GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2007

H                                                                                                                                                    1

HOUSE BILL 817

 

 

 

 

Short Title:     Residential Mortgage Fraud Act.

(Public)

Sponsors:

Representatives Blue;  Carney, Church, Faison, and Hurley.

Referred to:

Judiciary II.

March 15, 2007

A BILL TO BE ENTITLED

AN ACT to enact the north carolina residential mortgage fraud act.

The General Assembly of North Carolina enacts:

SECTION 1.  Chapter 14 of the General Statutes is amended by adding a new Article to read:

"Article 20A.

"Residential Mortgage Fraud Act.

"§ 14‑118.10.  Title.

This Article shall be known and cited as the "Residential Mortgage Fraud Act".

"§ 14‑118.11.  Definitions.

(a)       Unless otherwise provided in this Article, or when the context clearly indicates that a different meaning is intended, the following definitions apply in this Article:

(1)       Mortgage loan. – A loan made to a natural person or persons primarily for personal, family, or household use, primarily secured by either a mortgage or a deed of trust on residential real property located in North Carolina.

(2)       Mortgage lending process. – The process through which a person seeks or obtains a mortgage loan including, solicitation, application, origination, negotiation of terms, underwriting, signing, closing, and funding of a mortgage loan and services provided incident to a mortgage loan, including the appraisal of the residential real property. Documents involved in the mortgage lending process include (i) uniform residential loan applications or other loan applications, (ii) appraisal reports, (iii) settlement statements, (iv) supporting personal documentation for loan applications, including W‑2 or other earnings or income statements, verifications of rent, income, and employment, bank statements, tax returns, and payroll stubs, (v) and any required disclosures.

(3)       Pattern of residential mortgage fraud. – Residential mortgage fraud that involves two or more mortgage loans, which have the same or similar intents, results, accomplices, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics.

(4)       Person. – An individual, partnership, limited liability company, limited partnership, corporation, association, or other entity engaged in business activities, however organized.

(5)       Residential real property. – Real property located in the State of North Carolina upon which there is located or is to be located one or more single‑family dwellings or dwelling units.

"§ 14‑118.12.  Residential mortgage fraud.

(a)       A person is guilty of residential mortgage fraud when, with the intent to defraud, that person does any of the following:

(1)       Knowingly makes or attempts to make any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the intention that a mortgage lender, mortgage broker, borrower, or any other person or entity that is involved in the mortgage lending process relies on it.

(2)       Knowingly uses or facilitates or attempts to use or facilitate the use of any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the intention that a mortgage lender, borrower, or any other person or entity that is involved in the mortgage lending process relies on it.

(3)       Receives or attempts to receive proceeds or any other funds in connection with a residential mortgage closing that the person knew resulted from a violation of subdivision (1) or (2) of this subsection.

(4)       Conspires or endeavors to violate any of the provisions of subdivision (1), (2), or (3) of this subsection.

(b)       It shall be sufficient in any prosecution under this Article for residential mortgage fraud to show that the party accused did the act with the intent to deceive or defraud. It shall be unnecessary to show that any particular person or entity was harmed in the transaction or that the person or entity to whom the deliberate misstatement, misrepresentation, or omission was made relied upon the misstatement, misrepresentation, or omission.

"§ 14‑118.13.  Venue.

For purposes of venue under this Article, any violation of this Article shall be construed to have been committed:

(1)       In the county in which the residential real property for which a mortgage loan is being sought is located; or

(2)       In any county in which any act was performed in furtherance of the violation; or

(3)       In any county in which any person alleged to have violated this Article had control or possession of any proceeds of the violation; or

(4)       If a closing occurred, in any county in which the closing occurred; or

(5)       In any county in which a document containing a deliberate misstatement, misrepresentation, or omission is filed with the official registrar of deeds.

"§ 14‑118.14.  Authority to investigate and prosecute.

Upon its own investigation or upon referral by the Office of the Commissioner of Banks, the North Carolina Real Estate Commission, the Attorney General, or other parties, of available evidence concerning violations of this Article, the proper district attorney may institute the appropriate criminal proceedings under this Article.

"§ 14‑118.15.  Penalty for violation of Article.

(a)       A violation of this Article involving a single mortgage loan is a Class H felony.

(b)       A violation of this Article involving a pattern of residential mortgage fraud is a Class C felony.

(c)       Each residential loan and property transaction subject to a violation of this Article shall constitute a separate offense and shall not merge with any other crimes set forth in this Chapter.

"§ 14‑118.16.  Forfeiture.

(a)       All real and personal property of every kind used or intended for use in the course of, derived from, or realized through a violation of this Article shall be subject to forfeiture to the State as set forth in G.S. 14‑2.3 and G.S. 14‑7.20. However, the forfeiture of any real or personal property shall be subordinate to any security interest in the property taken by a lender in good faith as collateral for the extension of credit and recorded as provided by law, and no real or personal property shall be forfeited under this section against an owner who made a bona fide purchase of the property without knowledge of a violation of this Article.

(b)       In addition to the provisions of subsection (a) of this section, courts may order restitution to any person that has suffered a financial loss due to violation of this Article."

SECTION 2.  This act becomes effective December 1, 2007, and applies to offenses committed on or after that date.