Ny Court Upholds Foreclosure Abuse Law

The New York State Court of Appeals has upheld the Foreclosure Abuse Prevention Act of 2022 (FAPA), confirming that the law is constitutional and applies retroactively.

The landmark decision, made on Nov. 25, means that mortgage lenders cannot restart the state’s six-year statute of limitations on foreclosure claims by withdrawing or abandoning earlier cases.

FAPA was passed in 2022 in an attempt to stop banks from endlessly trying to foreclose on a homeowner for the same debt. The issue stemmed from the 2008 housing crisis when lenders filed and later dropped thousands of foreclosure cases, often allowing the six-year limitations period to expire.

As a result, many lenders later attempted to file new foreclosure actions on the same loans, arguing that earlier cases did not properly trigger the statute of limitations because the wrong party brought the case or because the loan was not validly accelerated.

The Court of Appeals rejected these arguments, pointing to language in the statute stating that the law “shall take effect immediately” and applies to all foreclosure actions without an enforced final judgment.

The court also said applying the law retroactively is constitutional, noting that lenders were responsible for the timing and handling of prior cases.

The rulings are expected to have significant implications for foreclosure litigation in New York, with homeowners now having stronger protections against old or repeated foreclosure attempts.

For lenders, the ruling makes clear that proper legal steps and documentation are required before moving forward on stalled or dismissed foreclosures.

“These decisions are a huge win for New York homeowners who, for too long, have been preyed upon by lenders seeking to manipulate the statute of limitations and relitigate foreclosure actions that have long been dismissed or abandoned,” said Jacob Inwald, director of litigation-economic justice at Legal Services NYC.

“Governor Hochul and state legislators wisely closed the loophole that allowed lenders to refile time-barred foreclosure actions by passing the Foreclosure Abuse Prevention Act and the Court of Appeals correctly reinforced the law’s protections,” he added. “Struggling New York homeowners can breathe a little easier knowing their rights against time-barred foreclosure actions are being upheld.”