Business: mortgage fraud.

(1) Existing law makes it a criminal offense to commit mortgage fraud. This includes filing or causing to be filed with the county recorder in connection with a mortgage loan transaction any document that the person knows to contain a deliberate misstatement, misrepresentation, or omission, and with the intent to defraud. This bill would prohibit the filing of any document with the recorder of any county that the person knows to contain, instead, a material misstatement, misrepresentation, or omission. This bill would also provide that a mortgage broker or person who originates a loan commits mortgage fraud if, with the intent to defraud, the person takes specified actions relating to instructing or deliberately causing a borrower to sign documents reflecting certain loan terms with knowledge that the borrower intends to use the loan proceeds for other uses. By expanding the scope of a crime, this bill would impose a state-mandated local program. (2) Existing law generally regulates the provision of covered loans, including by prohibiting a person who originates a covered loan from avoiding, or attempting to avoid, the application of that law by, among other things, structuring a loan transaction as an open-end credit plan for the purpose of evading that law if the loan would have been a covered loan if the loan had been structured as a closed end loan. Existing law defines "covered loan" to mean a consumer loan in which the original principal balance of the loan does not exceed the most current conforming loan limit for a single-family first mortgage loan established by the Federal National Mortgage Association in the case of a mortgage or deed of trust, as specified. Existing law also prohibits a person who originates a covered loan from acting in a manner that constitutes fraud. This bill would additionally prohibit a person who originates a covered loan from avoiding, or attempting to avoid, the application of the law regulating the provision of covered loans by committing mortgage fraud. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.