The New York State Assembly passed a bill that protects homeowners from fraudulent business practices like robo-signing from taking place during the foreclosure process.
Last week, attorney general Eric Schneiderman proposed the Foreclosure Fraud Prevention Act of 2012 that would impose new criminal penalties against managers of residential mortgage businesses who knowingly permit fraudulent activities to happen at their company by employees and agents.
The bill makes it a Class A misdemeanor for an employee or agent of a residential mortgage business to deliberately file false documents in a pending residential foreclosure action. This action is punishable with a one-year jail sentence and a $1,000 fine.
Additionally, a Class E felony, punishable by up to four years in prison, would occur if employees engage in multiple acts of robo-signing. Also, any manager of a residential mortgage business who "recklessly tolerates" such behavior from being conducted by their employees and agents can also face four years in jail.
Assemblymember Helene Weinstein, D-Brooklyn, and Sen. Stephen Saland, R-Poughkeepsie, sponsored the bill.
"For many middle-class New Yorkers, their life savings is their home. To take away people's homes under fraudulent circumstances is a crime deserving of jail time," Schneiderman said in a written statement.
"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 State Senate has not voted on this bill yet.
