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286.8-990 Kentucky Residential Mortgage Fraud Act -- Provisions -- Criminal
proceedings -- Penalties.
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This section shall be known and cited as the "Kentucky Residential Mortgage
Fraud Act."
A person is guilty of residential mortgage fraud when, with the intent to
defraud, that person does any of the following in connection with the mortgage
lending process:
(a) Employs a device, scheme, or artifice to defraud;
(b)
Engages in any act, practice, or course of business that operates or
would operate as a fraud or deceit upon any person;
(c) Fails to disburse funds in accordance with a loan commitment;
(d) Knowingly makes or attempts to make any material misstatement,
misrepresentation, or omission within the mortgage lending process with
the intention that a mortgage lender, mortgage broker, borrower, or any
other person or entity involved in the mortgage lending process relies on
it;
(e) Knowingly uses or facilitates or attempts to use any misstatement,
misrepresentation, or omission within the mortgage lending process with
the intention that a mortgage lender, borrower, or any other person or
entity involved in the mortgage lending process relies on it;
(f) Receives or attempts to receive proceeds or any other funds in
connection with a residential mortgage closing that the person knew, or
should have known, resulted from a violation of paragraph (a), (b), (c), (d),
or (e) of this subsection;
(g) Knowingly causes to be filed with the commissioner or in any proceeding
under this subtitle any document that is, at the time and in the light of the
circumstances under which it is made, false or misleading in any material
respect; or
(h) Conspires or solicits another to violate any of the provisions of this
subsection.
It shall be sufficient in any prosecution under this section for residential
mortgage fraud to show that the party accused acted with the intent to deceive
or defraud. It shall be unnecessary to show that any particular person or entity
was harmed financially in the transaction or that the person or entity to whom
the deliberate misstatement, misrepresentation, or omission was made relied
upon the misstatement, misrepresentation, or omission.
In any criminal proceeding brought under this section, the crime shall be
construed to have been committed:
(a) In the county in which the residential real property for which a mortgage
loan is being sought is located;
(b) In any county in which any act was performed in furtherance of the
violation;
(c) In any county in which any person alleged to have violated this section
had control or possession of any proceeds of the violation;
(d) If a closing occurred, in any county in which the closing occurred; or
(e)
In any county in which a document containing a deliberate misstatement,
misrepresentation, or omission is filed with the official registrar of deeds
or with the Division of Motor Vehicles.
(5) Upon referral by the commissioner, the Kentucky Real Estate Commission, the
Attorney General, the Kentucky Board of Appraisers, or other parties; or upon
its own investigation of available evidence concerning any violation of this
subtitle; the proper Commonwealth's attorney or district attorney may institute
the appropriate criminal proceedings under this section.
(6) Unless the conduct is prohibited by some other provision of law providing for
greater punishment, a violation of this section involving a mortgage loan is a
Class D felony for the first or second offense and a Class C felony for each
subsequent offense.
(7) (a) All real and personal property of every kind used or intended for use in
the course of, derived from, or realized through a violation of this section
shall be subject to forfeiture to the Commonwealth. However, the
forfeiture of any real or personal property shall be subordinate to any
security interest in the property taken by a lender in good faith as
collateral for the extension of credit and recorded as provided by law, and
no real or personal property shall be forfeited under this section against
an owner who made a bona fide purchase of the property without
knowledge of a violation of this section.
(b) In addition to the provisions of paragraph (a) of this subsection, courts
may order restitution to any person who has suffered a financial loss due
to violation of this section.
(8) In the absence of fraud, bad faith, or malice, a person shall not be subject to an
action for civil liability for filing reports or furnishing other information regarding
suspected residential mortgage fraud to a regulatory or law enforcement
agency.
(9) Nothing in this subtitle shall limit the powers of the state to punish any person
for any conduct that constitutes a crime.
(10) The court may assess a fine of not less than one thousand dollars ($1,000) nor
more than five thousand dollars ($5,000,) against any person who is convicted
of violating any provision of this section.
(11) Any person who knowingly engages in the business of residential mortgage
lending regulated by this subtitle without first securing a license or registration
therefore shall be guilty of a Class A misdemeanor.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 796, effective July 15, 2010. -Amended 2008 Ky. Acts ch. 175, sec. 20, effective April 24, 2008. -- Amended
1998 Ky. Acts ch. 197, sec. 17, effective July 15, 1998. -- Amended 1994 Ky.
Acts ch. 377, sec. 5, effective July 15, 1994. Amended 1992 Ky. Acts ch. 77,
sec. 13, effective July 14, 1992. -- Created 1980 Ky. Acts ch. 365, sec. 24,
effective July 15, 1980.
Formerly codified as KRS 294.990
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS
references within this statute have been adjusted to conform with the 2006
renumbering of that code.
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