Portions Of New York's FAPA Survive Constitutional Challenges

• Published date: 26 February 2025
• Law Firm: Goodwin Procter LLP
• Author: Christian Fletcher

Over the last four months, New York's Appellate Division has finally begun to address constitutional challenges to the state's Foreclosure Abuse Prevention Act (FAPA), an act that became effective in December 2022 and promptly generated disparate trial court interpretations about whether the law was supposed to apply retroactively. As noted in prior posts, appellate precedent remained wanting. At last, beginning on October 24, 2024, the first of nine appellate court decisions was issued, rejecting constitutional challenges to certain portions of FAPA.

FAPA amended New York rules related to mortgage foreclosure time limits, to give lenders less flexibility in commencing foreclosure actions. It made six basic changes to New York law:

• Anti-Engel. FAPA invalidated the core holding in Freedom Mortgage v. Engel, 37 N.Y.3d 1 (2021). According to Engel, a lender that had accelerated a mortgage loan's maturity date (acceleration is generally the first step in a foreclosure action in New York and generally starts the limitations period running) could revoke that acceleration by simply discontinuing the foreclosure action. Under FAPA-created procedural rules (CPLR 203(h) and CPLR 3217(e)), a discontinuance alone is not sufficient to revoke acceleration and stop the limitations clock.
• Saving Statute. FAPA created a new so-called "saving statute" specific to mortgage foreclosures (CPLR 205-a), more restrictive than the "saving statute" (CPLR 205(a)) for other actions. (A "saving statute" saves an otherwise time-barred claim by allowing a re-start within a short window of time following a non-substantive dismissal of the claim.)
• Estoppel. New FAPA procedural rules (CPLR 213(4)(A) and (B)) estop lenders, in certain circumstances, from asserting that a mortgage loan's maturity date had not been accelerated such that the statute of limitations period to recover the debt had not yet started to run.
• GOL. FAPA amended the state's General Obligations Law to strictly limit the circumstances in which a statue of limitations period can stop or reset.
• Election of Remedies. FAPA enhanced the so-called "election of remedies" rule (RPAPL 1301), which generally prohibits multiple lawsuits to enforce the same debt such that now a creditor must in some cases obtain court permission if it needs to bring a repeat lawsuit, and further, any timeliness determination made in any action would have preclusive effect on all actions enforcing the same debt.
• Final Judgment Rule. By its terms, FAPA changed laws applicable to foreclosure actions even after entry of a final judgment of foreclosure in those actions, so long as the judgment "has not been enforced," inviting challenges to adjudicated matters, post-judgment.

By its terms, FAPA was to "take effect immediately," but its retroactive effect was not clear, which produced divergent trial court determinations. Although retroactive applications of FAPA's provisions have been, and continue to be, upheld...