In December 2022, Governor Hochul signed the Foreclosure Abuse Prevention Act (FAPA) into law. This legislation aims to prevent lenders from abusing the foreclosure process, ensuring more fairness for homeowners.
Background and Purpose
The Foreclosure Abuse Prevention Act was introduced in response to a 2021 court case (Freedom Mortgage v. Engel) that allowed mortgage lenders to manipulate the statute of limitations in foreclosure cases, giving them an unfair advantage over homeowners. The new law restores the original statute of limitations and prevents lenders from exploiting loopholes to extend the foreclosure process indefinitely.
Key Provisions of the Act
1. Restoring the Statute of Limitations: One of the primary goals of FAPA is to restore the six-year statute of limitations for mortgage foreclosure actions. This means that lenders must begin foreclosure proceedings within six years of the date of default. The Act prevents lenders from unilaterally stopping and restarting the statute of limitations to revive time-barred actions.
2. Restricting Voluntary Discontinuances: The Act addresses the issue of voluntary discontinuances, where lenders could pause the foreclosure process and restart it later to extend the statute of limitations. Under FAPA, once a foreclosure action is started, lenders cannot voluntarily discontinue the process to reset the statute of limitations.
3. Protecting Homeowners: FAPA aims to protect homeowners from abusive practices that disproportionately affect communities of color. By preventing lenders from manipulating the foreclosure process, the Act ensures that homeowners have a fair chance to defend their rights and avoid unjust foreclosures.
Impact on Homeowners and Lenders
The new law is significant for both homeowners and lenders. For homeowners, the Act provides protection against unfair foreclosure practices. It ensures that they have a clear understanding of their rights and the timeline for foreclosure proceedings. This transparency helps homeowners make informed decisions and seek legal assistance if necessary. Lenders must now adhere to stricter guidelines and cannot exploit loopholes to extend the statute of limitations. While this may pose challenges for lenders, it ultimately promotes a fairer and more just system for all parties involved.
Conclusion
New York's Foreclosure Abuse Prevention Act is a crucial piece of legislation that addresses long-standing issues in the foreclosure process. By restoring the statute of limitations and preventing abusive practices, the Act ensures a fairer and more balanced system for homeowners and lenders alike. As the Act continues to be implemented, it will be essential to monitor its impact and make any necessary adjustments to further protect homeowners and promote justice in the foreclosure process.
If you are in danger of foreclosure, or if you’ve already been sued, get legal advice from attorneys familiar with whether and how the new law might help you.
Background and Purpose
The Foreclosure Abuse Prevention Act was introduced in response to a 2021 court case (Freedom Mortgage v. Engel) that allowed mortgage lenders to manipulate the statute of limitations in foreclosure cases, giving them an unfair advantage over homeowners. The new law restores the original statute of limitations and prevents lenders from exploiting loopholes to extend the foreclosure process indefinitely.
Key Provisions of the Act
1. Restoring the Statute of Limitations: One of the primary goals of FAPA is to restore the six-year statute of limitations for mortgage foreclosure actions. This means that lenders must begin foreclosure proceedings within six years of the date of default. The Act prevents lenders from unilaterally stopping and restarting the statute of limitations to revive time-barred actions.
2. Restricting Voluntary Discontinuances: The Act addresses the issue of voluntary discontinuances, where lenders could pause the foreclosure process and restart it later to extend the statute of limitations. Under FAPA, once a foreclosure action is started, lenders cannot voluntarily discontinue the process to reset the statute of limitations.
3. Protecting Homeowners: FAPA aims to protect homeowners from abusive practices that disproportionately affect communities of color. By preventing lenders from manipulating the foreclosure process, the Act ensures that homeowners have a fair chance to defend their rights and avoid unjust foreclosures.
Impact on Homeowners and Lenders
The new law is significant for both homeowners and lenders. For homeowners, the Act provides protection against unfair foreclosure practices. It ensures that they have a clear understanding of their rights and the timeline for foreclosure proceedings. This transparency helps homeowners make informed decisions and seek legal assistance if necessary. Lenders must now adhere to stricter guidelines and cannot exploit loopholes to extend the statute of limitations. While this may pose challenges for lenders, it ultimately promotes a fairer and more just system for all parties involved.
Conclusion
New York's Foreclosure Abuse Prevention Act is a crucial piece of legislation that addresses long-standing issues in the foreclosure process. By restoring the statute of limitations and preventing abusive practices, the Act ensures a fairer and more balanced system for homeowners and lenders alike. As the Act continues to be implemented, it will be essential to monitor its impact and make any necessary adjustments to further protect homeowners and promote justice in the foreclosure process.
If you are in danger of foreclosure, or if you’ve already been sued, get legal advice from attorneys familiar with whether and how the new law might help you.
