Knowledge is power…and a powerful weapon that can be used against you in litigation if you don’t pay enough attention to the rules and regulations that govern California real estate transactions.

Several new laws took effect while you were out celebrating the New Year or catching the bowl games…do you know what they are? We won’t make you dig…we’ll spell them out for you right here this week. In fact, we provide this and other kinds of useful information to all our Risk Management Program clients free of charge (you can sign up here).

We’ll start with a big one, which you can remember by its use of two very bad f-words: fraud and felony:

SB 239 Effective Jan. 1, 2010: Fraud on a Mortgage Loan Application will be a Felony.
Mortgage Fraud Becomes a State Crime: As of January 1, 2010, anyone who deliberately makes any misrepresentation or omission during the mortgage lending process with the intent of influencing that process will be guilty of mortgage fraud under California law. A violation of this law is a crime punishable by one-year imprisonment. Under existing federal law, loan fraud against a federally insured lender is a crime punishable by a $1 million fine, plus one-year imprisonment (18 U.S.C. section 1014).

This law adds section 523f (a) to the Penal Code, which provides:
“A person commits mortgage fraud if, with the intent to defraud, the person does any of the following:

(1) Deliberately makes any misstatement, misrepresentation, or omission during the mortgage lending process with the intention that it is relied on by a mortgage lender, borrower, or any other party to the mortgage lending process.

(2) Deliberately uses or facilitates the use of any misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the mortgage lending process with the intention that it be relied upon by a mortgage lender, borrower, or any other party to the mortgage lending process.

(3) Receives any proceeds or any other funds in connection with a mortgage loan closing that the person knew resulted from a violation of paragraph (1) or (2) of this subdivision.

(4) Files or causes to be filed with the recorder of any county in connection with a mortgage loan transaction any document the person knows to contain a deliberate misstatement, misrepresentation, or omission.”



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