On May 3, the New York State Senate passed. S5473D (Bill), which immediately applies to all cases where “final judgment of foreclosure and sale has not been enforced.” (look S5473D at Section 10.) This would affect future foreclosure actions and existing foreclosures, including those where the new law was applied retroactively and foreclosure and sale judgments were made but the auction had not yet taken place. means to give
In essence, the bill seeks to overturn a New York State Court of Appeals’ well-founded decision. free meeting. v. Engel, 37 NY3d 1 (2021) retroactively voids a lender’s longstanding right to revoke the option to accelerate a mortgage loan after default.of Engel The decision uniformly clarified the right of mortgagee to exercise their contractual rights to unilaterally suspend mortgage lending through the suspension of foreclosure activities, thereby resetting the six-year statute of limitations. rice field. The bill seeks to accomplish this by amending several laws governing foreclosure under New York state law.
The next step is to submit the bill to Governor Ho Chul for his signature. The governor of Hochul may veto the bill and seek further edits, but that seems unlikely. Ho-chol said she will take office in August 2021 and her actions early in her inauguration were aimed at preventing a flood of foreclosures. She signed a moratorium (expired in January) and established state participation in the Homeowners Assistance Fund.
The bill could allow many existing foreclosure cases to be dismissed against those that were seized at a disadvantage. Engel decision. For example, under the bill, a voluntary termination of a current foreclosure action would no longer constitute a revocation action and would not stop running the statute of limitations.Lenders who have previously restored a previously dismissed foreclosureEngel Because if you don’t disable acceleration properly, you’re likely to face a dismissal move soon.
Substantial litigation is expected if the bill is passed in writing. We also doubt that lenders facing layoffs after enactment would argue that the bill is unconstitutional given its retroactive effects, especially for lenders already involved in foreclosure lawsuits.
Troutman Pepper will continue to monitor the passage of legislation and related updates.