10 Jul Rhode Island Legislative Update
The Rhode Island legislature recently enacted legislation related to residential mortgage fraud, effective July 5, 2017.
Rhode Island House Bill 5695 and Senate Bill 835
“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, real estate appraisals and surveys, third-party provider servicers, underwriting, signing and close, and funding of the loan.
“Pattern of Residential Mortgage Fraud” means one or more violations specified below that involve two or more Residential Mortgage Loans and that have the same or similar intents, results, accomplices, or methods of commission or otherwise result from comparable actions or omissions.
“Person” means an individual, corporation, company, limited liability company, partnership, trustee, association, or any other entity.
“Residential Mortgage Loan” means a loan or agreement to extend credit made to a person, which loan is secured by a deed to secure debt, security deed, mortgage, security interest, deed of trust, promissory note, or any other document representing a security interest or lien upon any interest in a one to four family residential property including the renewal, modification or refinancing of any such loan.
“Victim” means a person who experienced personal loss, including, but not limited to, monetary loss, due to a violation of these provisions.
A person commits residential mortgage fraud when, with the intent to defraud, such person:
- Knowingly makes an omission of a material fact or a written misrepresentation or misstatement of a material fact during the mortgage lending process with the intention that a mortgage lender, a borrower, or any other person that is involved in the mortgage lending process will rely on the absence of such material fact or the making of such material misrepresentation or misstatement; or
- Knowingly uses or facilitates the use or attempts to use or facilitate the use of any omission of a material fact or written misrepresentation or misstatement of a material fact during the mortgage lending process with the intention that a mortgage lender, a borrower or any other person that is involved in the mortgage lending process will rely on the absence of such material fact or the making of such material misrepresentation or misstatement; or
- Knowingly receives or attempts to receive proceeds or any other funds in connection with a residential mortgage transaction that resulted from an act or acts constituting a violation;
- Conspires with or solicits another to engage in an act or acts constituting a violation; or
- Files or causes to be filed with a city or town clerk any document involved in the mortgage lending process that the person knows to contain an omission of a material fact or a written misrepresentation or misstatement of a material fact.
Any person who violates the above provisions, upon conviction, is subject to the following penalties:
- Any person who commits any of the above offenses is guilty of a felony and subject to imprisonment for not more than 10 years, a fine of not more than $10,000, or both.
- Any person who engages or participates in a pattern of residential mortgage fraud or conspires or endeavors to engage or participate in a pattern of residential mortgage fraud is guilty of a felony and subject to imprisonment for not more than 20 years, a fine of not more than $100,000, or both.
- Any person who commits an offense and knew that the victim was vulnerable due to age, disability, infirmity, reduced physical or mental capacity, or national origin is guilty of a felony and subject to imprisonment for not more than 15 years, a fine of not more than $15,000, or both.
The court must order restitution to any victim. In addition to any criminal penalties above, any person found in violation will forfeit anything of value received by them in the course of such violation less any restitution they actually paid. Action for recovery of these amounts may be brought in the superior court of any county in which any element of the crime occurred. The actions must be brought in the name of the state by the attorney general for the benefit and use of the state.
It is sufficient in any prosecution for residential mortgage fraud to show that the party accused did the act with the intent to defraud. It is unnecessary to show that any particular person was harmed financially in the transaction or that the person to whom the material misstatement, misrepresentation or omission was made relied upon the misstatement, misrepresentation or omission.
The statute of limitations for the violation of any of these offenses is ten years.