New York’s Foreclosure Abuse Prevention Act: Key Changes Explained

For New York homeowners and lenders, recent developments in foreclosure law are bringing significant changes and challenges. The Foreclosure Abuse Prevention Act (FAPA), passed in December 2022, has added strict limits to foreclosure actions and significantly changed the statute of limitations landscape. Under this law. Lenders are basically barred from restarting the foreclosure process after the six-year statute of limitations has expired, even if previous actions were dismissed voluntarily. This measure is designed to protect homeowners from repeated foreclosure actions, but it’s generating intense debate, especially when it comes to its retroactive application.

FAPA’s retroactivity is currently under scrutiny in New York courts. In particular, there’s uncertainty over whether FAPA can be applied to cases that were already underway before the act was passed. Some trial courts have interpreted FAPA to apply retroactively, impacting lenders’ ability to revive older foreclosure cases. Others have challenged this approach, arguing it may infringe on lenders’ rights under constitutional clauses related to contracts and due process. To address this inconsistency, the Court of Appeals has been tasked with providing a definitive ruling, which will influence how foreclosure cases are handled across New York in the future.

This is a nuanced issue that could reshape foreclosure investment and lending strategies. A retroactive ruling would indeed set a precedent, making some foreclosures time-barred, which could enable distressed homeowners to retain properties longer or negotiate from a stronger position. This would also create opportunities for investors who specialize in acquiring and turning around distressed properties, as these assets could become available at reduced prices.

On the other hand, if retroactivity is denied, lenders would retain the advantage in re-initiating foreclosures, reducing the risk associated with timing and process delays. This could mean more stability for lenders but might reduce potential gains for investors hoping to acquire properties under distressed conditions.

These developments underscore the importance for both lenders and homeowners to stay informed about foreclosure law changes in New York. For those facing foreclosure, legal assistance can help navigate these complexities, while investors should closely monitor upcoming court decisions as they could shape opportunities in the distressed property market for years to come .

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Sources

• Harris Beach PLLC, which outlines the FAPA law’s amendments to foreclosure processes and limitations on restarting actions beyond the six-year period .

• Goodwin Law, which discusses the ongoing debate regarding FAPA’s constitutionality and how it affects current foreclosure cases across New York .

• The National Law Review, which details the Court of Appeals’ pending decision on FAPA’s retroactive application, which could create far-reaching implications for lenders and homeowners alike .