution of any document by deception, an offense of simulating legal process, or an offense of refusal to execute the release of a fraudulent lien or claim that involves a real estate transaction in the county from which any material document was sent or in the county in which such a document was delivered.

Utah
none
Vermont
none
Virginia
none
Washington

H.B. 1191
Signed by governor 4/20/11, Chapter 129
S.B. 5075
Passed Senate 2/23/11
Changes the expiration dates of the mortgage lending fraud prosecution account and its revenue source.

West Virginia
none
Wisconsin
none
Wyoming
none

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