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S.B. 134 Enrolled

             1     

MORTGAGE FRAUD ACT

             2     
2008 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Sheldon L. Killpack

             5     
House Sponsor: Paul Ray

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Utah Criminal Code relating to offenses against property and
             10      creating an offense of mortgage fraud.
             11      Highlighted Provisions:
             12          This bill:
             13          .    establishes penalties for certain conduct governed by the Real Estate Appraiser
             14      Licensing and Certification Act and the Utah Residential Mortgage Practices Act;
             15          .    requires the attorney general to hire a mortgage fraud prosecutor;
             16          .    enacts the Mortgage Fraud Act, including:
             17              .    creating the crime of mortgage fraud;
             18              .    establishing penalties; and
             19              .    providing definitions; and
             20          .    includes mortgage fraud as an illegal activity under the Pattern of Illegal Activity
             21      Act.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:
             28          61-2-21, as last amended by Laws of Utah 2007, Chapter 325
             29          61-2b-33, as last amended by Laws of Utah 2005, Chapter 199


             30          76-10-1602, as last amended by Laws of Utah 2007, Chapter 129
             31      ENACTS:
             32          61-2c-405, Utah Code Annotated 1953
             33          67-5-26, Utah Code Annotated 1953
             34          76-6-1201, Utah Code Annotated 1953
             35          76-6-1202, Utah Code Annotated 1953
             36          76-6-1203, Utah Code Annotated 1953
             37          76-6-1204, Utah Code Annotated 1953
             38     
             39      Be it enacted by the Legislature of the state of Utah:
             40          Section 1. Section 61-2-21 is amended to read:
             41           61-2-21. Remedies and action for violations.
             42          (1) (a) The director shall issue and serve upon a person an order directing that person
             43      to cease and desist from an act if:
             44          (i) the director has reason to believe that the person has been engaging, is about to
             45      engage, or is engaging in the act constituting a violation of this chapter; and
             46          (ii) it appears to the director that it would be in the public interest to stop the act.
             47          (b) Within ten days after receiving the order, the person upon whom the order is served
             48      may request an adjudicative proceeding.
             49          (c) Pending the hearing, any cease and desist order shall remain in effect.
             50          (d) If a request for a hearing is made, the division shall follow the procedures and
             51      requirements of Title 63, Chapter 46b, Administrative Procedures Act.
             52          (2) (a) After the hearing, if the commission and the director agree that the act of the
             53      person violates this chapter, the director:
             54          (i) shall issue an order making the order issued under Subsection (1) permanent; and
             55          (ii) may impose a civil penalty not to exceed the greater of:
             56          (A) $2,500 for each violation; or
             57          (B) the amount of any gain or economic benefit derived from each violation.


             58          (b) The director shall file suit in the name of the Department of Commerce and the
             59      Division of Real Estate, in the district court in the county in which an act described in
             60      Subsection (1) occurred or where the person resides or carries on business, to enjoin and
             61      restrain the person from violating this chapter if:
             62          (i) (A) no hearing is requested; and
             63          (B) the person fails to cease the act described in Subsection (1); or
             64          (ii) after discontinuing the act described in Subsection (1), the person again commences
             65      the act.
             66          (c) The district courts of this state shall have jurisdiction of an action brought under this
             67      section.
             68          (d) Upon a proper showing in an action brought under this section [related to an
             69      undivided fractionalized long-term estate,] or upon a conviction under Section 76-6-1203 , the
             70      court may:
             71          (i) issue a permanent or temporary, prohibitory or mandatory injunction;
             72          (ii) issue a restraining order or writ of mandamus;
             73          (iii) enter a declaratory judgment;
             74          (iv) appoint a receiver or conservator for the defendant or the defendant's assets;
             75          (v) order disgorgement;
             76          (vi) order rescission;
             77          (vii) impose a civil penalty not to exceed the greater of:
             78          (A) $2,500 for each violation; or
             79          (B) the amount of any gain or economic benefit derived from each violation; and
             80          (viii) enter any other relief the court considers just.
             81          (e) The court may not require the division to post a bond in an action brought under
             82      this Subsection (2).
             83          (3) Any license or registration issued by the division to any person or entity convicted
             84      of a violation of Section 76-6-1203 is automatically revoked.
             85          [(3)] (4) The remedies and action provided in this section may not interfere with, or


             86      prevent the prosecution of, any other remedies or actions including criminal proceedings.
             87          Section 2. Section 61-2b-33 is amended to read:
             88           61-2b-33. Penalty for violating this chapter -- Automatic revocation.
             89          [(1) Any person required by this chapter to be licensed or certified who engages in real
             90      estate appraisal activity in this state without obtaining a license or certification or]
             91          (1) In addition to being subject to a disciplinary action by the board, a person who
             92      violates [any provision of] this chapter:
             93          [(a)] (a) is guilty of a class [B] A misdemeanor [punishable by a $1,000 fine and up to
             94      six months in jail] upon a conviction of a first violation of this chapter; and
             95          [(b) shall be ineligible to apply for a license or certificate for a period of one year from
             96      the date of the person's conviction of the offense.]
             97          [(2) The division, in its discretion, may grant a license or certification to a person
             98      ineligible pursuant to Subsection (1) within the one-year period upon application and after an
             99      administrative hearing.]
             100          (b) is guilty of a third degree felony, upon conviction of a second or subsequent
             101      violation of this chapter.
             102          (2) Any license or registration issued by the division to any person or entity convicted
             103      of a violation of Section 76-6-1203 is automatically revoked.
             104          Section 3. Section 61-2c-405 is enacted to read:
             105          61-2c-405. Penalty for violating this chapter -- Automatic revocation.
             106          (1) In addition to being subject to a disciplinary action by the commission, a person who
             107      violates this chapter:
             108          (a) is guilty of a class A misdemeanor upon conviction of a first violation of this
             109      chapter; and
             110          (b) is guilty of a third degree felony upon conviction of a second or subsequent
             111      violation of this chapter.
             112          (2) Any license or registration issued by the division to any person or entity convicted
             113      of a violation of Section 76-6-1203 is automatically revoked.


             114          Section 4. Section 67-5-26 is enacted to read:
             115          67-5-26. Real estate fraud prosecutor.
             116          (1) The state attorney general shall employ an attorney licensed to practice law in Utah
             117      who:
             118          (a) has knowledge of the law related to mortgage fraud; and
             119          (b) preferably also has background or expertise in investigating and prosecuting
             120      mortgage fraud.
             121          (2) The primary responsibility of the attorney employed under Subsection (1) is the
             122      prosecution of real estate fraud.
             123          (3) The state attorney general may employ clerks, interns, or other personnel as
             124      necessary to assist the attorney employed under Subsection (1).
             125          Section 5. Section 76-6-1201 is enacted to read:
             126     
Part 12. Utah Mortgage Fraud Act

             127          76-6-1201. Title.
             128          This part is known as the "Utah Mortgage Fraud Act."
             129          Section 6. Section 76-6-1202 is enacted to read:
             130          76-6-1202. Definitions.
             131          As used in this part:
             132          (1) "Mortgage lending process" means the process through which a person seeks or
             133      obtains a mortgage loan, including solicitation, application, or origination, negotiation of terms,
             134      third-party provider services, underwriting, signing and closing, and funding of the loan.
             135          (2) "Mortgage loan":
             136          (a) means a loan or agreement made to extend credit to a person when the loan is
             137      secured by a deed, security deed, mortgage, security interest, deed of trust, or other document
             138      representing a security interest or lien upon any interest in one-to-four family residential
             139      property; and
             140          (b) includes the renewal or refinancing of any loan.
             141          (3) "Pattern of unlawful activity" has the same definition as in Section 76-10-1602 .


             142          (4) "Sensitive personal identifying information" includes:
             143          (a) the following information regarding an individual's:
             144          (i) Social Security number;
             145          (ii) driver license number or other government issued identification number;
             146          (iii) financial account number or credit or debit card number;
             147          (iv) password or personal identification number or other identification required to gain
             148      access to a financial account or a secure website;
             149          (v) automated or electronic signature; and
             150          (vi) unique biometric data; and
             151          (b) any other information that can be used to gain access to an individual's financial
             152      accounts or to obtain goods or services.
             153          (5) "Value" means the value of the property, money, or thing obtained or sought to be
             154      obtained.
             155          Section 7. Section 76-6-1203 is enacted to read:
             156          76-6-1203. Mortgage fraud.
             157          A person commits the offense of mortgage fraud if the person does any of the following
             158      with the intent to defraud:
             159          (1) knowingly makes any material misstatement, misrepresentation, or omission during
             160      the mortgage lending process, intending that it be relied upon by a mortgage lender, borrower,
             161      or any other party to the mortgage lending process;
             162          (2) knowingly uses or facilitates the use of any material misstatement,
             163      misrepresentation, or omission, during the mortgage lending process, intending that it be relied
             164      upon by a mortgage lender, borrower, or any other party to the mortgage lending process;
             165          (3) files or causes to be filed with any county recorder in Utah any document that the
             166      person knows contains a material misstatement, misrepresentation, or omission; or
             167          (4) receives any proceeds or any compensation in connection with a mortgage loan that
             168      the person knows resulted from a violation of this section.
             169          Section 8. Section 76-6-1204 is enacted to read:


             170          76-6-1204. Classification of offense.
             171          (1) Notwithstanding any other administrative, civil, or criminal penalties, a person who
             172      violates Section 76-6-1203 is guilty of a:
             173          (a) class A misdemeanor when the value is or exceeds $300 but is less than $1,000;
             174          (b) third degree felony when the value is or exceeds $1,000 but is less than $5,000;
             175          (c) second degree felony when the value is or exceeds $5,000;
             176          (d) second degree felony when the object or purpose of the commission of an act of
             177      mortgage fraud is other than the obtaining of something of monetary value; and
             178          (e) second degree felony when the object or purpose of the commission of an act of
             179      mortgage fraud is the obtaining of sensitive personal identifying information, regardless of the
             180      value.
             181          (2) The determination of the degree of any offense under Subsection (1) is measured by
             182      the total value of all property, money, or things obtained or sought to be obtained by a violation
             183      of Section 76-6-1203 , except as provided in Subsections (1)(d) and (e).
             184          (3) Each residential or commercial property transaction offense under this part
             185      constitutes a separate violation.
             186          Section 9. Section 76-10-1602 is amended to read:
             187           76-10-1602. Definitions.
             188          As used in this part:
             189          (1) "Enterprise" means any individual, sole proprietorship, partnership, corporation,
             190      business trust, association, or other legal entity, and any union or group of individuals
             191      associated in fact although not a legal entity, and includes illicit as well as licit entities.
             192          (2) "Pattern of unlawful activity" means engaging in conduct which constitutes the
             193      commission of at least three episodes of unlawful activity, which episodes are not isolated, but
             194      have the same or similar purposes, results, participants, victims, or methods of commission, or
             195      otherwise are interrelated by distinguishing characteristics. Taken together, the episodes shall
             196      demonstrate continuing unlawful conduct and be related either to each other or to the
             197      enterprise. At least one of the episodes comprising a pattern of unlawful activity shall have


             198      occurred after July 31, 1981. The most recent act constituting part of a pattern of unlawful
             199      activity as defined by this part shall have occurred within five years of the commission of the
             200      next preceding act alleged as part of the pattern.
             201          (3) "Person" includes any individual or entity capable of holding a legal or beneficial
             202      interest in property, including state, county, and local governmental entities.
             203          (4) "Unlawful activity" means to directly engage in conduct or to solicit, request,
             204      command, encourage, or intentionally aid another person to engage in conduct which would
             205      constitute any offense described by the following crimes or categories of crimes, or to attempt
             206      or conspire to engage in an act which would constitute any of those offenses, regardless of
             207      whether the act is in fact charged or indicted by any authority or is classified as a misdemeanor
             208      or a felony:
             209          (a) any act prohibited by the criminal provisions of Title 13, Chapter 10, Unauthorized
             210      Recording Practices Act;
             211          (b) any act prohibited by the criminal provisions of Title 19, Environmental Quality
             212      Code, Sections 19-1-101 through 19-7-109 ;
             213          (c) taking, destroying, or possessing wildlife or parts of wildlife for the primary purpose
             214      of sale, trade, or other pecuniary gain, in violation of Title 23, Chapter 13, [Wildlife Resources
             215      Code of Utah] General Provisions, or Section 23-20-4 ;
             216          (d) false claims for medical benefits, kickbacks, and any other act prohibited by Title 26,
             217      Chapter 20, Utah False Claims Act, Sections 26-20-1 through 26-20-12 ;
             218          (e) any act prohibited by the criminal provisions of Title 32A, Chapter 12, Criminal
             219      Offenses;
             220          (f) any act prohibited by the criminal provisions of Title 57, Chapter 11, Utah Uniform
             221      Land Sales Practices Act;
             222          (g) any act prohibited by the criminal provisions of Title 58, Chapter 37, Utah
             223      Controlled Substances Act, or Title 58, Chapter 37b, Imitation Controlled Substances Act, Title
             224      58, Chapter 37c, Utah Controlled Substance Precursor Act, or Title 58, Chapter 37d,
             225      Clandestine Drug Lab Act;


             226          (h) any act prohibited by the criminal provisions of Title 61, Chapter 1, Utah Uniform
             227      Securities Act;
             228          (i) any act prohibited by the criminal provisions of Title 63, Chapter 56, Utah
             229      Procurement Code;
             230          (j) assault or aggravated assault, Sections 76-5-102 and 76-5-103 ;
             231          (k) a terroristic threat, Section 76-5-107 ;
             232          (l) criminal homicide, Sections 76-5-201 , 76-5-202 , and 76-5-203 ;
             233          (m) kidnapping or aggravated kidnapping, Sections 76-5-301 and 76-5-302 ;
             234          (n) sexual exploitation of a minor, Section 76-5a-3 ;
             235          (o) arson or aggravated arson, Sections 76-6-102 and 76-6-103 ;
             236          (p) causing a catastrophe, Section 76-6-105 ;
             237          (q) burglary or aggravated burglary, Sections 76-6-202 and 76-6-203 ;
             238          (r) burglary of a vehicle, Section 76-6-204 ;
             239          (s) manufacture or possession of an instrument for burglary or theft, Section 76-6-205 ;
             240          (t) robbery or aggravated robbery, Sections 76-6-301 and 76-6-302 ;
             241          (u) theft, Section 76-6-404 ;
             242          (v) theft by deception, Section 76-6-405 ;
             243          (w) theft by extortion, Section 76-6-406 ;
             244          (x) receiving stolen property, Section 76-6-408 ;
             245          (y) theft of services, Section 76-6-409 ;
             246          (z) forgery, Section 76-6-501 ;
             247          (aa) fraudulent use of a credit card, Sections 76-6-506.1 , 76-6-506.2 , and 76-6-506.4 ;
             248          (bb) deceptive business practices, Section 76-6-507 ;
             249          (cc) bribery or receiving bribe by person in the business of selection, appraisal, or
             250      criticism of goods, Section 76-6-508 ;
             251          (dd) bribery of a labor official, Section 76-6-509 ;
             252          (ee) defrauding creditors, Section 76-6-511 ;
             253          (ff) acceptance of deposit by insolvent financial institution, Section 76-6-512 ;


             254          (gg) unlawful dealing with property by fiduciary, Section 76-6-513 ;
             255          (hh) bribery or threat to influence contest, Section 76-6-514 ;
             256          (ii) making a false credit report, Section 76-6-517 ;
             257          (jj) criminal simulation, Section 76-6-518 ;
             258          (kk) criminal usury, Section 76-6-520 ;
             259          (ll) fraudulent insurance act, Section 76-6-521 ;
             260          (mm) retail theft, Section 76-6-602 ;
             261          (nn) computer crimes, Section 76-6-703 ;
             262          (oo) identity fraud, Section 76-6-1102 ;
             263          (pp) mortgage fraud, Section 76-6-1203 ;
             264          [(pp)] (qq) sale of a child, Section 76-7-203 ;
             265          [(qq)] (rr) bribery to influence official or political actions, Section 76-8-103 ;
             266          [(rr)] (ss) threats to influence official or political action, Section 76-8-104 ;
             267          [(ss)] (tt) receiving bribe or bribery by public servant, Section 76-8-105 ;
             268          [(tt)] (uu) receiving bribe or bribery for endorsement of person as public servant,
             269      Section 76-8-106 ;
             270          [(uu)] (vv) official misconduct, Sections 76-8-201 and 76-8-202 ;
             271          [(vv)] (ww) obstruction of justice, Section 76-8-306 ;
             272          [(ww)] (xx) acceptance of bribe or bribery to prevent criminal prosecution, Section
             273      76-8-308 ;
             274          [(xx)] (yy) false or inconsistent material statements, Section 76-8-502 ;
             275          [(yy)] (zz) false or inconsistent statements, Section 76-8-503 ;
             276          [(zz)] (aaa) written false statements, Section 76-8-504 ;
             277          [(aaa)] (bbb) tampering with a witness or soliciting or receiving a bribe, Section
             278      76-8-508 ;
             279          [(bbb)] (ccc) retaliation against a witness, victim, or informant, Section 76-8-508.3 ;
             280          [(ccc)] (ddd) extortion or bribery to dismiss criminal proceeding, Section 76-8-509 ;
             281          [(ddd)] (eee) public assistance fraud in violation of Section 76-8-1203 , 76-8-1204 , or


             282      76-8-1205 ;
             283          [(eee)] (fff) unemployment insurance fraud, Section 76-8-1301 ;
             284          [(fff)] (ggg) intentionally or knowingly causing one animal to fight with another,
             285      Subsection 76-9-301 (1)(f);
             286          [(ggg)] (hhh) possession, use, or removal of explosives, chemical, or incendiary devices
             287      or parts, Section 76-10-306 ;
             288          [(hhh)] (iii) delivery to common carrier, mailing, or placement on premises of an
             289      incendiary device, Section 76-10-307 ;
             290          [(iii)] (jjj) possession of a deadly weapon with intent to assault, Section 76-10-507 ;
             291          [(jjj)] (kkk) unlawful marking of pistol or revolver, Section 76-10-521 ;
             292          [(kkk)] (lll) alteration of number or mark on pistol or revolver, Section 76-10-522 ;
             293          [(lll)] (mmm) forging or counterfeiting trademarks, trade name, or trade device, Section
             294      76-10-1002 ;
             295          [(mmm)] (nnn) selling goods under counterfeited trademark, trade name, or trade
             296      devices, Section 76-10-1003 ;
             297          [(nnn)] (ooo) sales in containers bearing registered trademark of substituted articles,
             298      Section 76-10-1004 ;
             299          [(ooo)] (ppp) selling or dealing with article bearing registered trademark or service
             300      mark with intent to defraud, Section 76-10-1006 ;
             301          [(ppp)] (qqq) gambling, Section 76-10-1102 ;
             302          [(qqq)] (rrr) gambling fraud, Section 76-10-1103 ;
             303          [(rrr)] (sss) gambling promotion, Section 76-10-1104 ;
             304          [(sss)] (ttt) possessing a gambling device or record, Section 76-10-1105 ;
             305          [(ttt)] (uuu) confidence game, Section 76-10-1109 ;
             306          [(uuu)] (vvv) distributing pornographic material, Section 76-10-1204 ;
             307          [(vvv)] (www) inducing acceptance of pornographic material, Section 76-10-1205 ;
             308          [(www)] (xxx) dealing in harmful material to a minor, Section 76-10-1206 ;
             309          [(xxx)] (yyy) distribution of pornographic films, Section 76-10-1222 ;


             310          [(yyy)] (zzz) indecent public displays, Section 76-10-1228 ;
             311          [(zzz)] (aaaa) prostitution, Section 76-10-1302 ;
             312          [(aaaa)] (bbbb) aiding prostitution, Section 76-10-1304 ;
             313          [(bbbb)] (cccc) exploiting prostitution, Section 76-10-1305 ;
             314          [(cccc)] (dddd) aggravated exploitation of prostitution, Section 76-10-1306 ;
             315          [(dddd)] (eeee) communications fraud, Section 76-10-1801 ;
             316          [(eeee)] (ffff) any act prohibited by the criminal provisions of [Title 76,] Chapter 10,
             317      Part 19, Money Laundering and Currency Transaction Reporting Act;
             318          [(ffff)] (gggg) any act prohibited by the criminal provisions of the laws governing
             319      taxation in this state; and
             320          [(gggg)] (hhhh) any act illegal under the laws of the United States and enumerated in
             321      Title 18, Section 1961 (1)(B), (C), and (D) of the United States Code.


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