Skip Navigation
Office of the Governor of Michigan, Rick SnyderMichigan.gov, Official Web Site for the State of Michigan
Michigan.gov Home
close print view

Mortgage fraud protection legislation signed into law by governor

Thursday, Oct. 20, 2011

LANSING, Mich. - According to the most recent statistics from the FBI, Michigan is one of the top 10 states for mortgage fraud.  So it might come as a surprise to homeowners to learn that mortgage fraud is not, strictly speaking, a crime.

Or at least it wasn't until today, when Gov. Rick Snyder signed mortgage fraud protection legislation into law. 

"Tougher penalties are needed to protect against scammers who think nothing of bilking unsuspecting homeowners and lenders out of tens of thousands of dollars," Snyder said.  "This legislation makes it clear - mortgage fraud will not be tolerated.  Try to steal someone's house, go to prison."

Although prosecutors currently have the ability to go after perpetrators of mortgage fraud based on elements of the activity that are already illegal, mortgage fraud itself is not considered a separate crime.  This means prosecutors are often forced to go after offenders for lesser crimes such as forgery, but those penalties are considered weak and, because of the complexity involved and time it can take to discover that fraud occurred, cases are often hard to prosecute.

Specifically criminalizing mortgage fraud will give prosecutors the tools they need to better protect homeowners and lenders by making mortgage fraud a felony carrying stiff penalties of up to 20 years in prison and a maximum fine of $500,000.  Conviction may also result in forfeiture of property used in connection with a mortgage fraud scam. 

One of the most important consumer protection aspects of the new laws is a provision that allows the courts to invalidate fraudulent mortgage documents, which the governor said will ensure mortgage fraud victims are not held liable for criminal activity.

"Honest homeowners and lenders should not be held responsible for the terms of a fraudulent mortgage.  This change allows the courts to set things right," Snyder said.

Mortgage fraud can take a number of forms.  Fraud for housing usual involves a single borrower acquiring property under false pretenses, such as misrepresenting income information on a loan application, which can result in higher foreclosure rates.

Fraud for profit usually involves complex scams by industry insiders aimed at gaining illicit profits from property sales.  Common scams include falsely inflating appraisals, misrepresenting terms of an agreement and in extreme cases, buying or selling property under someone else's name using forged documents. 

The legislation, which was supported by both Republican and Democrat lawmakers, clarifies what counts as mortgage fraud and extends the length of time prosecutors have to charge suspects with a crime.  With these changes, a person would be guilty of mortgage fraud if they knowingly make false statements or deliberately conceal information during the lending process, conspire to commit fraud or file falsified documents. 
 
 Senate Bills 249 and 250, sponsored by state Sen. Darwin Booher, are now P.A.s 201 and 202 of 2011.
 S.B. 251, sponsored by state Sen. Mike Nofs, is now P.A. 203.
 S.B. 252, sponsored by state Sen. James Marleau, is now P.A. 204.
 S.B. 43, sponsored by state Sen. Tupac Hunter, is now P.A. 205.
 House Bill 4462, sponsored by state Rep. Marty Knollenberg, is now Public Act 206 of 2011.
 H.B. 4478, sponsored by state Rep. Lisa Posthumus-Lyons, is now P.A. 207.
 H.B. 4492, sponsored by state Rep. Rashida Tlaib, is now P.A. 208.

Detailed descriptions of individual bills may be found online at www.legislature.mi.gov.

#####
 

Related Content
 •  Snyder: International companies choosing to invest, create jobs in Michigan
 •  Northern Michigan communities receiving $6 million to repair infrastructure damaged by deep freeze
 •  Gov. Rick Snyder: Pension vote shows Detroit continues to move toward brighter future
 •  Gov. Rick Snyder says Healthy Michigan Plan surpasses first-year enrollment goal of 322,000
 •  Key progress being made with increased commitment to mental health issues in Michigan
 •  Gov. Rick Snyder commemorates Civil Rights Act
 •  Gov. Rick Snyder signs pharmacy, consumer protection, local government bills
 •  Gov. Rick Snyder signs legislation increasing access to physical therapy services
 •  Governor Snyder Honors Michigan Volunteers at 2014 Governor's Service Awards
 •  Gov. Rick Snyder signs bill connecting National Guard members to education, job opportunities
 •  Gov. Rick Snyder: Budget reflects focus on making Michigan better, safer, stronger
 •  Gov. Rick Snyder signs bill enhancing stream, lake management
 •  Gov. Rick Snyder signs legislation protecting workers' compensation benefits
 •  Gov. Rick Snyder: Law requires sexual assault evidence kits be analyzed quickly to bring justice, peace of mind
 •  Gov. Rick Snyder signs bills to prevent methamphetamine production
 •  Gov. Rick Snyder signs bills designating Pure Michigan Trail Network
 •  Snyder makes appointment, reappointments to Board of Plumbing
 •  Snyder makes appointment to Electronic Recording Commission
 •  Snyder makes reappointments to Farm Produce Insurance Authority
 •  Norlander named to 10th District Court bench in Calhoun County
QR code

Michigan.gov Home
PoliciesMichigan NewsMichigan.gov Survey


Copyright © 2014 State of Michigan