Initiatives Included in the Foreclosure Fraud Prevention Act of 2013 Would Bring Greater Accountability to Lenders
New York, NY – May 23, 2013 – (RealEstateRama) — Assembly Speaker Sheldon Silver and Judiciary Committee Chair Helene Weinstein today announced the passage of two important legislative measures aimed at increasing integrity and efficiency in the mortgage foreclosure process.
The Foreclosure Fraud Prevention Act of 2013, would help to protect working families by increasing penalties for fraudulent business practices perpetrated by creditors during the foreclosure process. To further protect homeowners, the Assembly also advanced the “Certificate of Merit” bill, which would ensure that lenders bringing foreclosure cases have a legal right to do so.
Silver and Weinstein noted that under current law, lenders can start a residential foreclosure lawsuit yet still avoid having to attend a mandatory settlement conference. This has created a backlog of residential foreclosure cases and has delayed these mandatory settlement conferences which require both parties to work toward a modification.
“Due to this discrepancy, banks and their attorneys are engaging in deceitful practices that are pushing hardworking New Yorkers out of their homes,” said Silver. “Through the approval of these measures the Assembly is taking steps to correct this situation to keep more working families in their homes and effectively putting an end to these abusive foreclosure practices by increasing penalties for those who intentionally engage in these acts.”
“With these new laws, we will hold criminals accountable for their abusive foreclosure practices and deter them from unlawfully removing New Yorkers from their homes and eliminate the ‘shadow docket’ in the courts,” said Weinstein. “The filing of foreclosure cases by lenders and their refusal to bring cases before a judge has left thousands of homeowners in legal limbo without knowing whether the lender even has a right to bring the action. In passing this package of bills today we are sending a clear message: going forward, fraud will no longer be tolerated in foreclosure actions in New York.”
Included in the package of bills is a measure that would address the backlog known as the “shadow docket” by requiring foreclosure plaintiffs to file a certificate of merit in residential foreclosure actions. The certificate of merit would be accompanied by copies of the legal documents which a lender must have in order to foreclose. Provisions in the bill would require counsel for lenders to certify that such action can be commenced (A.5582 /Weinstein).
In an effort to hold lenders accountable and further protect New Yorkers from deceitful foreclosure cases, the Foreclosure Fraud Prevention Act of 2013 would make it a class A misdemeanor for an employee or agent of a residential mortgage business to knowingly authorize, prepare, execute or offer to file false documents in a residential foreclosure action. The bill also makes it a class E felony for employees who engage in, or employers who tolerate multiple acts of foreclosure fraud (A.7395/Weinstein).
