New York State Senate Votes in Favor of Homeowners Foreclosure Relief Bill.

Real Estate
New York Foreclosure Attorney

On Tuesday, May 3, 2022, the New York State Senate voted in favor of a bill intended to provide homeowners foreclosure relief. The bill, if signed into law, would overrule the New York State Court of Appeals’ February 2021 decision in Freedom Mortgage Corporation v. Engel. In Freedom Mortgage Corporation v. Engel, the Court of Appeals held that lenders could proceed with foreclosures and revive dormant cases, including those which homeowners thought they had won As such, Freedom Mortgage Corporation v. Engel has allowed for lenders to save money, while providing leverage over a homeowner facing foreclosure. Freedom Mortgage Corporation v. Engel also overturned various lower court decisions that invalidated a foreclosure suit if proceeding had not begun within six (6) years of initiating suit or if the lender failed to notify the borrowers it stopped seeking foreclosure.

Currently, lenders can stop seeking foreclosure, without notifying borrowers and then start a new lawsuit even if six (6) years have elapsed. Under the new bill, the six (6) year statute of limitations will be clear.  Thus, if a lender discontinues a lawsuit, a lender will be barred from bringing another one. One option to address this time constraint and reset the six (6) years would be to allow the borrower to participate in a loan modification.  However, if a borrower defaults more than six (6) years after a lender first sought foreclosure, the proposed law could bar a lender from foreclosing on the modified loan. The proposed law could also create a situation where a new action under the modified loan could be commenced and allow for a second foreclosure suit.

Governor Kathy Hochul has not indicated whether she will sign the bill or not.  After ten (10) days, excluding Sundays, the bill can become law without her signature Should you have questions or concerns regarding the proposed law, do not hesitate to contact the attorneys at Mackey Butts & Whalen, LLP as we are ready to assist.

https://www.nysenate.gov/legislation/bills/2021/s5473

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