NY lawmaker to tackle foreclosure ‘injustice’

New York State Senator Zellnor Myrie is introducing legislation to change how debts and interest are calculated in foreclosure cases, responding to an investigation that found banks using a method that can overcharge homeowners and strip away surplus funds they should receive after foreclosure auctions.​

What the investigation found

A joint Gothamist–New York Focus investigation reviewed thousands of New York foreclosure cases and found that many lenders and their lawyers used a disputed way of calculating post-judgment interest. This practice allegedly inflated what homeowners owed, reduced or eliminated surplus funds that should have gone back to former owners after auctions, and may have cost struggling homeowners millions of dollars statewide.​

What Myrie’s bill would do

Sen. Myrie’s bill would standardize how courts and lenders calculate post-judgment interest and foreclosure debts across New York, replacing the contested method highlighted in the investigation. The proposal aims to ensure that any surplus proceeds from foreclosure auctions are properly paid to former homeowners instead of being absorbed by banks through extra interest and fees.​

Why supporters call it an “injustice”

Myrie has described the current situation as an “injustice in the system” because the rules on interest and surplus distribution have been loose enough for banks to claim money beyond what the law’s intent would suggest. Advocates say this effectively lets financial institutions profit from vulnerable homeowners’ losses, while many owners are unaware they might be entitled to surplus auction proceeds.​

How it fits into NY foreclosure law

The move comes as New York is already tightening foreclosure rules, including the Foreclosure Abuse Prevention Act, which courts recently upheld as constitutional and which limits lenders’ ability to delay or restart cases beyond the statute of limitations. Myrie’s bill targets a different problem—post-judgment accounting—so together these efforts are meant to make the foreclosure system fairer and more predictable for homeowners.​