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November 20, 2024

Law360, "Foreclosing Lenders Still Floating in Murky Legal Waters in NY"

Brian Rich, partner, had his “Foreclosing Lenders Still Floating in Murky Legal Waters in NY” expert analysis article published by Law360. The article explores how mortgage foreclosures in New York remain mired in legal uncertainty, particularly around the statute of limitations following voluntary discontinuance of actions. The US Court of Appeals for the Second Circuit recently sought clarity from New York’s Court of Appeals on whether the 2022 Foreclosure Abuse and Prevention Act (FAPA), which tightens limitations on foreclosure cases, applies retroactively. However, the state court declined to decide, leaving open significant legal questions.

FAPA overturned prior case law, restricting lenders from resetting foreclosure timelines through voluntary discontinuances. Lower courts have issued conflicting rulings, with one appellate court finding FAPA retroactive. This creates high stakes for lenders and borrowers, as unresolved issues could render many loans unenforceable while granting borrowers title free of encumbrances.

The legal ambiguity impacts New York’s foreclosure market, discouraging lenders from discontinuing cases and raising constitutional and statutory interpretation concerns. The Second Circuit’s resolution is anticipated to provide much-needed clarity for navigating this volatile landscape.

Law360 subscribers can read the full article here.

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