New York Foreclosure Abuse Prevention Act passes Senate and Assembly

Homes in Richmond Hill, Queens // Photo courtesy Joe Raskin, Wandering New York

Originally published by The Law Offices of Andrea Gross

On May 3, 2022, The Foreclosure Abuse Prevention Act (FAPA) passed the New York State Assembly and Senate. The bill passed by a vote of 107 to 40 in the Assembly and 52 to 10 in the Senate.

"Today, homeowners who are in foreclosure are the biggest winners with the passage of this significant foreclosure bill,” said James Sanders, Jr., a Democrat from New York Senate District 10 who introduced FAPA. “This bill will go a long way in helping homeowners save their homes from foreclosure by leveling the playing field by eliminating certain abuses lenders have used in Courts to the detriment of the homeowners.”

On Feb. 18, 2021, the New York Court of Appeals reversed a decision in foreclosure case Freedom Mortgage v. Engle, granting new exemptions to the enforcement of the statute of limitations on foreclosures. In response to this ruling, several legislators and their constituents advocated for FAPA, which aims to reinforce the statute of limitations.

In May 2005, Herschel Engel borrowed a $225,000 mortgage. Engel defaulted on the loan in March 2008, and in July 2008, the lender commenced foreclosure against him as well as several other borrowers. Engel moved to dismiss the foreclosure in court, citing improper service of documents. In January 2013, both parties signed an agreement, dismissing the foreclosure action brought against Engel in 2008.

Engel found himself in foreclosure again in 2015 as a result of the same missed payment from 2008. He moved to dismiss the second foreclosure, citing that New York’s statute of limitations for foreclosure cases is six years after the missed mortgage payment. In 2021, the Court of Appeals ruled in favor of the lender. The court decided that both parties’ voluntary discontinuance of the foreclosure action in 2013 counted as revocation of the action, resetting the statute of limitations. Under the Appellate Court’s decision, the bank had legally foreclosed on Engel a second time in 2015 for the missed payment in 2008. FAPA aims to override this ruling, outlining that a voluntary discontinuance of foreclosure does not reset the statute of limitations for the lender.

“[It is] start, discontinue, start, discontinue action,” said Marlon Graham, a supporter of FAPA and a Bronx-based paralegal who works in foreclosure defense. “This allows them to extend their time indefinitely.”

According to advocates for FAPA, the bill would mend disparities in homeownership throughout New York’s communities of color, which face foreclosure at nearly twice the rate of New York overall. Between July and October 2021, one in five homeowners of color in New York had missed a mortgage payment or defaulted on their loan. Some FAPA supporters argued that time restrictions on foreclosure cases also prevent homeowners from accruing insurmountable debt.

“The statute of limitations is not just there,” said Graham. “It’s there to prevent increasing the interest on a loan and making it impossible for somebody to repay.”

With support from the State’s Democratic majority, advocates anticipate that Gov. Kathy Hochul will sign it into law.

"Unjust home foreclosures threaten to force thousands of families on the street," said New York State Assembly District 42 Representative Rodneyse Bichotte Hermelyn. "The risk of displacement, particularly to seniors and in communities of color must not be pushed aside.”

More information from the New York State Senate about FAPA can be found here. Homeowners facing foreclosure who need assistance should call The Law Offices of Andrea Gross at (718) 341-2618 for a free consultation.