Subject: Banks and Financial Institutions; Licenses - Professional; Mortgages and Deeds

Bill Summary: Creates civil and criminal penalties for mortgage fraud and imposes sanctions upon certain licensed professionals and unlicensed individuals who commit the crime.

ESTIMATED NET EFFECT ON GENERAL REVENUE FUND
FUND AFFECTED	FY 2009	FY 2010	FY 2011
General Revenue	(Unknown less than $100,000)	(Unknown less than $100,000)	(Unknown less than $100,000)

Total Estimated Net Effect on General Revenue Fund	(Unknown less than $100,000)	(Unknown less than $100,000)	(Unknown less than $100,000)

ESTIMATED NET EFFECT ON OTHER STATE FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on Other State Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on FTE	0	0	0

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
Local Government	$0	$0	$0

Officials from the Office of State Courts Administrator and Department of Insurance, Financial Institutions and Professional Registration assume the proposal will have no fiscal impact on their organizations.

Officials from the Office of Administration (COA) - Administrative Hearing Commission anticipate this legislation will not significantly alter its caseload. However, if other similar bills also pass, there are more cases, or the cases are more complex, there could be a fiscal impact.

Officials from the Office of Prosecution Services (OPS) state the fiscal impact to County Prosecutors is unknown. The provisions of this proposed legislation create new criminal offenses and modify existing criminal laws. In the absence of any estimates of the number of additional criminal cases that would be referred to County Prosecutors for charges because of this proposed legislation, it is not possible to provide estimates concerning the extent of any fiscal impact. It is assumed this proposal would not have a significant direct fiscal impact on the OPS.

Oversight assumes because of the narrow scope of the legislation, that the County Prosecutors would not encounter a significant increase in the number of cases referred to them for prosecution.

Officials from the Office of Secretary of State (SOS) state the fiscal impact for this proposal for Administrative Rules is less than $2,500. The SOS does not expect that additional funding would be required to meet these costs. However, the SOS also recognizes that many such bills may be passed by the General Assembly in a given year and that collectively the costs may be in excess of what the SOS can sustain within its core budget. Therefore, the SOS reserves the right to request funding for the costs of supporting administrative rules requirements should the need arise based on a review of the finally approved bills signed by the Governor.

Officials from the Department of Corrections (DOC) state the DOC cannot predict the number of new commitments which may result from the creation of the offense(s) outlined in this proposal. An increase in commitments depends on the utilization by prosecutors and the actual sentences imposed by the court.

If additional persons are sentenced to the custody of the DOC due to the provisions of this legislation, the DOC will incur a corresponding increase in operational cost either through incarceration (FY 07 average of $41.21 per inmate per day, or an annual cost of $15,040 per inmate) or through supervision provided by the Board of Probation and Parole (FY 07 average of $2.43 per offender per day, or an annual cost of $887 per offender). Supervision by the DOC ASSUMPTION (continued)

through probation or incarceration would result in additional unknown costs to the DOC. Seven (7) persons would have to be incarcerated per fiscal year to exceed $100,000 annually. Due to the narrow scope of this new crime, it is assumed the impact would be less than $100,000 per year for the DOC.

Officials from the Office of State Public Defender (SPD) did not respond to our request for a statement of fiscal impact. However, in response to an earlier version of this proposal, the SPD assumed the new crime will create new cases for the SPD. The exact number of cases affected is too uncertain to provide a definitive dollar amount of fiscal impact. Nevertheless, there will some impact.

Since the amount of impact is so uncertain, the SPD is assuming existing staff will probably be able to provide representation in these cases initially. However, once the true fiscal impact is determined, the SPD will reassess the impact of the legislation. Passage of more than one bill increasing existing penalties or creating new crimes would require increased appropriations for the SPD.

Oversight notes that various provisions of the proposal allow the court to impose civil penalties of up to $2,500 per violation and up to $5,000 for any contested case proceeding. Oversight assumes minimal penalties will be collected and, therefore, is not presenting them in the fiscal note.

The proposal may impact small businesses that violate the provisions of this proposal and lose their licenses or have to pay civil penalties.

This proposal creates civil and criminal penalties for individuals committing mortgage fraud. The proposal allows licensed real estate brokers, real estate salespersons, and real estate appraisers to be brought before the Administrative Hearing Commission and lose their license for

committing mortgage fraud. A licensee who is criminally convicted of mortgage fraud will automatically have his or her license revoked; and the Missouri Real Estate Commission or the Missouri Real Estate Appraisers Commission within the Department of Insurance, Financial Institutions, and Professional Registration may maintain an action in circuit court. The court may impose a civil penalty of up to $2,500 per violation and may grant other relief the court determines is just and proper. A conviction for mortgage fraud is a class C felony.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

FISCAL IMPACT - State Government	FY 2009 (10 Mo.)	FY 2010	FY 2011
GENERAL REVENUE FUND

Costs - DOC
Increase in incarceration/parole costs	(Unknown less than $100,000)	(Unknown less than $100,000)	(Unknown less than $100,000)

ESTIMATED NET EFFECT ON GENERAL REVENUE FUND	(Unknown less than $100,000)	(Unknown less than $100,000)	(Unknown less than $100,000)