New York’s Newly Enacted Foreclosure Abuse Prevention Act and its Effect on Private Lenders

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On December 30, 2022, Governor Kathy Hochul signed into law the “Foreclosure Abuse Prevention Act” (§5473). The Foreclosure Abuse Prevention Act (“FAPA”) puts a hard six-year statute of limitations on foreclosure proceedings and controversially will take effect retroactively. FAPA applies to all pending foreclosure actions and will have a drastic impact on certain actions in danger of being time barred as a result of the six-year statute of limitations.

The Legislative intent behind FAPA was to eliminate purported abusive and unlawful litigation tactics in mortgage foreclosure actions and prevent lenders from extending the statute of limitations beyond six (6) years. As a result, the decision to accelerate a loan could have a detrimental consequence not only on lenders but on homeowners and borrowers willing to work with their lenders to get back on a performing path.

Nevertheless, the significance of FAPA should have less of an impact on future actions commenced by private bridge lenders where maturity dates are shorter term. Thus, defaults and foreclosures sought and prosecuted diligently and in the ordinary course of business by private lenders should generally be unaffected. Significantly, actions voluntarily taken by the borrower such as a waiver of the statute of limitations, a refinance and/or a loan modification as part of negotiated loss mitigation, starts the clock anew and corrects any potential infirmity. It is essential for all lenders to consider the effect of FAPA before acceleration and initiating loss mitigation.

Ian Axelrod, Esq, Senior Counsel

Ian is an accomplished attorney with over 10 years’ experience representing private lenders, financial institutions, investors, developers, and domestic and international high net worth individuals and investment groups in all facets of lending, borrowing, acquisitions and other real estate matters.  Ian has represented prominent lenders, developers, property operators, business owners, and investors for both residential and commercial property development projects. Ian provides counsel on the acquisition, renovation, and lease of multi-family, mixed use, condominium and various other real estate projects.  Prior to joining the firm, Ian was the Managing Attorney at The Shiponi Law Firm, P.C. and, Associate at The Law Offices of Frederick J. Giachetti, P.C.

Ian graduated from SUNY at Buffalo in 2007 with a Bachelor of Arts degree in Political Science, Public Law Concentration.  He earned his Juris Doctor degree from Touro College, Jacob D. Fuchsberg Law Center in 2010, and was admitted to the New York Bar Association in 2011.