With passage last evening by both the House and the Senate, legislation (H5695/S0835) filed at the request of Attorney General Peter F. Kilmartin that creates the criminal offense of residential mortgage fraud now moves to the Governor's desk for signature.
Residential mortgage fraud is when a person knowingly makes an omission or misrepresentation of a fact with the deliberate intention that it will be relied on in the mortgage lending process; receives proceeds in connection with a fraudulent transaction; conspires with another to engage in acts of residential mortgage fraud; or files a document that is known to be a misstatement.
The legislation makes residential mortgage fraud a felony and those convicted would be subject to imprisonment up to 10 years, a fine of $10,000, or both. If the offender knew that the victim was vulnerable due to age, infirmity, or reduced physical or mental capacity, or national origin, they would be subject to imprisonment up to 15 years, a fine of $15,000, or both; and court-ordered restitution. In addition, any person who engages in a pattern of residential mortgage fraud would be subject to imprisonment up to 20 years, a fine of $100,000 or both.
This act is a national model for residential mortgage fraud based on Georgia law. Rhode Island joins over twenty 20 states, including Connecticut and Massachusetts, that have enacted similar legislation.
"Rhode Island was among the hardest hit when the housing bubble burst, leaving tens of thousands of homeowners unable to pay their mortgages, and nearly driving our economy off a cliff. Everyone – bankers, mortgage service providers and individuals applying for mortgages – played it fast and loose, often providing false information about the ability of those applying for a mortgage to afford the payments with the promise of a quick commission and with the expectation the market would continue to go up. With this Act, we have put important measures and penalties in place for such reckless and criminal behavior and will ensure Rhode Island is not as vulnerable to another housing downturn," said Attorney General Peter Kilmartin, who went on to thank the financial institutions for working with my office to craft a sound bill.
"I am pleased to have the support from the mortgage service industry and our financial institutions. I believe they too recognize the importance of having the right protections to prevent the past from repeating itself."