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House approves tougher mortgage-fraud penalties, funds special prosecutors and investigators
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Summary
The House passed House Bill 25 to elevate mortgage fraud to a second-degree felony, direct the attorney general to hire a special prosecutor and fund two mortgage-fraud investigators through licensee fees rather than general-tax dollars; lawmakers amended language to protect innocent third parties.
Representative Ray presented House Bill 25, saying Utah ranks “number 2 in the nation on mortgage fraud” and describing the measure as an enforcement package that would make active mortgage fraud a second-degree felony, direct the attorney general to hire a special prosecutor, and instruct the Department of Public Safety to hire two criminal investigators dedicated to mortgage fraud. Ray said the bill uses money from the mortgage-licensee fund so the enforcement will not rely on general-tax dollars.
Why it matters: Lawmakers said mortgage fraud has raised borrowing costs for Utah consumers and that enforcement — not new licensing rules — is the missing piece. The bill sponsors and supporters said prosecutorial capacity and specialized investigative resources are needed to pursue complex fraud cases.
What was decided: Representative Drax (offering an amendment) and others pressed for clarifying language to avoid inadvertently criminalizing unwitting participants. The adopted amendment struck certain lines and adjusted the wording to require direct, knowing, or intentional conduct in specific clauses and to preserve intent as an element of prosecution. Representative Ray said he would prefer to catch more “bad guys” but not at the expense of prosecuting innocent professionals.
Lawmakers debated placement of investigators: Representative Harper asked why investigators would be in the Department of Public Safety instead of the Department of Real Estate; Ray said Public Safety’s detective division offers the appropriate criminal-authority tools and that the bill’s language (lines 44–45) limits those investigators to mortgage-fraud work.
Votes and next steps: With the amendment adopted, the House voted for final passage. The clerk announced House Bill 25 received 73 yes votes and 0 no votes; the bill passed as amended and will be transmitted to the Senate for further consideration.
Details and implementation: The bill elevates active mortgage fraud to a second-degree felony, creates authority to use forfeiture tools against fraudulently financed properties, and establishes funding from the mortgage-licensee fee fund (rather than general revenue). The House record shows the bill sponsor and several questioners discussed the fiscal note and coordination with licensing and investigative agencies.
The House sent the amended bill to the Senate for further consideration.
