S T A T E O F N E W Y O R K
________________________________________________________________________
8204
2019-2020 Regular Sessions
I N A S S E M B L Y
June 7, 2019
___________
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:
Section 1. The banking law is amended by adding a new section 78-a to
read as follows:
§ 78-A. UNAUTHORIZED ENTITIES. THE FINANCIAL FRAUDS AND CONSUMER
PROTECTION UNIT OF THE DEPARTMENT OF FINANCIAL SERVICES SHALL REFER ANY
INSTANCES OF A PERSON, PARTNERSHIP, ASSOCIATION, CORPORATION OR OTHER
ENTITY WHICH IS OPERATING WITHOUT BEING CHARTERED, LICENSED OR REGIS-
TERED AS REQUIRED UNDER THIS CHAPTER TO THE ATTORNEY GENERAL AND TO ANY
OTHER FEDERAL, STATE OR LOCAL AGENCY OR ENTITY FOR APPROPRIATE ENFORCE-
MENT ACTION. AT LEAST EVERY SIX MONTHS, THE ATTORNEY GENERAL SHALL
PROVIDE THE UNIT WITH A WRITTEN UPDATE OF THE STATUS OF ANY ENFORCEMENT
ACTIONS IT HAS TAKEN AGAINST SUCH PERSONS OR ENTITIES.
§ 2. Paragraph (e) of subdivision 5 of section 590 of the banking law
is relettered paragraph (f) and a new paragraph (e) is added to read as
follows:
(E) NO MORTGAGE BANKER, MORTGAGE BROKER OR EXEMPT ORGANIZATION SHALL
CONDUCT BUSINESS WITH ANY PERSON, PARTNERSHIP, ASSOCIATION, CORPORATION
OR OTHER ENTITY WHICH IT KNOWS OR SHOULD HAVE KNOWN IS ACTING AS A MORT-
GAGE BANKER OR A MORTGAGE BROKER WITHOUT BEING LICENSED OR REGISTERED AS
REQUIRED BY THIS ARTICLE. A MORTGAGE BANKER, MORTGAGE BROKER OR EXEMPT
ORGANIZATION SHALL PROMPTLY NOTIFY THE DEPARTMENT OF ANY SUCH UNLICENSED
OR UNREGISTERED OPERATIONS.
§ 3. Subdivision 5 of section 598 of the banking law, as added by
chapter 571 of the laws of 1986, is amended to read as follows:
5. Civil penalties assessable against unlicensed or unregistered
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.
LBD05331-01-9
A. 8204 2
or entity engages in activities encompassed by this article, he shall be
liable to any person or entity affected by such activities for a sum of
money of not less than the amount of money paid to an affected person or
entity in connection with such activities, nor more than four times such
sum; PROVIDED HOWEVER THAT WHERE A NON-EXEMPT UNLICENSED OR UNREGISTERED
PERSON HAS CONTINUED TO ENGAGE IN SUCH UNAUTHORIZED ACTIVITIES AFTER
RECEIVING A CEASE AND DESIST NOTICE FROM THE SUPERINTENDENT, THE MAXIMUM
AMOUNT OF LIABILITY SHALL BE UP TO TEN TIMES SUCH SUM. Such sum may be
sued for and recovered by any person or entity for his use and benefit
in any court of competent jurisdiction.
§ 4. The article heading of article 187 of the penal law, as added by
chapter 472 of the laws of 2008, is amended to read as follows:
[RESIDENTIAL] MORTGAGE FRAUD
§ 5. Section 187.00 of the penal law, as amended by chapter 507 of the
laws of 2009, is amended to read as follows:
§ 187.00 Definitions.
As used in this article:
1. "Person" means any individual or entity.
2. ["Residential mortgage] "MORTGAGE loan" means a loan or agreement
to extend credit, including the renewal, refinancing or modification of
any such loan, made to a person OR AN ENTITY, which loan is primarily
secured by either a mortgage, deed of trust, or other lien upon any
interest in [residential] real property or any certificate of stock or
other evidence of ownership in, and a proprietary lease from, a corpo-
ration or partnership formed for the purpose of cooperative ownership of
[residential] real property.
3. ["Residential real property" means real property improved by a
one-to-four family dwelling, or a residential unit in a building includ-
ing units owned as condominiums or on a cooperative basis, used or occu-
pied, or intended to be used or occupied, wholly or partly, as the home
or residence of one or more persons, but shall not refer to unimproved
real property upon which such dwellings are to be constructed.
4. "Residential mortgage] "MORTGAGE fraud" is committed by a person
who, knowingly and with intent to defraud, presents, causes to be
presented, or prepares with knowledge or belief that it will be used in
soliciting an applicant for, applying for, underwriting or closing ON a
[residential] mortgage loan, or filing with a county clerk of any county
in the state arising out of and related to the closing of a [residen-
tial] mortgage loan, any written statement which:
(a) contains materially false information concerning any fact material
thereto; or
(b) conceals, for the purpose of misleading, information concerning
any fact material thereto.
§ 6. Section 187.05 of the penal law, as added by chapter 472 of the
laws of 2008, is amended to read as follows:
§ 187.05 [Residential mortgage] MORTGAGE fraud in the fifth degree.
A person is guilty of [residential] mortgage fraud in the fifth degree
when he or she commits [residential] mortgage fraud.
[Residential mortgage] MORTGAGE fraud in the fifth degree is a class A
misdemeanor.
§ 7. Section 187.10 of the penal law, as added by chapter 472 of the
laws of 2008, is amended to read as follows:
§ 187.10 [Residential mortgage] MORTGAGE fraud in the fourth degree.
A person is guilty of [residential] mortgage fraud in the fourth
degree when he or she commits [residential] mortgage fraud and thereby
A. 8204 3
receives proceeds or any other funds in the aggregate in excess of one
thousand dollars.
[Residential mortgage] MORTGAGE fraud in the fourth degree is a class
E felony.
§ 8. Section 187.15 of the penal law, as added by chapter 472 of the
laws of 2008, is amended to read as follows:
§ 187.15 [Residential mortgage] MORTGAGE fraud in the third degree.
A person is guilty of [residential] mortgage fraud in the third degree
when he or she commits [residential] mortgage fraud and thereby receives
proceeds or any other funds in the aggregate in excess of three thousand
dollars.
[Residential mortgage] MORTGAGE fraud in the third degree is a class D
felony.
§ 9. Section 187.20 of the penal law, as added by chapter 472 of the
laws of 2008, is amended to read as follows:
§ 187.20 [Residential mortgage] MORTGAGE fraud in the second degree.
A person is guilty of [residential] mortgage fraud in the second
degree when he or she commits [residential] mortgage fraud and thereby
receives proceeds or any other funds in the aggregate in excess of fifty
thousand dollars.
[Residential mortgage] MORTGAGE fraud in the second degree is a class
C felony.
§ 10. Section 187.25 of the penal law, as added by chapter 472 of the
laws of 2008, is amended to read as follows:
§ 187.25 [Residential mortgage] MORTGAGE fraud in the first degree.
A person is guilty of [residential] mortgage fraud in the first degree
when he or she commits [residential] mortgage fraud and thereby receives
proceeds or any other funds in the aggregate in excess of one million
dollars.
[Residential mortgage] MORTGAGE fraud in the first degree is a class B
felony.
§ 11. This act shall take effect on the thirtieth day after it shall
have become a law.