Assemblywoman Rhoda Jacobs Passes Foreclosure Fraud Prevention Act

Legislation targets fraudulent mortgage-foreclosure practices
June 26, 2012
Assemblywoman Rhoda Jacobs (D-Flatbush) announced the Assembly passed a bill she co-sponsored that would protect Brooklyn homeowners from deceitful business practices perpetrated by lenders during a home foreclosure process (A.10629-A). The Foreclosure Fraud Prevention Act of 2012 imposes both misdemeanor and felony-level penalties on banks and lenders who knowingly engage in fraud, and on “high managerial agents” of such banks and lenders who fail to take reasonable measures to stop fraudulent conduct by their employees and agents (A.10629-A).

“Irresponsible banks and mortgage lenders engaged in fraudulent practices and took advantage of hardworking families,” Jacobs said. “Despite the widespread economic destruction caused by their reckless actions, few of those responsible for this crisis were prosecuted. This legislation would correct that injustice and ensure that banks and lenders that engage in fraud and deceit will be held accountable to the many Brooklyn families who lost their homes because of Wall Street’s greed.”

The Assembly’s bill would create the crime of residential mortgage foreclosure fraud in the second degree, a class A misdemeanor, punishable by up to one year in jail and a $1,000 fine; this penalty is directed at employees or agents of residential mortgage companies who knowingly prepare and file false documents in a residential foreclosure action.

Additionally, the bill would make residential mortgage foreclosure fraud in the first degree a class E felony, punishable by up to four years in state prison; this penalty is directed at agents who engage in five or more acts of residential mortgage foreclosure fraud or those “high management agents” who know that one or more of his/her employees are engaged in residential mortgage foreclosure fraud and fail to take reasonable steps to stop it.

“It’s time to bring accountability to the mortgage industry and send a message that the days of shady business practices are over,” said Jacobs. “Our families deserve better.”