New York Foreclosure Abuse Bill Not Yet Signed – NMP

When the New York state Senate briefly passed a controversial bill aimed at reforming foreclosure laws in May, it was hoped that Gov. Kathy Hochol would soon sign the bill into law.

More than a month has passed and the bill has not yet been signed. There doesn’t seem to be a clear timeline for now, as Ho-chol said at Tuesday’s Democratic governor’s debate that her office has more than 800 bills to consider before she signs them. .

Hochul faces the Democratic primary on June 28 from Congressman Tom Suozzi and New York City public defender Jumaane Williams. Ho-chul’s office was asked to comment on when the bill would be signed, but she only responded that it was “considering the bill.”

Some people tracking the bill’s progress say it could be after the November general election before the legislature takes the bill to the governor’s office and begins the 10-day clock for signature or veto. I believe there is

Opponents of the bill, known as the Foreclosure Abuse Prevention Act, don’t expect a veto, but want to ease some of their concerns about the law’s impact on the lending industry. We hope that such a correction will be made, not just for consumers.

These changes are likely to come as a result of proposals by private and semipublic lenders, according to Brian McGrath, a partner at New York City law firm Hinshaw and Cullbertson and an opponent of the bill. That’s what I mean.

“Stakeholders, including the FHA, Fannie Mae and Freddie Mac, discussed potential amendments to the bill before it was signed,” Shaw said.

Legislators who backed the law said its purpose was to manipulate the law and courts by eliminating abusive and unlawful litigation tactics that lenders have employed and pursued in mortgage foreclosure lawsuits.

The issue arose from a 2021 New York Court of Appeals ruling in Freedom Mortgage Corp. v. Engel, in which some lawmakers ordered mortgage lenders and their servicers to “freely unilaterally enforce the restriction period.” has the ability to manipulate, arrest, suspend and resume.” , hurting New York homeowners dealing with foreclosure lawsuits.

As a result, courts across the state were flooded with motions made by lenders to reopen foreclosure suits that had been dismissed years earlier because of the statute of limitations.

The court’s ruling in the Engel case allowed lenders to voluntarily suspend the state’s six-year foreclosure statute of limitations countdown and reserve the right to reopen litigation again so long as it is done within six years. .

As a result, foreclosures were no longer statute of limitations, and countless homeowners were trapped in “a state of judicial purgatory suspended with uncertainty over the fate of their homes,” according to legislators.

Proponents of the bill also said some lenders in the state have long been accused of underestimating statutes of limitations by suspending and resuming actions that could push homeowners into foreclosure for a decade or more. It has a reputation, said these practices unduly harm communities of color.

At the time of the bill’s passage, the bill’s sponsor, State Senator James Sanders Jr., said that New York homeowners in foreclosure were the biggest winners, and that the bill would “level the playing field between lenders and borrowers.” I did,’ he said.

Sanders was not immediately available to comment on the signature impasse, but other supporters of the legislation expressed their displeasure.

“Struggling New York homeowners continue to be affected by delays in foreclosure abuse protection, with multiple decisions nearly every week reinstating or reinstating lawsuits previously barred by long-standing statutes of limitations. We are making decisions like allowing the lawsuit to proceed before Engel¸ is undoubtedly barred by the statute of limitations,” said Jacob Inwald, director of foreclosure prevention at Legal Services NYC. “The financial services industry may have reason to celebrate that the Court of Appeals has given a free pass to statutes that other categories of litigants don’t get, but New York families needlessly stay out of their homes. They’re being kicked out, meanwhile.”

Opponents countered that it would severely limit the right of mortgage holders to enjoy the benefits of foreclosure claims, encourage borrowers to delay foreclosure proceedings, and ignore loss mitigation and debt restructuring efforts by lenders.

Opponents also argue that the bill imposes penalties on lenders for procedural errors that, in some cases, could result in a defendant incidentally receiving a free house.

Lenders also argued that, with limited exceptions, the bill would not “apply” or preclude foreclosure proceedings that are already nearing or exceeding the six-year statute of limitations.

In its current form, McGrath said the bill could lead to stricter underwriting guidelines, impacting the ability of people with credit problems and those in lower socioeconomic communities to qualify for mortgages. said.

And for those who qualify for mortgages, interest rates are likely to be higher and terms less favorable to offset lender risk, he said.

McGrath still expects the new law to be challenged in court unless that provision is removed during the amendment process, especially because Congress changed rules for lenders already involved in foreclosure proceedings. increase.

But now that an experienced and respected lender is involved and changes could be made, he’s optimistic.

“If these groups are concerned about the law, they should not take it lightly,” he said. “If they’re concerned, it should be a problem.”

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