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New York AG Bill: Jail Time for Employees Involved in Foreclosure Fraud

New York Attorney General ""Eric Schneiderman"":http://www.ag.ny.gov/ announced Thursday the introduction of his bill in the state Legislature that would protect New Yorkers from fraudulent business practices in the foreclosure process.

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Schneiderman's bill, titled ""The Foreclosure Fraud Prevention Act of 2012,"" defines ""residential mortgage foreclosure fraud"" and imposes new criminal penalties for those who intentionally engage in fraudulent conduct, including managers of residential mortgage businesses who tolerate such conduct by their employees. These penalties include jail time.

""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,"" said the attorney general. ""By treating foreclosure fraud as the serious crime that it is, we can defer 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.""

Assemblymember ""Helene Weinstein"":http://assembly.state.ny.us/mem/?ad=041 (D-Brooklyn) sponsored the legislation, which 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 also makes it a Class E felony (punishable by up to four years in state prison) for employees to engage in multiple acts of foreclosure. In addition, it will be a class E felony for a ""high material agent"" of a residential mortgage business to tolerate fraudulent conduct by his or her employees.

""The best way to prevent wrongful foreclosures is with accountability,"" said Weinstein. ""I'm proud to sponsor Attorney General Schneiderman's Foreclosure Fraud Prevention Act-it provides a real and necessary deterrent to prevent criminals from unlawfully preying on homeowners. 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.""

In February, Schneiderman announced that New York would receive a sum of more than $130 million from the National Mortgage Settlement, the fourth highest amount received by a state from the federal settlement. The settlement also fulfilled Schneiderman's demand that he retain the right to bring legal action over misconduct that had not yet been fully investigated.

The attorney general's bill received support from many foreclosure prevention advocates.

""Knowingly filing fraudulent foreclosure documents, or overseeing such behavior, can ruin people's lives and should be a criminal offense,"" said Adam Cohen, senior staff attorney at ""MFY Legal Services"":http://www.mfy.org/. ""This is about deterrence and making sure homeowner's lives are not destroyed by reckless misconduct in the foreclosure process. Under Attorney General Schneiderman's Foreclosure Fraud Prevention Act, those who engaged in this kind of despicable behavior will face the justice they deserve.""

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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