New Yorkers facing foreclosure may soon receive protection from fraudulent business practices such as robo-signing that mortgage servicers are currently utilizing.
Attorney General Eric Schneiderman introduced the Foreclosure Fraud Prevention Act of 2012 to the State Legislature that defines residential mortgage foreclosure fraud and imposes new penalties for those who intentionally engage in illegal activity within the state.
The bill would make it a Class A misdemeanor for an employee or agent of a residential mortgage business to knowingly authorize or prepare for filing false documents in a pending residential foreclosure action. This action is punishable with a one-year jail sentence and a $1,000 fine.
Additionally, a Class E felony, punishable by up to four years in prison, would occur if employees engage in multiple acts of robo-signing. Also, any manager of a residential mortgage business who “recklessly tolerates” such behavior from being conducted by their employees and agents can also face four years in jail.
“For many middle-class New Yorkers, their life savings is in their home. To take away people’s homes under fraudulent circumstances is a crime deserving of jail time,” Schneiderman said. “By treating foreclosure fraud as the serious crime that it is, we can deter future abuse and spare untold numbers of families the trauma of wrongful foreclosure.”
Assemblymember Helene Weinstein, D-Brooklyn, sponsored this bill and said it provides accountability in order to prevent wrongful foreclosures.
“Attorney General Schneiderman’s Foreclosure Fraud Prevention Act provides a real and necessary deterrent to prevent criminals from unlawfully preying on homeowners,” Weinstein said. “Moving forward, fraud will no longer be tolerated in New York. This bill sends that message loud and clear: if you break the law to take someone’s home, you will go to jail.”
The introduction of this bill is not the first action by Schneiderman to hold those responsible for the foreclosure crisis accountable. In February, the Empire State received $130 million, the fourth highest amount throughout the country, as part of the national mortgage settlement with the five largest servicers over foreclosure abuses.
Out of the total amount secured from the settlement, $15 million will be used to extend funding for foreclosure prevention and other related services, the AG announced in March. Another $9 million will support the state’s Foreclosure Prevention Services Program that was set to expire on April 1.
Foreclosure prevention advocates like Adam Cohen, senior staff attorney at MFY Legal Services, hailed Schneiderman’s most recent legislation.
“Knowingly filing fraudulent foreclosure documents, or overseeing such behavior, can ruin people's lives, and should be a criminal offense. This is about deterrence and making sure homeowners' lives are not destroyed by reckless misconduct in the foreclosure process,” Cohen said. “Under Attorney General Schneiderman's Foreclosure Fraud Prevention Act, those who engage in this kind of despicable behavior will face the justice they deserve.”
