ProTitleUSA is the first to launch a streamlined product for New York loans that have been in and out of foreclosure. These loans are reviewed to identify risk and litigation estimates based on two recent case laws that can potentially make the default (NPL/RPL) loans unenforceable
due to the six year statute of limitation (SoL) after commencing the foreclosure. The two New York cases are "Kessler" (Bank of America v. Kessler, AD3d, N.Y. Slip Op.,06979), which is related to a 90-day notice, and the "Anti-Engle" case (Freedom Mtge. Corp v Engle 2021 NY Slip Op 01090), which is expected to be signed by New York’s governor within the next few weeks.
Many large funds and servicers that have a large population of NY loans with prior foreclosure filings are scrambling to find a solution to assess the risk on all loans where the old foreclosures may be past the 6 year statute of limitation to foreclose, making the loans unenforceable. The review could trigger aggressive loss mitigation actions to initiate borrower outreach and offer attractive modifications or trigger loan sales on risky assets.
The current "Engle" case decision allows the SoL clock to reset if the prior foreclosure case has a language of voluntary discontinuance in dismissal of prior foreclosure action, revoking acceleration of debt and reinstating the mortgage (also referred to as a deceleration, removing the obligation to immediately repay the total outstanding balance due on the loan). The new "Anti-Engle" case, once signed into law, will introduce stricter guidelines on the language for each case dismissal, requiring a proof of de-acceleration, making many NY loans with prior foreclosure actions unenforceable as the SOL "Clock" on foreclosure will not be reset after prior foreclosure dismissal, and therefore the currently active foreclosure cases dismissible if the borrower invokes the SoL argument based on the new law.
Additionally, failure to strictly comply with the new Kessler case results in dismissal of the active foreclosure case, due to 90-day notice defects. While the active case may be dismissed, due to Kessler case issues will not directly impact the enforceability of the mortgage, refiling the new case might not allocate enough time to finish the foreclosure within the allotted SOL timeframe before the mortgage becomes unenforceable.ProTitleUSA
launched this new product to review the title and foreclosure case information on each foreclosure filing, followed by payment history review, as well as full servicing comments and collateral review.
We also review bankruptcy files and how they correlate to the foreclosure timeline related to the Engle case.
Finally, we have teamed up with the leading NY attorney's firm, who are experts in dealing with these two case laws, to issue attorney opinions on each asset with asset risk to estimate the amount of risk and litigation required.
Our review produces a 20-point check dashboard specific to NY SOL review with an option to attorney opinion that can be used for seller rebuttal, acquisition due diligence, servicer portfolio review, ongoing litigation review, servicer oversight and post acquisition risk assessment.
Even if the loans become unenforceable, we can review the severity of the issues and potentially offer to broker a sale to groups we work with that specialize in the most distressed and perilous assets.