The state Senate passed the Foreclosure Abuse Prevention Act this week, paving the way for the legislation to be sent to Gov. Kathy Hochul.
The bill is one of the key pieces of legislation that New York Credit Union Association leaders have lobbied against in the past with both legislators and the governor’s office.
The bill seeks to negate a previous court decision (Freedom Mortgage Corporation v. Engel), which allowed lenders to pause foreclosure proceedings to work with delinquent members in a good-faith effort to keep them in their homes. The reversal is expected to have numerous unintended consequences for many stakeholders. To reiterate, the Association’s key points of contention are:
- This legislation would greatly decrease lender flexibility to work with members to go through loss mitigation. Ultimately, lenders will be forced to limit or forgo mutually beneficial loss mitigation practices to expedite the foreclosure.
- This will ultimately harm members and negatively impact affordable home loans in the state.
- Arguably, this creates an incentive for bunk litigation in an already drawn-out, costly process.
Association leadership will keep up its efforts o ensure the governor’s office understands how this legislation would negatively impact New York’s credit unions.