NY Court of Appeals: Foreclosure Abuse Prevention Act Is Retroactive

The New York Court of Appeals recently held that key provisions of the New York Foreclosure Abuse Prevention Act (FAPA) retroactively apply to ongoing foreclosure actions without final judgments, and that retroactive application does not violate due process rights under the New York Constitution. 

The case stems from a 2007 foreclosure action on a Brooklyn property where the owner defaulted on a senior mortgage.  The initial action was discontinued in 2017 because of standing issues.  In 2020, a new party acquired a junior mortgage and sought to extinguish the senior mortgage lien as time-barred under the six-year statute of limitations.  During the pendency of the case, the FAPA was enacted.

The FAPA, in pertinent part, provides that a lender is estopped from arguing that a prior foreclosure action did not validly accelerate the mortgage and therefore did not trigger the six-year statute of limitations (unless the prior foreclosure action was dismissed on an expressed judicial determination, upon a timely defense, that the loan was not validly accelerated).

In this case, because the initial action was not dismissed on an expressed judicial determination regarding the acceleration of the mortgage, the court held that as an incident to the retroactive application of the FAPA, the senior mortgage lien is time-barred.  The court further held that retroactive application of FAPA does not violate due process because (among other grounds) its ruling does not change the six-year statute of limitations, but rather merely clarified New York estoppel doctrine.