State Senator Bob Duff
May 6, 2009
Duff: Bill Approved in Senate Would Lead to Felony Charges for Mortgage Fraud
Lenders who knowingly defraud borrowers could face felony charges
Mortgage lenders and brokers who repeatedly and knowingly defraud borrowers would face felony charges under legislation approved in the State Senate today, said the co-chair of the General Assembly’s Banks Committee Senator Bob Duff (D-Norwalk).
Senate Bill 949, An Act Concerning Mortgage Practices, makes a conviction on single act of residential mortgage fraud a Class D felony under Connecticut law. A person who commits two or more acts of residential mortgage fraud could face Class C felony charges.
“Individuals and families seeking a mortgage expect that their mortgage lender or originator is acting in good faith,” Senator Duff said. “In the midst of a major mortgage crisis, however, we know that there are unscrupulous lenders that use fraud to victimize those people seeking equitable home ownership. This legislation simply tells those mortgage lenders who would seek to defraud lenders that they will face criminal felony charges for their unlawful actions. This move builds upon legislation passed in 2008 in response to the subprime mortgage crisis and sends a strong message to the mortgage industry. This is a step in the right direction that will help to protect the interests of borrowers in our state, and I would urge quick action in the state House of Representatives.”
The legislation defines mortgage fraud as:
- Knowingly making or attempting to make material misstatements, misrepresentation or omission to a borrower or other involved person during the mortgage lending process;
- Receiving or attempting to receive funds in connection with a residential mortgage closing that the person knew or should have known resulted from an act or acts constituting mortgage fraud; or
- Conspiring or soliciting another to engage in an act or acts constituting mortgage fraud.
If signed into law, the provisions would be effective October 1, 2009. The legislation, which was approved unanimously by consent in the Senate, now moves to the state House of Representatives for consideration.
The 2009 regular legislate session adjourns on June 3.
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