A bill in the New York Senate may drastically reduce the time it takes for a lender to start a foreclosure process. The bill introduced by James Sanders Jr. (D) of the 10th Senate District, nicknamed the Foreclosure Abuse Prevention Act, mandates that once a lender has launched a foreclosure case and accelerated the debt, they only have six years to complete the foreclosure.
According to Brian McGrath, partner at law firm Hinshaw & Culbertson, a vote on this bill is expected in the coming weeks. It could result in a pool of properties that cannot be foreclosed on since the limitations have elapsed. McGrath believes it is likely to pass the Senate and that once it does, it will apply equally to every lender and mortgage servicer attempting to foreclose on a home in New York. “It’s difficult to come across a lender or mortgage servicer with a nationwide portfolio that doesn’t include New York,” he added.
This makes this a pertinent issue for lenders across the United States. The bill will overturn the Court of Appeals’ recent ruling in Freedom Mortgage Corporation vs. Engel, in which “the ability to manipulate unilaterally, arrest, stop, and restart the limitations period at will” was placed in the hands of mortgage foreclosure plaintiffs and their services, according to the pending rule. Another major consequence of this bill is that lenders will have to tighten their underwriting requirements. Also, when this bill becomes law, lenders will suddenly have a pool of their portfolios where lien loss risk exists where it did not previously. To read more about this bill, click here.
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