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.