/>iAfter years of denying review, the New York Court of Appeals — the state’s highest court — agreed to address the question of whether New York’s momentous Foreclosure Abuse Prevention Act (FAPA) applies retroactively. On May 20, 2025, the New York Court of Appeals accepted review of two (2) cases that present challenges to Section 7 of FAPA, a provision limiting mortgage lenders’ defenses against statute of limitations challenges.
Under New York law, once a mortgage lender accelerates a mortgage loan, the lender has six (6) years to foreclose on the property, otherwise the mortgage may be extinguished. Following its enactment on December 30, 2022, FAPA has severely restricted lenders’ ability to stop or reset the six (6) year clock and, as relevant here, it has prevented mortgage lenders from arguing that the clock never started in the first place. Debate has raged about whether FAPA’s rules apply retroactively, which would mean that actions taken by mortgage lenders prior to the enactment of FAPA now have a different legal effect than they did when those actions were taken. When passing FAPA, members of the New York legislature stated that the law’s purpose was to overturn judicial decisions that sanctioned the use of the foreclosure process in abusive ways. New York’s intermediate appellate courts have noted this apparent legislative intent, along with FAPA’s text to conclude that the law was intended to apply retroactively. The defendants in Van Dyke and Article 13 LLC — along with litigants in many other cases — contend that retroactive application of FAPA’s provisions are unconstitutional.
Van Dyke v. U.S. Bank, N.A.is a New York state case initiated before FAPA’s enactment. There, a borrower brought a quiet title action against a mortgage lender, seeking to have her mortgage expunged. The borrower claimed that a previously discontinued 2009 foreclosure action had started the six (6) year statute of limitations and, because the statute of limitations had since expired, the borrower’s mortgage should be expunged. The state trial court agreed with the borrower, retroactively applying FAPA and concluding that such application did not violate the U.S. Constitution or New York Constitution. The intermediate appellate court affirmed the trial court in every respect in a February 18, 2025, opinion. Now, the New York Court of Appeals will review and opine for the first time on the constitutionality of FAPA’s retroactivity.
Article 13 LLC v. Ponce de Leon Fed. Bankis also a quiet title action. This case was initiated in 2020 — before FAPA’s enactment — in the United States District Court for the Eastern District of New York. There, a junior mortgagor sought to expunge a senior mortgage on the subject property based on the theory that the senior mortgagor initiated, then discontinued, a foreclosure action in 2007. According to the junior mortgagor, this prior action accelerated the loan on the property, and the statute of limitations has since expired, thus expunging the senior mortgage. The district court originally disagreed and denied the junior mortgagor’s motion for summary judgment. But two days later, FAPA was enacted and, upon reconsideration, the district court reversed itself, applied FAPA retroactively, and expunged the senior mortgage. The senior mortgagor appealed to the Second Circuit Court of Appeals, arguing that FAPA’s retroactive application violates both the New York Constitution and U.S. Constitution. The federal appellate court concluded that the state law questions presented by the senior mortgagor were essential to deciding the appeal. It certified two questions to the New York Court of Appeals:
1. Whether, or to what extent does, Section 7 of the Foreclosure Abuse Prevention Act, codified at N.Y. C.P.L.R. § 213(4)(b), apply to foreclosure actions commenced before the statute’s enactment?
2. Whether FAPA’s retroactive application violates the right to substantive and procedural due process under the New York Constitution, N.Y. Const., art. I, § 6?
Unlike previous FAPA-related questions from the Second Circuit that the New York Court of Appeals declined to answer, the Court of Appeals agreed to answer the questions certified in Article 13 LLC.
The stage is now set for the first rulings from the New York Court of Appeals on retroactive application of FAPA. That said, while the New York Court of Appeals will have the final say on the interpretation of FAPA and its compliance with the New York Constitution, the Second Circuit Court of Appeals remains free to conclude that FAPA’s retroactive application violates the U.S. Constitution.
The outcome of these cases will have a significant impact on foreclosure litigation and mortgage servicing operations in New York. We will continue to monitor FAPA litigation in New York and provide updates as soon as the Court of Appeals issues a ruling.
