Managing Partner
Governor Kathy Hochul has recently signed the Foreclosure Abuse Prevention Act, which significantly impacts lenders’ and servicers’ ability to foreclose on homeowners in New York. This Act enforces a strict six-year statute of limitations on foreclosures and applies to all pending cases where a final judgment of foreclosure and sale has not been enforced. As such, any lender that (a) has commenced a foreclosure action, (b) saw that foreclosure action discontinued, voluntarily or involuntarily, and (c) failed to recommence an action within six (6) years of the commencement of the initial action has a worthless and unenforceable mortgage on its hands.
In light of the recent enactment of the Foreclosure Abuse Prevention Act in New York, we would like to highlight the crucial changes to the Real Property Actions and Proceedings Law (RPAPL § 1301), the General Obligations Law (NY Gen Oblig § 17-105), and the Civil Practice Law and Rules (NY CPLR §§ 203, 205, 213, and 3217) that may impact your foreclosure strategies.
Key amendments to the law include:
- Voluntary discontinuance of a mortgage foreclosure action will no longer reset the statute of limitations. This change protects borrowers and limits lenders’ options for pursuing foreclosure.
- Acknowledgments, waivers, promises, or agreements cannot be used to extend the statute of limitations beyond the law’s provisions. This ensures the six-year limit is consistently applied in all cases.
- Lenders are prohibited from filing a new action on the same debt once a foreclosure action is deemed beyond the six-year limitations period. This restriction curbs aggressive foreclosure tactics and encourages lenders to seek alternative resolution methods.
- Mortgage lenders are barred from asserting that the statute of limitations did not expire due to a lack of valid acceleration of the loan, further limiting their available defenses in foreclosure actions.
- A new “savings” statute allows for a new foreclosure action to be commenced under certain conditions but limits a mortgage lender’s use of the saving statute to just one time.
As trusted legal advisors, Woods Lonergan is well-equipped to guide you through these changes and help you adapt your strategies accordingly.
We are available to answer any questions you may have and assist you in navigating the complexities of the Foreclosure Abuse Prevention Act.
Book a call for further guidance on this important legal development.