For Queens and Brooklyn homeowners facing foreclosure, the legal fight can feel like a rigged game. You scrape together money to catch up on your mortgage, you send it in, and the bank either sends the check back or buries it in something called a “suspense account” without actually reducing what you owe. The clock keeps ticking. The foreclosure keeps moving forward. And the payment you made simply disappears into a bureaucratic void. That practice is now illegal in New York.
Assembly Bill A2739 was signed by Governor Hochul in December 2025 and took effect on December 12, 2025.
This legislation fundamentally changes how mortgage servicers must handle payments made by homeowners in default. At Poltielov Law PC, our Queens and Brooklyn foreclosure defense attorneys have been closely tracking this bill. We want local homeowners to understand exactly what it means for their cases right now. Whether you are already in foreclosure proceedings or falling behind on payments, this law may open doors that were not available before.
The bill directly confronts predatory tactics where servicers issue payoff statements but then refuse payments sent to the specified location and manner, returning funds while continuing to accrue default interest and fees that trap homeowners in escalating arrears. Servicers could no longer park these payments in “suspense accounts” without applying them to principal, interest, or other due amounts, a practice that previously blocked reinstatements outside court proceedings.
By forcing acceptance and prompt application, A2739 gives homeowners a reliable off-ramp from default without litigation, while the enhanced satisfaction requirements clear title faster after full payoff to enable sales or refinances.
The suspense account problem has been one of the most frustrating and least discussed obstacles in foreclosure defense. A homeowner sends in a payment, often a substantial one, only to have the servicer claim it does not equal the full reinstatement amount and therefore cannot be applied. The money sits in a holding account without reducing the principal balance while late fees and interest continue to accumulate. Some servicers simply return the check entirely, leaving the homeowner worse off than before they sent it.
Under A2739, lenders are required to accept and promptly apply payments made in reliance on a payoff statement they provided. The days of a bank holding your payment in a suspense account while simultaneously advancing your foreclosure case are over.
This legislation amends Real Property Law Section 275 to clarify when a mortgage remains enforceable and codifies the duty of servicers to process payments tendered according to their payoff letters, preventing them from rejecting or returning funds even if the amount falls short of the full balance.
It also updates Real Property Actions and Proceedings Law Section 1921 to mandate timely execution and recording of mortgage satisfactions after payoff, with escalating penalties starting at $500 for delays up to 30 days, rising to $1,500 after 90 days. The changes took effect immediately upon signing, providing immediate protections for residential mortgage borrowers facing default.
The core protection in A2739 includes when your lender provides you with a payoff statement and you submit payment according to its terms, including the amount, the method, and the designated recipient, the lender must accept and apply that payment. They cannot manufacture a technical defect to reject it. As long as you pay where and how your lender instructs, your money must count toward your loan balance.
Beyond mere acceptance, the law requires that funds be applied promptly and properly to principal and interest. This closes the window where a servicer might technically acknowledge receipt of a payment but park it indefinitely without reducing the outstanding balance. Every dollar you send in must now work toward resolving your debt.
One of the most significant implications of this law is that it creates a legitimate, incremental path to curing a default that does not depend on your servicer granting you a loan modification. Homeowners can now make installment payments to chip away at their arrears and potentially save their homes without needing a full payoff, a formal modification agreement, or a short sale.
For Queens homeowners who have been told they do not qualify for a modification, this changes the real estate game entirely.
A2739 carries real consequences for servicers who continue to reject or misapply payments that comply with a provided payoff statement. Non-compliant servicers expose themselves to legal challenges within the active foreclosure action itself, sanctions and adverse rulings in the settlement conference process, and civil liability for damages resulting from improper payment handling.
For homeowners who have already experienced payment rejection since the law’s December 2025 effective date, documentation of those violations may provide grounds to challenge the current status of the proceeding.
Knowing a law exists and actually using it to your advantage are two very different things. Servicers will not volunteer that they are now legally required to apply your payments. Some will continue their old habits hoping you do not push back. The attorneys at Poltielov Law PC understand how Queens and Brooklyn foreclosure courts operate and how to translate a statutory protection into concrete relief.
Our team handles the full spectrum of foreclosure defense and real estate litigation matters that intersect with cases like yours. Whether you need help obtaining a proper payoff statement, documenting a servicer’s non-compliance, or deploying A2739 strategically in your upcoming settlement conference, we are ready to put this law to work for you.
A2739 is one of the most homeowner-friendly pieces of foreclosure legislation New York has passed in years. For Queens and Brooklyn homeowners who have watched their payments vanish into servicer holding accounts, it is long overdue. But the law only helps you if you know how to use it and have someone in your corner who knows how to enforce it.
If you are facing foreclosure or struggling to get your mortgage payments properly applied, contact Poltielov Law PC today at (718) 520-0085 to schedule your free consultation. The rules have changed, and it is time to make them work for you.
