In 2010, robo-signing exploded onto the real estate and legal scene. Mortgage companies and foreclosure attorneys were taking illegal shortcuts. Mortgage service providers were filing documents that were falsified, incorrectly signed and executed.
Robo-signing is the process where mortgage companies and foreclosure attorneys sign a host of documents without verifying the facts attested to in those documents. Usually, a bank employee signs thousands of foreclosure documents on a regular basis, without knowing any of the facts contained in any of the documents. Thus the process was given the name “robo-signing” since the signing takes places in robotic fashion without any thought to the individuality of each situation.
Given the explosion of robo-signing offenses in New York within the past couple of years, New York lawmakers have taken steps to reduce this type of crime. Although the explosion of robo-signing began around 2010, the problem still exists today.
Recently, New York legislatures introduced a bill that would make it a felony for mortgage service managers or employees to commit foreclosure fraud. By making the law a felony, lawmakers hope to deter would-be offenders because felonies are considered greater offenses and come with more severe consequences than misdemeanors.
Specifically, the law provides that mortgage servicers who “authorize, prepare, execute or offer for filing false documents in a pending or prospective residential foreclosure action” can face up to a year in jail and a $1,000 fine. Further, multiple acts of robo-signing would be treated even more severely, as a Class E felony, punishable with up to four years in prison.
New York State Attorney General Eric Schneiderman said, “For many middle-class New Yorkers, their life savings is in their home. To take away people’s homes under fraudulent circumstances is a crime deserving of jail time.”
Given the economic downturn, law makers are eager to pursue any opportunity to protect homeowners from losing their homes. As a result, more bills like this may be introduced and may even pass.
In addition, some websites have listed certain notorious people suspected of mass robo-signing to prevent people from falling victim to this harmful crime.