Fannie Mae recently published Servicing Guide Announcement (SVC-2024-02) to provide information on updates to Form 3179 Loan Modification Agreements. The instructions for the form have been updated to include two new provisions for loans secured by property in New York, in response to New York’s Foreclosure Abuse Prevention Act (“FAPA”). Additionally, an update was also made to the instructions relating to MERS. The updates must be implemented no later than July 1, 2024.
Prior to FAPA, settled New York law provided that a lender’s discontinuance of acceleration of a debt during a foreclosure action constituted the affirmative act necessary to stop the six-year statute of limitation from running by which the lender must complete the foreclosure action. See Freedom Mortgage Corp. v. Engel.
FAPA sets a new precedent in New York foreclosure law with the addition of subsection CPLR § 3217(e) and amendments to GOL § 17-105, which instead provide that a stipulation or voluntary discontinuance of a foreclosure action is insufficient to reset the six-year statute of limitations period for a foreclosure action. The noteholder may only commence a foreclosure action within the same six-year period or be barred by the statute of limitations. GOL § 17-105 provides an exception by which the statute of limitations may be altered by an express written agreement from the parties to extend, waive, or not plead the statute of limitations as a defense.
Fannie Mae is adding language to Form 3179 when the subject property is New York based on the legislative changes in FAPA. Two new paragraphs will be inserted as 5(e) and 5(g) with the following language:
e) Borrower promises to pay the debt evidenced by the Note and Security Instrument. Further, Borrower acknowledges and agrees that any election by Lender to accelerate the debt evidenced by the Note and Security Instrument and the requirement by Lender of immediate payment in full thereunder is revoked upon the first payment made under the Agreement; and, the Note and Security Instrument, as amended by the Agreement, are returned to installment status and the obligations under the Note and Security Instrument remain fully effective as if no acceleration had occurred.
(f) Borrower further agrees to execute or cause to be executed by counsel, if applicable, a stipulation (to be filed with the court in the foreclosure action), that the Lender’s election to accelerate the debt evidenced by the Note and Security Instrument and requirement of immediate payment in full thereunder is revoked upon the first payment made under the Agreement and the debt evidenced by the Note and Security Instrument is deaccelerated at that time pursuant to New York General Obligations Law § 17-105, or other applicable law.
The update to Form 3179 instructions also includes a change to the MERS street address when the subject property is Indiana, Mississippi, New York, or Pennsylvania.
DocMagic will provide updates for the applicable state specific versions of Form 3179 beginning on June 6, 2024.
