Bulletin: MI2012002

Dear Associates:

Please be advised that on October 20, 2011, the Governor of Michigan signed into law Public Act 205 of 2011 which went into effect January 1, 2012.  The statute describes certain conduct as constituting criminal mortgage fraud and establishes penalties and liability for damages.  Sec. 219d. (1) describes the prohibited conduct and Sec. 219d. (4) provides that a person who violates subsection (1) can be found guilty of a felony punishable by fine and imprisonment. (Please see attached.) 

Importantly, subsection (7) provides an affirmative defense for an employer to the prosecution of a defendant if, by a preponderance of the evidence, the employer has in force at the time of the violation and continues to have in force a written policy that includes all of the following: 

• A prohibition against conduct that violates this section by employees and agents of the defendant.
• Penalties or discipline for violation of the policy.
• A process for educating employees and agents concerning the policy and consequences of a violation.
• A requirement for criminal history check before employing an employee or engaging an agent and a requirement that the defendant will not employ or engage an individual whose criminal history check reveals a previous conviction of a crime involving fraud. 

The statute goes on to require that the defendant demonstrates that it enforces the written policy described above and before the violation of this section, the defendant communicated the written policy described and the consequences for violating the policy to the employee or agent who committed the violation. 

It is recommended that each policy issuing office/Agent consult with their own counsel to institute their own policies and procedures to install the safeguards identified in the statute.

Please disseminate this Bulletin to all appropriate office personnel. 
 
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