The New York State Legislature is currently reviewing Bill S5473D that relates to the rights of parties involved in foreclosure actions and provides additional details regarding the commencement and termination of certain actions related to real property. The title of this Bill is the Foreclosure Abuse Prevention Act.
What is the Purpose of the Foreclosure Abuse Prevention Act?
The Purpose and Intent of the Bill is to address the ongoing problem with abuses of the judicial foreclosure process in New York and lenders’ attempts to manipulate statutes of limitations, which problem has been worsened by recent court decisions which, contrary to the intent of the legislature, have given mortgage lenders and loan servicers opportunities to avoid strict compliance with remedial statutes and manipulate statutes of limitation to their advantage.
Specifically, there is a recent decision of the Appellate Division in Citi Mortgage, Inc. v. Ramirez, 192 AD3d 70 (2020), which effectively gives mortgagees a second bite of the mortgage apple, permitting actions to be instituted on a note after a foreclosure action based on the same debt has already been adjudicated to be barred by the statute of limitations.
Furthermore, the bill seeks to amend CPLR Sec. 3217 as it concerns the discontinuance of mortgage foreclosure actions and is a direct response to the Court of Appeals recent holding Freedom Mtge. Corp. v Enge1, 37 NY3d 1 (2021).
What is the Statute of Limitations for bringing a foreclosure action?
New York law has a six-year statute of limitations concerning contracts. See NY CPLR § 213. Because a mortgage is a contract, this limit applies to mortgage foreclosure as well, with each payment becoming its own cause of action, time-barred six years after its due date.
How will this bill help New York homeowners in foreclosure defense?
As a direct result of these judicial decisions, thousands of New York homeowners who secured closure of their cases by operation of longstanding statute of limitations principles are at risk of an onslaught of successive foreclosure actions that would otherwise be barred by the statute of limitations under longstanding statutory and case law. This will cause the loss of countless homes and will burden the Courts with cases that should be barred by the statute of limitations and with excessive motion practice now that the foreclosure moratoriums have ended. This bill levels the fields for all homeowners and ensures the statute of limitation applies to all parties equally without exemption
There are several defenses to foreclosure. Most of the defenses are related to the lender making a mistake. Some examples of foreclosure defenses are lender’s noncompliance to RPAPL Article 13, lack of standing, improper affidavits and statute of limitations.
Does this Bill Apply to all Foreclosure Actions?
The legislature is seeking to apply this bill to all actions governed by CPLR 213 (4) in which a final judgment of foreclosure and sale has not yet been enforced.
Have Questions About Foreclosure Defense?
Clair Gjertsen & Weathers PLLC are proven foreclosure defense attorneys and we continue to monitor this ever-changing foreclosure landscape in New York for our clients. For additional questions regarding the implications of these decisions and the most current foreclosure laws, we invite you to contact Clair Gjertsen & Weathers PLLC by calling 914-472-6202. We look forward to hearing from you.