New York AG Schneiderman Proposes Legislation to Criminalize Foreclosure Fraud

Banks and mortgage servicers have been accused of widespread abuse and fraud which led to the inordinate number of foreclosures afflicting the housing market. Investigations were launched into the bank’s practices which led a $25 billion settlement, but very few of those services who pushed fraudulent documents through the system have faced criminal charges.

New York Attorney General Eric Schneiderman wants mortgage services to face criminal charges, including jail time if they use fraudulent signatures or documents to foreclose a person’s home. Schneiderman introduced the Foreclosure Fraud Prevention Act of 2012 to the New York legislature which would impose a fines and up to one year in jail for a mortgage servicer who uses fraudulent practices to foreclose on a residential home.

It took careful examination on behalf of many foreclosure attorneys to discover the widespread abuses. But once the abuses were uncovered they were rampant with many banks admitting they told employees to use fraudulent signatures on hundreds of documents a day.

Schneiderman, who was instrumental in negotiating the national settlement, said the new law would take aim at, “an employee or agent of a residential mortgage business,” who knowingly uses or authorizes fraudulent signatures or documents to foreclosure a person’s home.

Preventing foreclosure is in the best interest of the homeowner and the surrounding community. A foreclosure lawyer can help a troubled homeowner by presenting them with a number of options, such as a loan modification or a short sale; they can even challenge a bank’s documents if they suspect fraud.

Homeowners should not delay action once they have received a default notice. If they consult with a foreclosure attorney immediately they may very well be able to stay in their homes.