Bill Text: NY A03882 | 2021-2022 | General Assembly | Introduced

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Bill Title: Relates to unauthorized entities, unregistered mortgage brokers and mortgage fraud; establishes additional penalties against unlicensed or unregistered persons or entities engaging in activities after receiving a cease and desist notice; relates to the crime of mortgage fraud.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2022-01-05 - referred to banks [A03882 Detail]

Download: New_York-2021-A03882-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          3882

                               2021-2022 Regular Sessions

                   IN ASSEMBLY

                                    January 28, 2021
                                       ___________

        Introduced  by M. of A. VANEL -- read once and referred to the Committee
          on Banks

        AN ACT to amend the banking law and the penal law, in relation to  unau-
          thorized entities, unregistered mortgage brokers and mortgage fraud

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. The banking law is amended by adding a new section 78-a  to
     2  read as follows:
     3    §  78-a.  Unauthorized  entities.  The  financial  frauds and consumer
     4  protection unit of the department of financial services shall refer  any
     5  instances  of  a  person, partnership, association, corporation or other
     6  entity which is operating without being chartered,  licensed  or  regis-
     7  tered  as required under this chapter to the attorney general and to any
     8  other federal, state or local agency or entity for appropriate  enforce-
     9  ment  action.  At  least  every  six  months, the attorney general shall
    10  provide the unit with a written update of the status of any  enforcement
    11  actions it has taken against such persons or entities.
    12    §  2. Paragraph (e) of subdivision 5 of section 590 of the banking law
    13  is relettered paragraph (f) and a new paragraph (e) is added to read  as
    14  follows:
    15    (e)  No  mortgage banker, mortgage broker or exempt organization shall
    16  conduct business with any person, partnership, association,  corporation
    17  or other entity which it knows or should have known is acting as a mort-
    18  gage banker or a mortgage broker without being licensed or registered as
    19  required  by  this article. A mortgage banker, mortgage broker or exempt
    20  organization shall promptly notify the department of any such unlicensed
    21  or unregistered operations.
    22    § 3. Subdivision 5 of section 598 of the  banking  law,  as  added  by
    23  chapter 571 of the laws of 1986, is amended to read as follows:
    24    5.  Civil  penalties  assessable  against  unlicensed  or unregistered
    25  persons or entities. If any non-exempt unlicensed or unregistered person

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD03182-01-1
        A. 3882                             2

     1  or entity engages in activities encompassed by this article, he shall be
     2  liable to any person or entity affected by such activities for a sum  of
     3  money of not less than the amount of money paid to an affected person or
     4  entity in connection with such activities, nor more than four times such
     5  sum; provided however that where a non-exempt unlicensed or unregistered
     6  person  has  continued  to  engage in such unauthorized activities after
     7  receiving a cease and desist notice from the superintendent, the maximum
     8  amount of liability shall be up to ten times such sum. Such sum  may  be
     9  sued  for  and recovered by any person or entity for his use and benefit
    10  in any court of competent jurisdiction.
    11    § 4.  The article heading of article 187 of the penal law, as added by
    12  chapter 472 of the laws of 2008, is amended to read as follows:
    13    [RESIDENTIAL] MORTGAGE FRAUD
    14    § 5. Section 187.00 of the penal law, as amended by chapter 507 of the
    15  laws of 2009, is amended to read as follows:
    16  § 187.00 Definitions.
    17    As used in this article:
    18    1. "Person" means any individual or entity.
    19    2. ["Residential mortgage] "Mortgage loan" means a loan  or  agreement
    20  to  extend credit, including the renewal, refinancing or modification of
    21  any such loan, made to a person or an entity, which  loan  is  primarily
    22  secured  by  either  a  mortgage,  deed of trust, or other lien upon any
    23  interest in [residential] real property or any certificate of  stock  or
    24  other  evidence  of ownership in, and a proprietary lease from, a corpo-
    25  ration or partnership formed for the purpose of cooperative ownership of
    26  [residential] real property.
    27    3. ["Residential real property" means  real  property  improved  by  a
    28  one-to-four family dwelling, or a residential unit in a building includ-
    29  ing units owned as condominiums or on a cooperative basis, used or occu-
    30  pied,  or intended to be used or occupied, wholly or partly, as the home
    31  or residence of one or more persons, but shall not refer  to  unimproved
    32  real property upon which such dwellings are to be constructed.
    33    4.  "Residential  mortgage]  "Mortgage fraud" is committed by a person
    34  who, knowingly and with  intent  to  defraud,  presents,  causes  to  be
    35  presented,  or prepares with knowledge or belief that it will be used in
    36  soliciting an applicant for, applying for, underwriting or closing on  a
    37  [residential] mortgage loan, or filing with a county clerk of any county
    38  in  the  state  arising out of and related to the closing of a [residen-
    39  tial] mortgage loan, any written statement which:
    40    (a) contains materially false information concerning any fact material
    41  thereto; or
    42    (b) conceals, for the purpose of  misleading,  information  concerning
    43  any fact material thereto.
    44    §  6.  Section 187.05 of the penal law, as added by chapter 472 of the
    45  laws of 2008, is amended to read as follows:
    46  § 187.05 [Residential mortgage] Mortgage fraud in the fifth degree.
    47    A person is guilty of [residential] mortgage fraud in the fifth degree
    48  when he or she commits [residential] mortgage fraud.
    49    [Residential mortgage] Mortgage fraud in the fifth degree is a class A
    50  misdemeanor.
    51    § 7. Section 187.10 of the penal law, as added by chapter 472  of  the
    52  laws of 2008, is amended to read as follows:
    53  § 187.10 [Residential mortgage] Mortgage fraud in the fourth degree.
    54    A  person  is  guilty  of  [residential]  mortgage fraud in the fourth
    55  degree when he or she commits [residential] mortgage fraud  and  thereby
        A. 3882                             3

     1  receives  proceeds  or any other funds in the aggregate in excess of one
     2  thousand dollars.
     3    [Residential  mortgage] Mortgage fraud in the fourth degree is a class
     4  E felony.
     5    § 8. Section 187.15 of the penal law, as added by chapter 472  of  the
     6  laws of 2008, is amended to read as follows:
     7  § 187.15 [Residential mortgage] Mortgage fraud in the third degree.
     8    A person is guilty of [residential] mortgage fraud in the third degree
     9  when he or she commits [residential] mortgage fraud and thereby receives
    10  proceeds or any other funds in the aggregate in excess of three thousand
    11  dollars.
    12    [Residential mortgage] Mortgage fraud in the third degree is a class D
    13  felony.
    14    §  9.  Section 187.20 of the penal law, as added by chapter 472 of the
    15  laws of 2008, is amended to read as follows:
    16  § 187.20 [Residential mortgage] Mortgage fraud in the second degree.
    17    A person is guilty of  [residential]  mortgage  fraud  in  the  second
    18  degree  when  he or she commits [residential] mortgage fraud and thereby
    19  receives proceeds or any other funds in the aggregate in excess of fifty
    20  thousand dollars.
    21    [Residential mortgage] Mortgage fraud in the second degree is a  class
    22  C felony.
    23    §  10. Section 187.25 of the penal law, as added by chapter 472 of the
    24  laws of 2008, is amended to read as follows:
    25  § 187.25 [Residential mortgage] Mortgage fraud in the first degree.
    26    A person is guilty of [residential] mortgage fraud in the first degree
    27  when he or she commits [residential] mortgage fraud and thereby receives
    28  proceeds or any other funds in the aggregate in excess  of  one  million
    29  dollars.
    30    [Residential mortgage] Mortgage fraud in the first degree is a class B
    31  felony.
    32    §  11.  This act shall take effect on the thirtieth day after it shall
    33  have become a law.