Foreclosure Abuse Prevention Act, which aims to overturn landmark appeals court decision, awaits Gov. Kathy Hochul's decision
NEW YORK -- Lynden Hall, a resident of Canarsie, bought his home in 2007. He was a first-time homeowner optimistic to find a place for him and his brother's family to live.
Two years later, in 2009, he went into foreclosure.
"The mortgage, it was very high and it was very hard for me to keep up with the payments," he recently told CBS2's Hannah Kliger.
After years of the loan switching hands and litigation in court, his lawyer, Chidi Eze, filed a motion to cancel the mortgage in 2015.
"It's been six years and nothing is going on and the time to file a case for foreclosure has expired, so the court granted my request," Eze explains.
That wasn't the end. The bank successfully filed a motion to restore the case, got a judgment, and the right to sell the house.
"It's not a level playing field, let's just say that. The statute of limitations applies to everybody else, doesn't apply to the banks," Eze said.
Hundreds of homeowners in foreclosure can be affected by a 2021 New York Court of Appeals landmark decision called Freedom Mortgage Corporation v. Engel. The decision gives lenders more flexibility in the foreclosure process, especially when it comes to the statute of limitations.
In some cases, the clock on that six-year timeline can be restarted multiple times, dragging lawsuits on for years.
"There is no question that this has a huge impact on Brooklyn. It has a huge impact, however, across New York state because there are really hundreds and hundreds of cases that until the Engel decision came down, would have been barred by the statute of limitations under longstanding existing principles," said Jacob Inwald, director of foreclosure prevention at Legal Services NYC.
Foreclosures in New York City have been slowly climbing since the Emergency Eviction and Foreclosure Act expired in January. So far, this year has seen 286 new foreclosures, according to data from Property Shark.
This year, a bill which aims to provide relief to homeowners by overruling that Engel decision, passed in both the state Senate and Assembly. James Sanders Jr. sponsored it, and said the Foreclosure Abuse Prevention Act aims to help by, among other things, enforcing that six-year deadline.
"No one, the financial industry or the banks, can stop the clock, start the clock, stop the clock, start the clock, whenever they wish," Sanders told Kliger.
Now it sits on Gov. Kathy Hochul's desk, but supporters of the bill say they don't believe she is on board. Her office said she is still reviewing the legislation.
The bill has its critics, too. Brian McGrath, an attorney who often represents mortgage lending institutions, is one of them. He said this will have negative effects on the lending industry and new homeowners.
"The risk to a lender if a loan goes into default becomes higher in New York because they will make it far more difficult for a lender to recover on a bad home loan," McGrath says.
The effect of the bill, if it passes, still remains to be seen. For now, financial institutions and homeowners like Hall are keeping their eyes on Albany.
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