Provides that a default judgment against a defendant in a foreclosure action does not need to be vacated in order for the defense of lack of standing or expiration of the statute of limitations to be raised by the defendant.
Summary
This bill amends section 1302-a of the Real Property Actions and Proceedings Law to clarify when a homeowner or other defendant in a foreclosure action may raise certain defenses. Under current law, defenses based on the plaintiff’s lack of standing are preserved and not waived merely because they were not raised in an initial responsive pleading or pre-answer motion. The bill expands that rule to also cover the defense that the foreclosure claim is barred by the statute of limitations.
The key change is that a defendant may raise lack of standing or statute-of-limitations defenses after a foreclosure sale even if the judgment of foreclosure and sale was entered on the defendant’s default, and even if that default judgment has not been vacated. The bill applies to new foreclosure actions filed on or after its effective date, and also to pending actions where a final judgment of foreclosure and sale has not yet been enforced.
Impact
The bill would modify New York foreclosure procedure by broadening RPAPL 1302-a to expressly include statute-of-limitations defenses alongside lack-of-standing defenses, and by removing the practical barrier that previously required a default judgment to be vacated before those defenses could be asserted after a foreclosure sale. This would affect mortgage lenders, loan servicers, foreclosure plaintiffs, and homeowners/defendants in home-loan foreclosure cases, potentially increasing the availability of post-default challenges to foreclosure judgments and sales.
Sentiment
No committee transcript or vote record is provided, so there is no documented debate or recorded legislative sentiment in the supplied materials. Based on the bill text and caption, the measure appears to be framed as a consumer/homeowner protection and procedural clarification bill, suggesting likely support from those concerned with foreclosure fairness and access to defenses. At the same time, it may be viewed more cautiously by lenders and foreclosure practitioners because it could expand litigation opportunities after default judgments.
Contention
The main point of contention is whether defendants in foreclosure cases should be allowed to assert lack of standing or statute-of-limitations defenses after default without first obtaining vacatur of the default judgment. Supporters would likely argue that these are fundamental defenses that should not be lost due to default, especially in home-loan foreclosure cases. Opponents, likely including lenders and servicers, may argue that the change undermines finality of judgments and could complicate or delay foreclosure enforcement by reopening cases after default and sale.
Provides that a default judgment against a defendant in a foreclosure action does not need to be vacated in order for the defense of lack of standing or expiration of the statute of limitations to be raised by the defendant.
Clarifies provisions governing when foreclosure actions are deemed abandoned for failure of a plaintiff to timely seek a default judgment; governs when foreclosure actions are deemed terminated for purposes of the savings clause permitting actions to be recommenced following termination of a prior action and be deemed timely; governs the finality of dismissed or discontinued residential foreclosure actions.
Provides that certain communications made without malice regarding an incident of sexual assault, harassment or discrimination shall be deemed privileged; provides that a prevailing defendant in an action brought against such defendant for making a communication that is privileged shall be entitled to attorney's fees and costs for such defense.
Relates to orders of adjournment in contemplation of dismissal by mandating that judges seal certain records of defendants rather than giving judge's discretion for such an action; limits the total period of adjournment to 90 days.