ALBANY, NY – June 22, 2012 – (RealEstateRama) — Attorney General Eric T. Schneiderman released the following statement today on the overwhelming passage of The Foreclosure Fraud Prevention Act of 2012 in the state Assembly:
“I applaud the Assembly, Speaker Silver, and Assemblywoman Weinstein for overwhelmingly passing the Foreclosure Fraud Prevention Act. 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.
“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. This legislation will ensure that employees involved in these fraudulent and abusive practices, and their supervisors who allow the misconduct to continue, will be held accountable for their crimes.”
The Foreclosure Fraud Prevention Act of 2012
Attorney General Eric T. Schneiderman introduced legislation last week to protect New Yorkers from fraudulent business practices like “robosigning” in the foreclosure process. The Attorney General’s Foreclosure Fraud Prevention Act of 2012, will define “residential mortgage foreclosure fraud,” and impose tough new criminal penalties that include jail time for those who intentionally engage in such conduct, including managers of residential mortgage businesses who knowingly tolerate fraudulent foreclosure practices committed by their employees and agents.
Attorney General Schneiderman’s legislation, sponsored by Assemblymember Helene Weinstein (D-Brooklyn) and Senator Stephen Saland (R-Poughkeepsie), makes it a Class A misdemeanor, punishable by up to a year in jail and a $1,000 fine, for an employee or agent of a residential mortgage business to knowingly authorize, prepare, execute or offer for filing false documents in a pending or prospective residential foreclosure action. The bill makes it a class E felony, punishable by up to four years in state prison, for such employees to engage in multiple acts of foreclosure fraud (“robosigning”), and also makes it a class E felony for a “high managerial agent” of a residential mortgage business to have knowledge of such fraudulent conduct by his or her agents or employees and not take reasonable action to stop it.
This legislation is the latest effort by Attorney General Schneiderman to hold those responsible for the foreclosure crisis accountable. The current wave of foreclosures was precipitated by the bursting of the housing bubble, which cost American families over $7 trillion in household wealth; destroyed millions of jobs; and plunged the nation into the deepest and longest recession in 70 years. In 2011, a staggering 345,000 mortgages were either in default or delinquent in New York State.
In February, Attorney General Schneiderman announced a settlement of over $130 million for New York with the nation’s five largest mortgage servicers over foreclosure abuses, the fourth highest dollar amount nationwide as part of the federal-state settlement. The settlement, which imposes strong national standards for mortgage servicing, also fulfilled Attorney General Schneiderman’s demand that he retain the right to bring legal action over misconduct that had not yet been fully investigated, or where investigations were ongoing.
In March, the Attorney General announced that up to $15 million of the money he secured in the national mortgage servicing settlement will be used to extend funding for foreclosure prevention and other related services. Up to $9 million of the allocation will be used to support the state’s Foreclosure Prevention Services Program, which was set to expire on April 1 of this year. And up to $6 million will support housing and community renewal activities statewide through not-for-profit community-based housing organizations.
