2013 -- S 0456

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LC01017

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO CRIMINAL OFFENSES - FRAUD AND FALSE DEALING

     Introduced By: Senators Pichardo, Archambault, Jabour, Lynch, and Ottiano

     Date Introduced: February 28, 2013

     Referred To: Senate Judiciary

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 11-18 of the General Laws entitled "Fraud and False Dealing" is

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hereby amended by adding thereto the following section:

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     11-18-34. Residential mortgage fraud. – (a) A person commits residential mortgage

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fraud when, with the intent to defraud, such person:

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     (1) Knowingly makes any deliberate written misstatement, misrepresentation or omission

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during the mortgage lending process with the intention that a mortgage lender, a borrower, or any

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other person that is involved in the mortgage lending process will rely on such written

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misstatement, misrepresentation or omission;

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     (2) Knowingly uses or facilitates the use or attempts to use or facilitate the use of any

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written misstatement, misrepresentation or omission during the mortgage lending process with the

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intention that a mortgage lender, a borrower or any other person that is involved in the mortgage

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lending process relies on it;

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     (3) Receives or attempts to receive proceeds or any other funds in connection with a

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residential mortgage lending transaction that the person knew or should have known resulted

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from an act or acts constituting residential mortgage fraud;

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     (4) Conspires with or solicits another to engage in an act or acts constituting residential

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mortgage fraud; or

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     (5) Files or causes to be filed with a city or town clerk any document involved in

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mortgage lending process that the person knows to contain a deliberate misstatement,

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misrepresentation or omission.

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     (b) Any person who violates subsection (a) shall be subject to the following penalties:

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     (1) Any person who commits an offense under subsection (a) shall be guilty of a felony

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subject to imprisonment for not more than five (5) years, a fine of five thousand dollars ($5,000),

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or both.

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     (2) Any person who engages or participates in a pattern of residential mortgage fraud or a

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conspiracy or endeavor to engage or participate in a pattern of residential mortgage fraud shall be

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guilty of a felony subject to imprisonment for not more than twenty (20) years, a fine of one

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hundred thousand dollars ($100,000), or both.

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     (3) Any person who commits an offense and knew or had reason to know that the victim

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was vulnerable due to age, disability, infirmity, reduced physical or mental capacity, national

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origin or ancestry shall be guilty of a felony subject to imprisonment for not more than fifteen

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(15) years, a fine of fifteen thousand dollars ($15,000) or both.

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     (4) The court shall order restitution to any victim.

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     (5) In addition to any criminal penalties above, any person found in violation of this

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section shall forfeit anything of value received by him or her in the course of such violation.

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Action for recovery of these amounts shall be brought in the superior court of any county in

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which any element of the crime occurred. The actions shall be brought in the name of the state by

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the attorney general for the benefit and use of the state.

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     (c) For purposes of this section, the following definitions shall apply:

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     (1) “Mortgage lending process” means the process through which a person seeks or

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obtains a residential mortgage loan including, but not limited to, solicitation, application,

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origination, negotiation of terms, real estate appraisals, third-party provider services,

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underwriting, signing and closing, and funding of the loan. Documents involved in the mortgage

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lending process include, but are not limited to, uniform residential loan applications or other loan

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applications; appraisal reports: HUD-1 settlement statements, verifications or certifications

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regarding occupancy intentions; supporting personal documentation for loan applications such as

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W-2 forms, verifications of income and employment, bank statements, tax returns, and payroll

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stubs; and any required disclosures.

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     (2) “Pattern of residential mortgage fraud” means one or more misstatements,

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misrepresentations, or omissions made during the mortgage lending process that involve two (2)

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or more residential properties, which have the same or similar intents, results, accomplices,

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victims, or methods of commission or otherwise are interrelated by distinguishing characteristics.

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     (3) “Person” means an individual, corporation, company, limited liability company,

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partnership, trustee, association, or any other entity.

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     (4) “Residential mortgage loan” means a loan or agreement to extend credit made to a

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person, which loan is secured by a deed to secure debt, security deed, mortgage, security interest,

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deed of trust, or other document representing a security interest or lien upon any interest in a one

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to four (4) family residential property including the renewal or refinancing of any such loan.

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     (5) “Victim” means a person who experienced personal loss, including, but not limited to,

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monetary loss, due to a violation of subsection (a).

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     (d) It shall be sufficient in any prosecution for residential mortgage fraud to show that the

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party accused committed the act with the intent to defraud. It shall be unnecessary to show that

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any particular person was harmed financially in the transaction or that the person to whom the

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deliberate misstatement, misrepresentation or omission was made relied upon the misstatement,

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misrepresentation or omission.

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     SECTION 2. Section 12-12-17 of the General Laws in Chapter 12-12 entitled

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"Indictments, Informations and Complaints" is hereby amended to read as follows:

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     12-12-17. Statute of limitations. -- (a) There shall be no statute of limitations for the

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following offenses: treason against the state, any homicide, arson, first degree arson, second

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degree arson, third degree arson, burglary, counterfeiting, forgery, robbery, rape, first degree

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sexual assault, first degree child molestation sexual assault, second degree child molestation

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sexual assault, bigamy, manufacturing, selling, distribution or possession with intent to

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manufacture, sell or distribute a controlled substance under the Uniform Controlled Substance

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Act, chapter 28 of title 21, or any other offense for which the maximum penalty provided is life

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imprisonment.

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      (b) The statute of limitations for the following offenses shall be ten (10) years: larceny

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under section 11-41-2 (receiving stolen goods), section 11-41-3 (embezzlement and fraudulent

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conversion), section 11-41-4 (obtaining property by false pretenses or personation), section 11-

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41-11 (embezzlement by bank officer or employee), section 11-41-12 (fraudulent conversion by

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agent or factor), and section 11-41-13 (obtaining signature by false pretenses), or any larceny

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which is punishable as a felony; any violation of chapter 7 of title 11 (bribery); any violation of

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section 11-18-1 (giving false document to agent, employee, or public official); perjury; any

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violation of chapter 42 of title 11 (threats and extortion); any violation of chapter 15 of title 7

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(racketeer influenced and corrupt organizations); any violation of chapter 57 of title 11 (racketeer

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violence); or any violation of chapter 36 of title 6 (antitrust law); any violation of section 11-41-

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11.1 (unlawful appropriation); any violation of section 11-41-27 (wrongful conversion by officer

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or state or municipal employee); any violation of section 11-18-6 (false financial statement to

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obtain loan or credit); any violation of section 19-9-28 (false statement to obtain a loan); any

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violation of section 11-9-29 (bank fraud); or any violation of section 11-18-34 (residential

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mortgage fraud).

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      (c) The statute of limitations for any other criminal offense shall be three (3) years unless

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a longer statute of limitations is otherwise provided for in the general laws.

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      (d) Any person who participates in any offense, either as a principal accessory, or

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conspirator shall be subject to the same statute of limitations as if the person had committed the

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substantive offense.

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      (e) The statute of limitations for any violation of chapter 18.9 of title 23 (refuse

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disposal), chapter 19 of title 23 (solid waste management corporation), chapter 19.1 of title 23

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(hazardous waste management), chapter 12 of title 46 (water pollution), and chapter 13 of title 46

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(public drinking water supply) shall be seven (7) years from the time that the facts constituting

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the offense or violation shall have become known to law enforcement authorities, unless a longer

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statute of limitations is otherwise provided for in the general laws.

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     SECTION 3. This act shall take effect upon passage.

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LC01017

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO CRIMINAL OFFENSES - FRAUD AND FALSE DEALING

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     This act would criminalize residential mortgage fraud and extend the statute of

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limitations for certain offenses.

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     This act would take effect upon passage.

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LC01017

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