Labelled as an amendment to the civil practice law and rules regarding the interest rate applicable to money judgments arising from consumer debt (emphasis supplied), a new law was signed by the Governor on December 31, 2021 and becomes effective April 30, 2022. A cursory reading would suggest, and some scuttlebutt making the rounds, would indicate that the statute would apply to foreclosures, that is, to judgments of foreclosure and sale. That court clerks may adopt this position appears from a mailing of the new law’s text to foreclosure firms by a high official in the Office of the Court Administration.
The view here, however, is that judgments of foreclosure and sale are not affected by the new provision.
A painstaking analysis of the statute with concepts, related case law, parsing of multitudinous sections and line by line examination of Senate Introduction Memo In Support is not unwise, but that pedantic exercise can be bypassed to present the points in brief, understandable fashion. If all this comes to litigation – which seems inevitable – the minutiae will then be extensively explored.
Here are the basics:
A judgment of foreclosure and sale is not a money judgment. (See 3 Bergman On New York Mortgage Foreclosures §27.01, LexisNexis, Matthew Bender for more extensive review and case citations.) Because this statute refers specifically to money judgments, it cannot include the judgment of foreclosure and sale.
Supporting the concept that the judgment of foreclosure and sale is not a money judgment, CPLR Article 52 relating to money judgment enforcements and RPAPL Article 13 controlling mortgage foreclosures are distinct legislative enactments so that the judgment arising from the equitable action of mortgage foreclosure is not a money judgment.
Indeed, a mortgage foreclosure is not an action to recover the sums due from the mortgagor personally (suit on the note would be). Rather, it is designed to collect the monies from the land through enforcement of the lien of the mortgage – it is an action in rem.
While the actuality that a foreclosure judgment is not a money judgment alone confirms that the statute does not encompass it, the provisions refer extensively to the role of the sheriff and various execution procedures. All of these have nothing to do with the mortgage foreclosure sale process of bringing to fruition the foreclosure judgment.
Finally, the new statute does not once mention mortgages, mortgage foreclosure of the judgment of foreclosure and sale – even though it could easily have done so if such was the focus. Contrast that with the plethora of borrower protective legislation of the last fifteen years which has been transparent in reciting and focusing upon foreclosures, using the applicable words.
This is underscored yet further by the lengthy Senate Introduction Memo. No mention whatsoever is made of mortgages in any context. Instead, it makes clear what the statute is designed to remedy: “debt collection lawsuits”. And when offering examples, it delineates rent, medical bills and car loans. It also assertively mentions protection from bank levies and wage garnishments, but never touches upon foreclosures.
A careful reading of each line of the memo offers considerably more evidence that foreclosure judgments are not encompassed by the new requirements.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2022), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.