Bill would make foreclosure robo-signing a felony
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The measure would make it a felony for firms to engage in "robo-signing," a fraudulent practice that allowed companies to rapidly pursue foreclosures, triggering an explosion in cases. In some instances, the practice led to unlawful foreclosure proceedings.
Carrying a maximum sentence of four years in prison, the bill would for the first time treat mortgage fraud as "the serious crime it is," the Democrat said.
"We can deter future abuse and spare untold numbers of families the trauma of wrongful foreclosure," Schneiderman said in a statement.
Schneiderman is trying to get the State Legislature to approve the measure before it adjourns June 21. Assemb. Helene Weinstein (D-Brooklyn) introduced the bill in the house; it doesn't have a Senate sponsor yet.
Schneiderman was at the center of a $25 billion settlement in February among the federal government, state attorneys general and the nation's five largest mortgage lenders, who were accused of foreclosing without proper documentation.
Schneiderman gained national attention by resisting an earlier proposed settlement because he felt the terms were too generous for financial institutions. After the holdout, President Barack Obama named Schneiderman to a special unit to investigate illegalities that led to the mortgage crisis.
Robo-signing involved lenders robotically signing off on affidavits that they owned the mortgages in question and that payments had been months in arrears in order to launch foreclosures. Some lenders were accused of signing off on mortgages they didn't even own, not informing some homeowners their mortgages had been transferred or telling them whom they needed to pay.