New York’s Foreclosure Abuse Prevention Act: What Consumers Need To Know

In response to the New York Court of Appeals’ ruling in Freedom Mortgage Corp. v. Engel, which essentially gave lenders and loan servicers seeking to foreclose New York mortgages free reign to skirt the six-year statute of limitations by allowing them to “revoke” the acceleration of the mortgage debt and start a new foreclosure lawsuit, the New York Legislature enacted the Foreclosure Abuse Prevention Act (FAPA) to (among other things) reverse the decision made by the Court of Appeals and hold lenders and servicers to the same legal standards as all other New York litigants, who must bring lawsuits within the statutes of limitations mandated by New York law.

The attorneys at Fadullon Dizon Krul LLP want borrowers facing foreclosure to be aware that FAPA can have significant and (likely) positive impacts on the foreclosure lawsuits they are facing. The legal team at Fadullon Dizon Krul LLP is ready to analyze your case to determine whether any part of the newly-enacted FAPA legislation can help you prevent foreclosure.

What Does FAPA Do?

FAPA makes it more difficult for lenders and servicers to foreclose in certain situations.

FAPA is intended by the Legislature to apply retroactively (in cases wherein a judgment of foreclosure and sale has not been enforced) and states, in essence, that if a lender or servicer voluntarily discontinues a foreclosure lawsuit or otherwise “revokes” its election to accelerate the mortgage debt, the six-year statute of limitations on the foreclosure action will continue to run despite the lender or servicer’s discontinuance of a foreclosure lawsuit or other attempt at “revocation” of the acceleration of the mortgage debt (CPLR3217 [e]; CPLR 203). This effectively prevents the lender or servicer from starting to foreclose the same mortgage after six years have passed from the date the loan was initially accelerated.

FAPA also aims to curb foreclosure litigation abuses by lenders and servicers and to level the playing field in foreclosure litigation by, among other things:

• Preventing lenders and servicers from claiming that a prior acceleration of a mortgage debt was invalid when a borrower raises a statute of limitations defense, unless it was specifically determined by a court in a prior action that said acceleration was, in fact, invalid (CPLR 213 [4]);
• Mandating that if a lawsuit to foreclose a mortgage or recover any part of the mortgage debt is found by a court to be barred by the statute of limitations, that any other lawsuit seeking to foreclose the mortgage or recover any part of the same mortgage debt would also be barred by the statute of limitations (RPAPL § 1301); and
• Preventing lenders and servicers from relying on the “savings clause” (which gave lenders an additional six months to re-start a foreclosure lawsuit after a previous foreclosure lawsuit was dismissed), where, among other things, the lender or servicer neglected to prosecute the previous lawsuit, voluntarily discontinued the previous lawsuit, or failed to obtain jurisdiction over the defendant in the previous lawsuit by failing to serve the defendant with process (CPLR 205-a).

Because the mechanics of FAPA are complex, it is important to seek legal guidance to fully understand how FAPA may apply to your situation, whether you are seeking to modify a mortgage to avoid foreclosure, have a foreclosure case dismissed, a mortgage discharged as barred by the statute of limitations, or accomplish some other goal in this area of law.

When You Are Facing Foreclosure, Get Dedicated Legal Guidance

If you are facing foreclosure, talk to one of the firm’s lawyers. They understand everything there is to know about foreclosure defense. Call 347-967-4087 or use the online contact form to schedule an appointment at the Woodside or Jericho offices.