NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7737B
TITLE OF BILL:
An act to amend the real property actions and proceedings law, the
general obligations law and the civil practice law and rules, in
relation to the rights of parties involved in actions commenced upon
real property related instruments
PURPOSE AND INTENT OF BILL:
The legislature finds that there is an ongoing problem with abuses of
the judicial foreclosure process and lenders' attempts to manipulate
statutes of limitations; that the problem has been exacerbated by recent
court decisions which, contrary to the intent of the legislature, have
given mortgage lenders and loan servicers opportunities to avoid strict
compliance with remedial statutes and manipulate statutes of limitation
to their advantage; and that the purpose of the present legislation is
to clarify the meaning of existing statutes, and to rectify these erro-
neous judicial interpretations thereof.
Accordingly, this bill amends certain statutes and rules to clarify the
existing law and overturn certain court decisions to ensure the laws of
this state apply equally to all litigants, including those currently
involved in mortgage foreclosure actions, in order to ensure that
parties purporting to sue on mortgage debt are bound by the same stat-
utes of limitations that bind all other litigants. The aim of the bill
is to thwart and eliminate abusive and unlawful litigation tactics that
have been adopted and pursued in mortgage foreclosure actions to manipu-
late the law and judiciary to yield to expediency and the convenience of
mortgage banking and servicing institutions at the expense of the final-
ity and repose that statutes of limitations are meant to ensure.
The gravity of the aforementioned problem, and the legislature's deter-
mination to remedy same, is illustrated by the determination of the
legislature in passing this bill to apply to all actions governed by
CPLR 213 (4) in which a final judgment of foreclosure and sale has not
yet been enforced.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill contains the title of the bill, the "foreclosure
abuse prevention act".
Section 2 amends the RPAPL to address the deleterious and onerous effect
of a recent decision of the Appellate Division in Citi Mortgage, Inc. v.
Ramirez, 192 AD3d 70 (2020), which effectively gives mortgagees a second
bite of the mortgage apple, permitting actions to be instituted on a
note after a foreclosure action based on the same debt has already been
adjudicated to be barred by the statute of limitations, making a mockery
of the well well-settled statutory and case law concerning election of
remedies in connection with proceedings to enforce mortgage debts.
Section 3 of the bill makes conforming changings to the General Obli-
gations Law to create clear limits on when a cause of action to fore-
close a mortgage accrues.
Sections 4, 5 and 7 make conforming changes to the statute of limita-
tions provisions in the CPLR to clarify the relevant accrual periods for
actions upon a mortgage and note.
Section 6 of the bill creates a new "savings" statute expressly for
mortgage foreclosure cases in order to address judicial decisions that
have been contrary to the spirit of this savings provision which have
been overly indulgent of foreclosure plaintiffs whose cases have been
dismissed for various forms of neglect, who are not entitled to the six
months grace period meant for diligent plaintiffs whose cases were
dismissed for reasons that do not reflect their own fault. This will
ensure that mortgagees do not have an unfettered ability to bring numer-
ous successive actions on the same mortgage, without any limitation in
Section 8 of the bill amends CPLR Sec. 3217 as concerns discontinuance
of mortgage foreclosure actions, and is a response to the Court of
Appeals recent holding Freedom Mtge. Corp. v Engel,37 NY3d 1 (2021).
This will restore longstanding law that made it clear that a lenders'
discontinuance of a foreclosure action that accelerated a mortgage loan
does not serve to reset the statute of limitations.
Section 9 contains a severability clause.
Section 10 contains the effective date and makes it clear that this
legislation will apply immediately, and will apply to all such actions
commenced where a final judgment of foreclosure and sale has not been
As a direct result of the aforementioned judicial decisions, thousands
of New York homeowners who secured closure of their cases by operation
of longstanding statute of limitations principles are at risk of an
onslaught of successive foreclosure actions that would otherwise be
barred by the statute of limitations under longstanding statutory and
case law. This will cause the loss of countless homes and will burden
the Courts, which had significant budget cuts and forced retirement
of-dozens of senior judges, with cases that should be barred by the
statute of limitations and with excessive motion practice now that the
foreclosure moratoriums have ended. This bill levels the fields for all
homeowners, and ensures the statute of limitation applies to all parties
equally without exemption.
PRIOR LEGISLATIVE HISTORY:
New Bill, 2021.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
Immediately and will apply to all such actions commenced where a final
judgment of foreclosure and sale has not been enforced.