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ALDOCS01-_824768-v1-s7759_A10629A

ALDOCS01-_824768-v1-s7759_A10629A

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Published by: liz_benjamin6490 on Jun 20, 2012
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06/20/2012

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WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP
677 Broadway - 9th Floor, Albany, New York 12207-2996 Tel: (518) 449-8893 Fax: (518) 449-8927
 Albany
Baltimore
Boston
Chicago
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Garden City
Houston
Las Vegas
London
Los Angeles
McLean Miami
Newark
New York
Orlando
Philadelphia
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Stamford 
Washington, DC 
White Plains Affiliates: Berlin
Cologne
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Paris___
www.wilsonelser.com
MEMORANDUM IN OPPOSITIONJune 19, 2012A.10629-A Rules -Weinstein (Assembly Rules Cal. 340)S.7759 – Saland (Senate Rules Committee)
 AN ACT to amend the penal law, in relation to enacting the “foreclosure fraud preventionact of 2012” 
This memorandum in
opposition
is written on behalf of our client, the New York BankersAssociation (NYBA). NYBA is comprised of 150 community, regional and money-center commercial banks and thrift institutions operating in New York State, with over 200,000 NewYork employees.This bill would create criminal penalties for any “person who, being an agent of aresidential mortgage business acting within the scope of his or her employment, intentionallyengages in fraud or deception by authorizing, preparing, executing, offering or presenting for filingany written instrumentwhen that person knows such document contains a “material falsestatement, material false information or a material omission” and knows or believes that documentwill be filed with a court or other public office or public servant. Residential mortgage foreclosurefraud in the second degree would be a class A misdemeanor. Residential mortgage foreclosurefraud in the first degree would be a class E felony. Among others, those persons acting as “highmanagerial agents”, who know that one or more agents of the business are engaged in the prohibited conduct, or fail to take reasonable measures to prevent it from continuing, would bedeemed to be committing a class E felony. NYBA opposes this bill because, while imposingcriminal penalties in addition to the existing penalties for fraud which are already well embeddedin New York law, it is sweeping in its scope, vague and subject to misinterpretation. As such – and because the consequences of violating it are so severe – it is likely to chill the ability of lendersto exercise their lawful right to bring foreclosure actions against defaulting mortgagors. This will,no doubt, ultimately hurt the recovery of New York’s residential housing industry and our overalleconomy.It is unclear from this proposal, what statement, or information provided or omitted would be deemed to be “material” under its terms. Nor is it clear how one could always be expected todetermine in advance whether a document would one day be filed “in support of or in conjunctionwith a pending or prospective residential mortgage foreclosure action.” It is even less clear how ahigh managerial agent could determine what would constitute “knowledge” that an underling wasengaged in the vaguely defined residential mortgage foreclosure fraud, or when he or she would be
824768.1
 

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