In the six months since New York’s governor signed the Foreclosure Abuse Prevention Act, L. 2022, ch. 821 (eff. Dec. 30, 2022) (FAPA), a split has emerged about whether the law applies retroactively.

FAPA strictly cabins the time limits for commencing mortgage foreclosures by amending five New York procedural rules (CPLR 203; CPLR 205; CPLR 213; CPLR 3217; RPAPL 1301) and the state’s General Obligations Law (GOL 17-105).  The intent of the act, according to its sponsor, was to overturn certain precedent interpreting those rules and laws.  Most significantly, FAPA invalidates the holding of Freedom Mortgage v. Engel, 37 N.Y.3d 1 (Feb. 18, 2021).  In that case, New York’s highest court concluded that a mortgage holder may revoke a prior election to accelerate an installment debt (acceleration is generally a precursor to foreclosure), thereby preserving the option to accelerate again in the future.  By undoing Engel, and other precedent too, FAPA takes away this and similar options from foreclosing plaintiffs.

Recent court decisions applying FAPA have varied as to whether or not the act’s effects may, constitutionally, be retroactive.

Two federal court decisions have found that it may.  One found FAPA applied retroactively such that the mortgage owner’s discontinuance of a prior foreclosure action, which under Engel would have functioned to revoke acceleration of the mortgage loan, no longer had that effect.  East Fork Funding LLC v. U.S. Bank N.A., 2023 WL 2660645 (E.D.N.Y. Mar. 23, 2023) (canceling mortgage as time-barred).  Another applied the FAPA-amended CPLR 205.  Windward Bora, LLC v. Sotomayor, 2023 WL 2575582 (S.D.N.Y. Mar. 20, 2023).  Appeals have been filed in both cases.

In New York state court, the decisions are split.

Five New York trial courts have declined to apply FAPA retroactively.  HSBC Bank USA, N.A. v. Besharat, Index No. 500836/2021 (N.Y. Sup. Ct. Putnam Cnty May 19, 2023); Wilmington Savings Bank v. Hack, Index No 701590/2019 (N.Y. Sup. Ct. Queens Cnty Apr. 21, 2023); Deutsche Bank Nat’l Tr. Co. v. Feurtado, Index No. 719810/2019 (N.Y. Sup. Ct. Queens Cnty Mar. 29, 2023); NewRez LLC v. Kalina, (N.Y. Sup. Ct. Albany Cnty Mar. 22, 2023); MTGLQ Invs., L.P. v. Gross, (N.Y. Sup. Ct. Westchester Cnty Mar. 16, 2023); see also Nestor I LLC v. Moriarty-Gentile, Index No. 065328/2014 (N.Y. Sup. Ct. Suffolk Cnty May 2, 2023) (in dicta, noting FAPA should not apply retroactively).

Seven others have found the act does apply retroactively.  U.S. Bank Tr., N.A. v. Miele, Index 51023/2016 (NY Supr. Westchester Cnty June 21, 2023); U.S. Bank Tr., N.A. etc. v. Leonardo, Index No. 14266/2013 (NY Supr. Nassau Cnty June 12, 2023); HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, (NY Supr. Suffolk Cnty May 16, 2023); Deutsche Bank v. Cheng, (NY Supr. Nassau Cnty May 1, 2023); Deutsche Bank Natl. Trust Co. v Dagrin, (NY Supr. Queens Cnty Apr. 12, 2023); U.S. Bank N.A. etc. v. Pierre, (NY Supr. Suffolk Cnty Feb. 23, 2023); Wilmington Savings Fund Doc., FSB v. Madden, 78 Misc.3d 736, 186 N.Y.S.3d 910 (NY Supr. Putnam Cnty Feb. 10, 2023); see also Aspen v. Santoro, 77 Misc.3d 1277(A), 181 N.Y.S.3d 460 (N.Y. Sup. Ct. Suffolk Cnty Jan. 19, 2023) (in dicta, noting dismissal of action as time-barred due to prior acceleration not revoked is “in harmony” with FAPA).

None of the four departments of New York’s Appellate Division have decided the issue.

In the Second Department, a dozen decisions have applied FAPA without determining its constitutionality, but those appeals were briefed before FAPA became effective, without its constitutionality being raised.  ARCPE 1 LLC v. DeBrosse, (2d Dep’t June 28, 2023); Bank of N.Y. Mellon v. Treitel, (2d Dep’t June 28, 2023); Deutsche Bank Nat’l Tr. Co. v. Natal, (2d Dep’t June 21, 2023); U.S. Bank N.A. v. Outlaw, (2d Dep’t June 7, 2023); SYCP, LLC v. Evans, (2d Dep’t June 7, 2023); Bank of New York Mellon v. Joseph, (2d Dep’t May 31, 2023); MTGLQ Investors, L.P. v. Singh, (2d Dep’t May 24, 2023); U.S. Bank, N.A. v. Onuoha, (2d Dep’t May 17, 2023); Bank of N.Y. Mellon v. Stewart, (2d Dep’t May 10, 2023); U.S. Bank, N.A. v. Coleman, 215 A.D.3d 780, 185 N.Y.S.3d 701 (2d Dep’t 2023); Reinman v. Deutsche Bank Nat’l Tr. Co., 215 A.D.3d 704, 187 N.Y.S. 3d 666 (2d Dep’t 2023); GMAT Legal Title Tr. 2014-1 v. Kator, 213 A.D.3d 915, 184 N.Y.S.3d 805 (2d Dep’t 2023); see also HSBC Bank USA, N.A. v. Francis, 214 A.D.3d 58, 185 N.Y.S.3d 173 (2d Dep’t 2023) (denying consolidation because one foreclosure action was time-barred and noting in dicta, “our result may be compelled by [FAPA]”).

Similarly, the First Department has twice decided cases touching upon FAPA, but provided no retroactively analysis.  U.S. Bank, N.A. v. Fox, (1st Dep’t May 4, 2023) (applying amended CPLR 205 without discussion of retroactivity); U.S. Bank Tr., N.A. v. Chung, (1st Dep’t May 2, 2023) (determining timeliness of complaint “regardless of whether the debt was [as allowed before FAPA] de-accelerated by the voluntary discontinuance of the 2008 action”).  The Third and Fourth Departments have not reached the issue.  Cf. Deutsche Bank v. Quinn, (3d Dep’t June 15, 2023) (denying plaintiff’s appeal of time-bar dismissal on procedural grounds, not addressing FAPA).

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