In prior newsletters, we discussed the New York Court of Appeals in Freedom Mortgage Corp. v. Engel (2021) which held (1) the filing of a foreclosure action accelerates all payments on a mortgage and starts the six-year clock for all payments and (2) the voluntary dismissal of the foreclosure action de-accelerates the mortgage, and stops the clock on future payments.
At the very end of 2022, New York’s governor signed the Foreclosure Abuse and Prevention Act. That law implements several provisions that favor borrowers over lenders in home mortgage foreclosures. One section overrules Engel, eliminating a lender’s ability to deaccelerate a debt by voluntarily discontinuing a foreclosure action or by sending a deacceleration letter to the borrower. This means that, once accelerated, the statute of limitations begins to run, and cannot be reset without the borrower’s consent.
Another section of the new law deals with CPLR 205(a), which extends the statute of limitations by six months while a claim is pending and later dismissed other than for certain specified reasons. The new law exempts actions on certain negotiable instruments secured by real property from 205(a), and instead enacts a more restrictive CPLR 205-a to govern such claims.
The new section does provide for a similar six-month extension, but with more restrictions, most notably that a successor-in-interest cannot invoke its provisions.
Another section of the new law amends subdivisions 4 and 5 of General Obligation Law §17-105. GOL §17-105(1) provides that an agreement to waive the statute of limitations to foreclose on a mortgage is effective if expressly set forth in writing and signed by the party to be charged. The amended language in subdivisions (4) and (5) provides that an acknowledgment, promise or agreement, express or implied, shall not postpone, cancel, reset, toll, revive or otherwise extend the statute of limitations, unless it is made as provided in this section.
Finally, the new law takes effect immediately and applies to all applicable action, including pending actions, so long as “a final judgment of foreclosure and sale has not been enforced.”
At the very end of 2022, New York’s governor signed the Foreclosure Abuse and Prevention Act. That law implements several provisions that favor borrowers over lenders in home mortgage foreclosures. One section overrules Engel, eliminating a lender’s ability to deaccelerate a debt by voluntarily discontinuing a foreclosure action or by sending a deacceleration letter to the borrower. This means that, once accelerated, the statute of limitations begins to run, and cannot be reset without the borrower’s consent.
Another section of the new law deals with CPLR 205(a), which extends the statute of limitations by six months while a claim is pending and later dismissed other than for certain specified reasons. The new law exempts actions on certain negotiable instruments secured by real property from 205(a), and instead enacts a more restrictive CPLR 205-a to govern such claims.
The new section does provide for a similar six-month extension, but with more restrictions, most notably that a successor-in-interest cannot invoke its provisions.
Another section of the new law amends subdivisions 4 and 5 of General Obligation Law §17-105. GOL §17-105(1) provides that an agreement to waive the statute of limitations to foreclose on a mortgage is effective if expressly set forth in writing and signed by the party to be charged. The amended language in subdivisions (4) and (5) provides that an acknowledgment, promise or agreement, express or implied, shall not postpone, cancel, reset, toll, revive or otherwise extend the statute of limitations, unless it is made as provided in this section.
Finally, the new law takes effect immediately and applies to all applicable action, including pending actions, so long as “a final judgment of foreclosure and sale has not been enforced.”