What Is the New Foreclosure Law in NY?
At the end of December 2022, New York State Governor Kathy Hochul signed a new piece of legislation into law called the Foreclosure Abuse Prevention Act (FAPA). This new law seeks to provide additional protections for homeowners who are facing foreclosure proceedings, particularly those who have been subjected to abusive practices by plaintiffs and servicers. It also aims to prevent disproportionate manipulative practices against people of color.
The FAPA is a transformative piece of legislation that intends to remedy foreclosure abuse in actions where plaintiffs have used voluntary discontinuances to their advantage. The Act amends the Real Property Actions and Proceedings Law, Civil Practice and Rules and the General Obligation law to prevent Lenders to prevent a reset of the Statute of Limitations. In addition, the Act limited the basis upon which a pending case with no activity can be continued.
Who Does FAPA Apply To?
The Foreclosure Abuse Prevention Act applies to all foreclosure actions initiated in New York State. This means that private lenders, banks, mortgage servicers, and other financial institutions that initiate foreclosure actions must comply with the new regulations set forth by the Act.
How Does FAPA Work?
The Act's provisions primarily focus on preventing plaintiffs from leveraging voluntary discontinuances to their advantage. This means that once a plaintiff has initiated a foreclosure action, they cannot voluntarily discontinue the process by some affirmative act, such as discontinuing a prior foreclosure action.
In New York, a lender must bring a mortgage f oreclosure action forward within six years of the maturity date, or more commonly, when it accelerates the loan by filing a foreclosure action.
The new law holds that a voluntary discontinuance of an action does not reset the Statute of Limitations, which was the holding of the Court of Appeal case in Engel. The six years now runs from the initial filing. And any subsequent foreclosure case commenced more than six years from a prior one can be dismissed provided that an auction has not yet occurred.
Before the Act was implemented, New York legislation stipulated that if a lender voluntarily discontinued the foreclosure process by reaching an agreement with the lender, it effectively de-accelerated the loan. This action would pause the statute of limitations, granting the lender an additional six years to initiate a new foreclosure action, either due to a fresh default by the borrower or when the loan reached maturity.
What Happens After My Foreclosure case is dismissed?
After a foreclosure has been dismissed, an action must be commenced to remove the mortgage from title. This is called a quiet title action and is crucial to clearing title. Otherwise, the property will not be able to be sold or refinanced.
Potential Pitfalls
While FAPA is certainly a positive development for homeowners, it does introduce new complexities into foreclosure proceedings. For instance, the six-month redemption period could potentially prolong foreclosure proceedings, causing further uncertainty for homeowners and lenders alike. Moreover, the new restrictions on voluntary discontinuances could discourage plaintiffs from initiating foreclosure actions.
Successful Case
James J. Quail and associates have already resolved many cases under FAPA. Many lenders and borrowers have agreed to take much less than what is owed to prevent a possible dismissal and subsequent mortgage discharge. For instance, we settled a mortgage that exceeded $800,000 for the sum of $60,000, as well as another mortgage in the amount of $350,000 for the sum of $30,000. In addition, there are many cases that are currently filed and are being litigated.
Talk with Our Attorney
Choosing James J. Quail & Associates, P.C. for your foreclosure defense cases and quiet title actions is a decision you won't regret. Our firm prides itself on its extensive legal knowledge, tenacious advocacy, and personalized client service. More importantly, we stay abreast of new legislation like the Foreclosure Abuse Prevention Act, ensuring our clients are never left in the dark about how such laws could impact their cases.
We don't just represent you; we educate and guide you through the complexities of the foreclosure process. With our firm by your side, you can be confident that your case is in the hands of professionals who understand the nuances of foreclosure law and will fight tirelessly to protect your rights and interests.
Learn more about our services by calling (516) 246-2449 or reaching out to us online.
