Foreclosure Looms for Homeowners Who Thought They’d Won, Thanks to Top New York Court Ruling

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Christine Fife was “speechless with joy” when she won her foreclosure case in January 2020, she recalled, believing her decade under threat of foreclosure in her Upper West Side condo was finally over.

Now, though, Fife is once again facing the seizure of the apartment she has owned since 1990.

In February 2021, New York’s top court issued a decision that eliminated a path that New York homeowners had used for years to fight foreclosure.

The decision in Freedom Mortgage Corporation v. Engel allowed Fife’s lender to renew its foreclosure suit against her.

“They said it was OK. How can they change their mind?” Fife asked during an interview with New York Focus and THE CITY.

Across New York State, homeowners who believed that their cases had been settled in their favor are now once again facing foreclosure due to the Engel decision. Many are in danger of losing their homes …

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In New York, if a borrower misses a mortgage payment, the lender is allowed to demand the entire remaining balance immediately and then move to foreclose after 120 days, if the money owed remains unpaid.

But a lender must start the legal proceedings within six years of first demanding full payment, or the suit becomes invalid.

Until recently, the clock kept ticking until the lender informed the borrower that they were no longer seeking foreclosure. In Fife’s case, the lender had never done so. The bank sued Fife twice: first in 2010, a case the lender claims it later voluntarily withdrew, and again in 2017.

Her lawyers, representing Fife pro bono, successfully argued that the bank’s second foreclosure suit was barred by the six-year limit and got it dismissed.

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But the Engel decision changed the rules. The Court of Appeals found that voluntarily ending a foreclosure suit stops the clock on the six-year time limit — even if the homeowner is never notified. The court’s ruling applies retroactively to any foreclosure cases ongoing or still open to appeal at the time the decision was issued.

‘I was shocked, because I had put all my faith in the initial decision.’

Following the ruling, many foreclosures that expired under the six-year limit have been reopened or appealed to higher courts. Holly Meyer, a Suffolk County lawyer who represented one of the defendants in the Engel case, estimated that the number of affected homeowners could be in the tens of thousands.

www.thecity.nyc/housing/2021/11/29/22801547/foreclosure-looms-new-york-homeowners-top-court-ruling

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