New foreclosure law benefits Long Island homeowners

In May 2010, Hallie Maggi received notice from her mortgage company that it was foreclosing on her family’s home in Hauppauge.

Nearly 13 years later, she is optimistic that she and her husband Steven will soon be able to put the case behind them and will own their home free and clear. 

That’s because a new law could help the family win a legal fight with their mortgage holder over their house’s title as it shifts the balance of power in foreclosure cases toward borrowers and away from banks. While it may benefit the Maggis and others like them, there is debate about whether the law will help resolve foreclosure cases more quickly.  

 

WHAT TO KNOW

  • A new foreclosure law has shifted power toward borrowers and away from lenders, according to local attorneys.
  • The law addresses the statute of limitations for filing foreclosure cases and strips lenders of flexibility they were granted through a 2021 decision by the state Court of Appeals.
  • The law could help Long Island homeowners who have been involved in lengthy foreclosure cases.

On Dec. 30, Gov. Kathy Hochul signed the Foreclosure Abuse Prevention Act, a law designed to limit the ways mortgage lenders can extend the six-year statute of limitations for judicial foreclosure cases. The law is intended to overrule a 2021 decision by the Court of Appeals, Freedom Mortgage Corp. v. Engel, that gave lenders greater flexibility to stop and start foreclosure cases.

Under that decision, it was possible for lenders to voluntarily discontinue a case against a mortgage borrower and then later refile the case, resetting the six-year statute of limitations.

The decision led to a “flurry of motions” from mortgage lenders and servicers seeking to re-open cases,   according to a memo written by the bill’s lead sponsor in the State Senate, Sen.

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