Provides that a default judgment against a defendant in a foreclosure action does not need to be vacated for such defendant to claim the plaintiff lacks…

◆ The sponsor's argument

Why Jessica Scarcella-Spanton says this is needed

In 2019, the Legislature enacted section 1302-a of the real property actions and proceedings law to ensure that homeowners would not forfeit the critical defense of lack of standing due to procedural default. That reform reflected the principle that foreclosure actions, which may result in the toss of a person's home, should be decided on their merits rather than on technical pleading rules. Central to that reform is the recognition that foreclosure is an extraordinary remedy, and only a party with a lawful interest in the underlying debt should be permitted to invoke the power of the courts to take a person's home. The requirement that a plaintiff stands at commencement is not technical, but a fundamental safeguard ensuring that only the proper party may enforce a mortgage obligation. Section 1302-a was enacted to preserve that safeguard. In practice, however, courts have required defendants who defaulted to first move to vacate a default judgment under the CPLR before asserting defenses the Legislature intended to preserve. This requirement imposes a significant procedural barrier and limits the statute's intended effect. Recent appellate decisions illustrate this inconsistency. In U.S. Bank N.A. v. Eisler, 237 AD3d 999 (2nd Dept 2025), the Appellate Division held that a defendant who defaulted was required to satisfy the stand- ards for vacating a default judgment before asserting a standing defense, notwithstanding section 1302-a. The court ruled similarly in Ditech Fin. LLC v. Mendonez, 236 AD3d 761 (2nd Dept 2025). Such deci- sions effectively condition the assertion of preserved defenses on vaca- tur, preventing courts from reaching the merits in appropriate cases. Although section 1302-a addressed standing, similar concerns arise with statute of limitations defenses, which likewise go to the legal viabil- ity of a foreclosure action. Legislature has underscored the importance of such defenses in 2022 with the enactment of the Foreclosure Abuse Prevention Act. Yet where a defendant has defaulted, procedural barriers may prevent courts from ever addressing whether a claim is time-barred. As a result, homeowners may face foreclosure even where the plaintiff lacked standing at commencement or where the claim is untimely. Requir- ing vacatur of a default judgment-often years after entry creates a substantial and, in many cases, insurmountable obstacle, particularly for unrepresented or financially distressed defendants. This outcome is inconsistent with the Legislature's intent in enacting section 1302-a. This bill clarifies that the defenses of lack of standing and expiration of the statute of limitations may be raised at any time, including after the entry of a default judgment and entry of the judgement of foreclo- sure and sale, without the need for vacatur. It ensures that courts may reach the merits of these defenses in all cases where a judgment of foreclosure and sale has not yet been enforced. The bill does not alter the substantive burden of proof for any party. Plaintiffs must still establish standing and timeliness, and defendants must still prove their defenses. The bill removes only an unnecessary procedural barrier that has led to inconsistent and unfair application of the law. By restoring uniformity, reinforcing the requirement that only a proper party may foreclose, and giving full effect to the Legislature's prior enactment, this bill promotes fairness, judicial efficiency, and confi- dence in the foreclosure process.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.