On October 23, 2026, New York AG Letitia James announced a settlement requiring a group of debt buyers to pay more than $480,000 and provide additional debt relief to homeowners. The Attorney General’s Office alleged that the debt buyers violated New York’s six-year statute of limitations under the Civil Practice Law and Rules by seeking to collect expired mortgage payments through foreclosure lawsuits.
The mortgages were largely second mortgages originated before the 2008 financial crisis. Many went unpaid for years after homeowners modified their primary mortgages. The Attorney General’s Office alleged that the debt buyers:
- Acquired thousands of long-dormant mortgages. Beginning in 2019, the buyers collectively acquired more than 3,000 of these “zombie” mortgages in New York.
- Filed foreclosure lawsuits to collect on the mortgages. The office said the buyers filed more than 140 lawsuits involving long-defaulted second mortgages.
- Sought payments the office alleged were time-barred. Many lawsuits demanded the full principal balance and interest dating back as far as 12 years, beyond the six-year limitations period.
Under the settlement, the debt buyers must pay $240,000 in penalties and more than $242,000 in restitution to homeowners who paid or agreed to pay expired amounts. They must also stop seeking to collect expired mortgage payments and amend demands in ongoing foreclosure cases to remove those amounts.
Putting It Into Practice: New York’s action reflects continued regulatory scrutiny of debt buyers’ collection practices (previously discussed here). Mortgage and debt-collection participants should monitor state enforcement activity and assess whether their review and litigation practices address time-barred amounts.