State lawmakers are pushing to restore the six-year statute of limitations on home foreclosures, more than a year after a court granted flexibility to lenders and their timelines.
The Foreclosure Abuse Prevention Act, or FAPA, is on the desk of Gov. Kathy Hochul. Democratic lawmakers including Sen. James Sanders Jr. are urging her to sign the bill, amNY reported.
The bill easily passed several months ago, despite opposition from mortgage lenders, and has been awaiting a signature from the governor, who is in the midst of a tense election campaign.
The measure would keep the statute of limitations for lenders to initiate foreclosure proceedings at six years.
“I wish that she had signed this bill long ago,” Sanders told the publication, while acknowledging the reality that Hochul has a lot of legislation to review. She has signed 57 percent of the nearly 1,000 bills approved by the legislature this year.
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According to Sanders, a long-standing legal principle in New York requires lenders to bring proceedings against homeowners within six years of initiating a foreclosure. But a ruling last year opened up a loophole that gave lenders more time.
Last February, the New York Court of Appeals ruled that lenders could pause the statute of limitations by withdrawing the foreclosure action within six years, then restart the clock later.
Advocates argued that the ruling essentially meant foreclosure actions in the state were no longer time-restricted. Lenders countered that the health of the mortgage industry depends on their ability to foreclose on homes whose owners have defaulted on their loans.
Sanders quickly introduced legislation to undo the court’s decision. His bill prevents lenders from hitting the pause button.
Representatives of mortgage lenders pushed back against the effort, claiming it would drive lenders out of the state. They noted that the state’s average foreclosure proceeding was nearly three years — already among the longest in the country.
Prior to the pandemic, the Bank of New York Mellon was hit with a class-action lawsuit, accusing the bank of systematically trying to foreclose on mortgages after the six-year statute of limitations had passed. Last February’s court decision meant the timing of BNY Mellon’s actions was no longer problematic.
— Holden Walter-Warner