On September 16, a trust filed a class action lawsuit in the U.S. District Court for the Northern District of New York challenging the constitutionality of New York State’s Foreclosure Abuse Prevention Act (FAPA). The plaintiff alleged FAPA retroactively altered the statute of limitations for mortgage foreclosure actions, rendering thousands of mortgages unenforceable and depriving lenders and investors of vested contractual rights and secured interests in real property.
Specifically, the complaint alleged FAPA’s retroactive application violated: (i) the Takings Clause of the Fifth Amendment of the U.S. Constitution, by effecting “an uncompensated taking of property”; (ii) the Contracts Clause of the U.S. Constitution, by “substantially” impairing mortgage holders’ contractual rights; and (iii) the Due Process Clause of the Fourteenth Amendment, by depriving mortgage holders of vested property and contract rights “without adequate justification, notice, or compensation.”
The plaintiff defined the putative class as comprising “[a]ll persons or entities who, on or after December 30, 2022, held a mortgage loan secured by real property in the State of New York that became unenforceable, in whole or in part, by operation of FAPA.” On behalf of the putative class, the plaintiff seeks declaratory relief, just compensation and attorneys’ fees. The case remains pending.
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