New Law In New York State Helps Protects Homeowners From Banks
Governor Kathy Hochul has signed a law that closes loopholes that had been allowing banks and lenders to foreclose on New Yorkers' homes. The bill, dubbed the 'Foreclosure Abuse Prevention Act', was sponsored by NY State Senator James Sanders (D-Queens) and Assemblymember Helene Weinstein (D-Brooklyn). Even though S.05473-D/A.07737-B passed in May, Gov. Hochul only recently signed it into law. Senator Sanders says the law helps protect homeowners from having their homes taken due to loopholes that can restart the statute of limitations,
The FAPA does not disturb New York’s already generous six-year statute of limitations on mortgage foreclosure actions. It simply restores a fair and common-sense principle: no party may unilaterally stop and restart the statute of limitations to revive what would otherwise be a time-barred action.
Many homeowners who were directly affected by the loopholes were in support of the bill.
New York State Wants To Make A Major Change To House Foreclosures
Another foreclosure bill that would protect homeowners is still stuck in the Senate Rules Committee. The bill aims to make sure homeowners who face foreclosure for unpaid taxes don't continue to get screwed. If it passed, it would change the law to put money back in homeowners' pockets after foreclosures, rather than allowing municipalities to benefit from people's misfortunes.
Senate Bill S9572 (Assembly Bill A10681) is sponsored by Senator Pete Harckham, a Democrat from the 40th District. If passed, the bill would stop the practice of municipalities keeping all of the money from a foreclosed home when it is above the tax debt that was owed. Senate Bill S9572,
Provides for the return of surplus proceeds from tax lien foreclosures to a former owner; requires 14-day posted notice prior to the public auction of a property.
The bill asks a great question: why should a local government that foreclosed on a property to collect the taxes owed to it, benefit from the equity the owner had in the home? The text of the bill says that it would,
Provide relief to families whose property was foreclosed on for tax arrears by allowing them to acquire the net proceeds from tax foreclosure auctions after all outstanding debts have been paid. Just because a municipality was owed taxes does not mean it should get the windfall from outstanding equity in the property. After tax debts have been collected, with interest, there is no reason the municipality should also be entitled to the equity that the previous homeowner built up in that property.
Currently, if your home is foreclosed and sold at auction for a surplus, you don't automatically get that money back. You must ask the court to get the surplus money back. If it sells at less than what is owed it is called a deficiency judgment.