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Both houses of the Georgia General Assembly have recently passed by overwhelming majorities House Bill 237 to specifically make criminal misstatements with the intent to defraud during the foreclosure process. The governor of Georgia is expected to sign this legislation into law shortly.

HB 237 amends prior Code Sections 16-8-101 and 102 by expanding the definition of “mortgage lending process” to include the execution of deeds under power of sale and the execution of assignments of security deeds that are required by Georgia law to be recorded prior to a foreclosure sale. The legislation is intended to give law enforcement authority to investigate and prosecute violations for alleged fraud in the foreclosure process.

The new legislation also provides that the offense of residential mortgage fraud shall not be predicated solely upon information lawfully disclosed under federal disclosure laws and regulations relating to the mortgage loan process, nor upon truthful information contained in documents filed in the land records for the stated purpose of correcting scrivener’s errors, mistakes, inadvertent misstatements, or omissions contained in previously filed documents.

This legislation does not provide for a private cause of action for alleged fraud in connection with the execution of deeds under power or assignments of security instruments. However, we anticipate that aggrieved borrowers will report what they believe to be violations of this new provision, and may attempt to assert a private cause of action.

Please contact us with any questions regarding this new legislation.