Foreclosure Fraud Prevention Act of 2012 Bill Introduced Today in New York
The concept of Robo-Signing exploded onto the foreclosure scene about two years ago when it came to light that mortgage companies and foreclosure attorneys were taking illegal shortcuts.
Today, New York lawmakers introduced a bill that would make it a felony for mortgage servicer managers or their employees who commit foreclosure fraud.
The bill, which was drafted by New York State Attorney General Eric Schneiderman, provides that mortgage servicers who “authorize, prepare, execute or offer for filing false documents in a pending or prospective residential foreclosure action” can face up to a year in jail and a $1,000 fine. In addition, multiple acts of robo-signing would be treated as a Class E felony punishable with up to four years in prison.
As a foreclosure defense attorney on Long Island, I’ve seen many families’ lives crushed when banks brought improper foreclosure proceedings against them. We have been fortunate to have some of these cases dismissed. This legislation offers foreclosure accountability — a concept that has been duly lacking.
In a press release , the Attorney General stated, “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.”
The proposed legislation imposes a very stringent duty of accountability, something which barely exists with any teeth today. It appears that this bill, if enacted, will provide the strong criminal-law deterrent we need to prevent such abhorrent activity from continuing.
Robo-signing describes the process whereby mortgage companies and their foreclosure attorneys sign numerous documents in robotic fashion without verifying the facts attested to in those documents. About two years ago, as the U.S. foreclosure crisis reached a head, it became apparent that robo-signing was a major and widespread problem throughout the country in a great number of foreclosure proceedings. I wrote extensively about this problem previously, and my law office has successfully used this as a defense in many cases. See Craig Robins Mentioned in New York Times Cover Story About Sloppy Foreclosure Lawyers Who Represent Lenders . See also Boston Globe article about Robo-Signers .
Incidentally, Nevada enacted legislation in October which made foreclosure fraud a felony. As a result, the number of foreclosure filings in that state dropped to almost zero while banks and their attorneys made sure their cases were clean and correct. It would be nice to see lenders who bring foreclosure proceedings in New York make sure that there cases are 100% clean and proper at the time of filing.