Senator: 'This Will Stop the Hemorrhaging of Foreclosures While the Economy, Hopefully, Slowly Recovers Over the Next Year'
Queens, NY --
In order to better protect New Yorkers facing the foreclosures of their homes, New York State Senator Joseph Addabbo, Jr.
(D-Howard Beach) co-sponsored a bill (S7759-2011/A10629A-2011) that is now
before the Senate’s Rules Committee, which amends the penal law to prevent the
fraudulent and widespread practice of “robo-signing” during the foreclosure
process.
The bill would impose both misdemeanor and
felony-level penalties on those who intentionally engage in such conduct and on
“high managerial agents” of residential mortgage businesses who recklessly
tolerate such fraudulent conduct by their employees and agents. It creates the
crimes of residential mortgage foreclosure fraud in the first- and second
degrees.
The senator also stated that later this year,
when the Legislature is called back into an expected special session by
Governor Cuomo, he plans to introduce his own bill to enact a
one-year moratorium on foreclosures in New York State.
“With the increasing number of foreclosures, we
have seen a rise in vacant, bank-owned homes in our communities. These premises
have become places for criminal activity and negatively affected the good
neighbors surrounding them. I am hopeful that by addressing the foreclosure
issue and assisting those homeowners facing financial difficulties, I can also
address the issue of vacated homes,” explained Addabbo.
The senator cited that there are about 800 homes
in Howard Beach alone that currently are in foreclosure—foreclosures have
reached an all-time high during the current economic recession and that one in
ten residential mortgages in New York City is seriously delinquent. Queens has
among the highest percentages of seriously delinquent mortgages citywide.
Addabbo also noted the recently growing concern
among the residents of Woodhaven regarding vacated homes that have become a
problem for the community.
“My new bill would impose a one-year moratorium
on foreclosures, provided that the homeowner maintains a reduced mortgage
payment agreed to as a result of negotiations with the bank or other mortgage
holder. This will stop the hemorrhaging of foreclosures while the economy,
hopefully, slowly recovers over the next year. And, it will allow New Yorkers
to secure employment and get their finances back on track, which in turn will
assist in stabilizing our state’s economy,” Addabbo added.
As for the current legislation pending in
Albany, the senator stated, “The abuses committed in recent years by mortgage
servicers in mortgage foreclosure proceedings are well documented. Multiple
employees of the major servicers have admitted in sworn testimony that they
perpetrated systematic fraud on the courts in foreclosure proceedings by
‘robo-signing’ affidavits, such as attesting to personal knowledge about
mortgages and properties despite having no such knowledge.”
Addabbo believes these fraudulent abuses
occurred in hundreds of thousands of proceedings nationwide and that the
dramatic increase in the number of foreclosure proceedings being brought
compounded the problem. According to Realty Trac, Inc., there have been more
than 54,000 homes in foreclosure over the past four years statewide.
The widespread practice of “robo-signing” has
prompted a number of investigations by governmental authorities, including
several by the Office of the NYS Attorney General (OAG) to determine the scope
of the fraud committed against the courts of New York.
“Robo-signing” and related foreclosure abuses
have also prompted a coordinated review by state and federal regulators. In
2010, following revelations of the widespread use of “robo-signed” affidavits
in foreclosure proceedings across the country, New York State, along with other
state attorneys general, formed a working group to investigate the
problem.
The major mortgage servicing banks soon
acknowledged that individuals had been signing thousands of foreclosure
affidavits without reviewing the validity or accuracy of the sworn statements.
Several national banks then agreed to stop their foreclosure filings and sales
until corrective action could be taken.
In April 2012, New York and 48 other state
attorneys general along with federal agencies, including the Departments of
Justice, Treasury, and Housing and Urban Development reached a landmark
settlement with the five leading bank mortgage servicers resulting in
substantial changes to their servicing and foreclosure-related practices and
approximately $25 billion in monetary sanctions and relief.
The New York Legislature responded to the residential
mortgage crisis with comprehensive legislation enacted in 2008 and 2009.
Intended to address the high number of defaults by unrepresented defendants in
residential foreclosure proceedings, the new legislation provided additional
protections for homeowners, including but not limited to, a requirement that,
at least 90 days before commencing foreclosure proceedings, mortgage lenders
and assignees notify homeowners about the availability of housing counseling
and foreclosure prevention services.
Within 60 days of the filing of proof of
service, the court must hold a mandatory settlement conference, to which the
plaintiff must bring specified key documents, including the mortgage and note,
or the name, address and phone number of the legal holder of the mortgage if it
is not the plaintiff; payment history; and an itemization of the amounts needed
to cure and pay off the loan.
Addabbo concluded, “While an important step in
the right direction, these recent legislative advances and civil enforcement actions
against so-called ‘foreclosure mills’ are not enough to ensure that New Yorkers
are fully protected from ongoing misconduct and outright fraud during
residential foreclosure processes. But this legislation would impose tough new
criminal sanctions – including felony-level penalties – against agents and
employees of residential mortgage businesses who intentionally engage in fraud
or deception. In addition, with this bill, those ‘high managerial agents’ of a
residential mortgage business who know of such fraudulent or deceptive conduct
by their agents and employees, but do nothing to prevent it, will face similar,
felony-level punishment as well.”
Addabbo urges his constituents to report any
nearby property they’re aware of that is owned by a bank and is in disrepair or
in need of a clean-up, to simply call either his Howard Beach or Middle Village
district offices at 718-738-1111 or 718-497-1630.
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