Wednesday, Feb 25 2026

Friedman Vartolo Partner Stephen J. Vargas was recently published in ALFN’s ANGLE Vol. 13 Issue 1 as the author of an article titled, “The Cautionary Tale of the Foreclosure Abuse Prevention Act”.

The Cautionary Tale of the Foreclosure Abuse Prevention Act

The Foreclosure Abuse Prevention Act (“FAPA”) was introduced by the New York State Legislature on March 8, 2021 and immediately garnered attention from the mortgage loan default servicing community by virtue of the omnibus statutory amendments proposed by the State Senate. The primary purpose of the bill was to overrule the high appellate court decision Freedom Mortgage Corp. v. Engel, [1] , in which the Court of Appeals held that “where the maturity of the debt has been validly accelerated by commencement of a foreclosure action, the noteholder’s voluntary withdrawal of that action revokes the election to accelerate, absent the noteholder’s contemporaneous statement to the contrary.” [2] The Legislature vehemently disagreed with Engel, and used the disdain for a unanimous appellate court ruling to present a multi-faceted bill that abrogated appellate court decisional law favorable to foreclosing parties by amending and creating statutes concerning the statute of limitations and other procedural rules. In addition to overruling Engel [3], FAPA created a draconian mortgage foreclosure-specific “savings clause” [4], codified estoppel in connection with a prior alleged acceleration [5], mandated strict compliance with the “prior pending action” rule [6], and eliminated a line of statutory tolling case law related to the election of remedies between actions to enforce the mortgage or recover a money judgment on the promissory note [7]. These sweeping amendments were signed into law by New York Governor Kathy Hochul on December 30, 2022, amidst great fanfare by the foreclosure defense community and despite zealous advocacy efforts by loan servicers and related trade associations.

The most controversial and legally dubius aspect of FAPA was its enactment clause §10, which provided that the Act “shall take effect immediately and shall apply to all actions commenced on [a mortgage] in which a final judgment of foreclosure and sale has not been enforced.” Industry advocates objected to any retroactive application of FAPA amendments predicated on §10, positing that the statutory text was insufficient to indicate the Legislature’s intent for indefinite statutory retroactivity as well as that any retrospective application would be unconstitutional under the United States as well as New York State Constitutions, as violative of, inter alia, the Due Process, Contracts, and Takings Clauses.

While the Legislature purported that “[a]s a direct result of Engel, trial and appellate courts throughout the State have been bombarded with a flurry of motions made by mortgage lenders and servicers to re-open cases” [8] was a basis to introduce FAPA, the litigation filed by defendants after FAPA’s passage was far more voluminous than the Engel-related motion and appellate practice. It took fewer than two months for the appellate courts to weigh in on FAPA. In GMAT Legal Title Trust 2014-1 v. Kator [9], the Appellate Division, Second Department – the highest volume appellate court in the Nation –applied CPLR §213(4)(a) to estop the foreclosing plaintiff from asserting that the statute of limitations did not elapse because its predecessor did not validly accelerate the maturity of the mortgage debt. This adverse decision was a portent of how countless FAPA-impacted appeals would be decided.

During the infancy of FAPA litigation, the appellate courts applied FAPA retroactively while avoiding the issue of the constitutionality of the retroactivity clause on procedural grounds [10]. In stark contrast to the unfavorable appellate rulings, numerous trial court judges opined that the retroactive application of FAPA amendments offended constitutional protections [11]. In 2024, the appellate courts continued to uphold the retroactive application of FAPA amendments, though without addressing the constitutionality of the statutory retroactivity [12]. During late-2024, the intermediate appellate courts finally opined on the constitutional challenges to the retroactive application of FAPA amendments and upheld every statutory amendment. [13] In doing so, the appellate panels found that the retroactive application of FAPA was supported by a legitimate legislative purpose – curtailment of “abuse” of the judicial foreclosure process by noteholders – and was supported by rational means related to this State purpose to nullify case law that the Legislature disagreed with. In connection with the numerous decisions concerning the propriety of FAPA retroactivity issued by many appellate panels across the State’s four appellate departments, only a single dissenting appellate justice opined that retroactivity was unconstitutional.

This adversely impactful trend continued unabated through 2025. During this time, the State’s highest court summarily denied every attempt by a mortgagee to seek Court of Appeals review of FAPA’s retroactivity clause [14], while also declining a request from the United States Court of Appeals for the Second Circuit to do so as well [15].

The lone exception to the application of statutory retroactivity was in circumstances where a final judgment of foreclosure and sale was entered, and the judgment was affirmed on appeal or time to appeal from the judgment elapsed and no appeal was taken [16].

With dwindling opportunities and limited options to challenge the unprecedented indefinite statutory retroactivity, the mortgage servicing industry looked to the United States Supreme Court in hopes that the Country’s top jurists would recognize the constitutional quagmire created by the FAPA retroactivity clause. Fox was viewed as the quintessential example of the deleterious impact of FAPA retroactivity because it involved a circumstance where the lower appellate court held that a mortgage foreclosure was timely commenced within the limitations period based on pre-FAPA statutory authority [17], only to have the same court apply a FAPA chapter amendment months later to dismiss the foreclosure as time-barred [18]. The foreclosing party – relying on federal Due Process and Takings Clause challenges – petitioned the Supreme Court for a writ of certiorari, with the hope that the United States’ highest court would recognize the fatal flaws and unconstitutional nature of FAPA’s retroactive application. Numerous New York State and national trade associations – including the ALFN – supported U.S. Bank’s quest with amicus curiae briefs.

Less than one week after the Fox petition was filed by the foreclosing party, the Court of Appeals agreed to hear a pair of FAPA-related “quiet title action” appeals in which the constitutionality of FAPA’s was implicated [19]. Yet again, industry trade organizations supported the mortgagees with amicus curiae briefs, and the ALFN was at the forefront of these advocacy efforts because it appeared as an amicus in each appeal.

Despite the most ambitious advocacy efforts and a litany of decisional law supporting the mortgage servicing industry’s position that FAPA’s retroactivity clause was unconstitutional, the foreclosing party faced an uphill battle in the Supreme Court because approximately one percent of petitions for writs of certiorari are granted [20]. On October 6, 2025, SCOTUS denied the petition, rendering the valiant efforts of the mortgage default servicing community in vain. On November 25, 2025, the Court of Appeals upheld the constitutionality of FAPA’s CPLR §213(4)(b), §203(h), and §3217(e) [21] in “as applied” challenges to those statutes. In reaching its determination, the State’s governing court found that the challenging mortgagees failed to meet their burdens to show the absence of any rational purpose behind the FAPA, despite compelling case law supplied by the mortgagees to support the argument that FAPA retroactivity was unconstitutional based on binding State and federal jurisprudence. Despite three years of decisional law, an appellate court is yet to identify a comparable retroactive statute that passed constitutional scrutiny prior to FAPA, while mortgagees identified numerous Supreme Court and Court of Appeals decisions in which similar retroactivity clauses were struck down as unconstitutional or deemed prospective rather than retroactive [22].

While the State’s highest court did not conclusively foreclose challenges to other FAPA amendments in distinguishable circumstances, the avenues for continued FAPA litigation are extremely limited. The lone procedural posture in which a mortgagee has been insulated from application of the harsh retroactivity during a contested foreclosure is where a final foreclosure judgment was entered and the defendant’s right to appeal from the judgment terminated [23]. The Second Circuit Court of Appeals will determine whether certain FAPA provisions are constitutional in at least two appeals [24], and any holding that FAPA retroactivity is unconstitutional would bind the United States District Courts in New York. Nonetheless, New York State Courts will be bound to adhere to the adverse Court of Appeals precedent irrespective of how the Circuit Court rules.

Despite the passionate advocacy by the mortgage servicing community – including trade associations, law firms, and servicers – the New York State Legislature passed a virtually unparalleled retroactive bill that punished mortgage servicers, the Governor signed the bill into law despite the vociferous objections of industry advocates, and the Courts upheld the constitutionality of unprecedented statutory retroactivity despite a plethora of legal authority according to which the FAPA appeared plainly unconstitutional. The alarming sequence of events could embolden legislators in more consumer-friendly jurisdictions and foreshadow future legislative efforts across the country to introduce adverse mortgage-related legislation with the expectation that the judiciary will subvert precedent in deference to the legislature’s discretion. This is particularly true in New York, where the Legislature is well-aware that legislation perceived by the servicing industry as legally dubious was upheld by the appellate courts after searing trial court decisions rejected retroactivity. Thus, it will be incumbent upon industry advocates to remain vigilant and committed to advancing and protecting the interests of the mortgage servicing community to preempt any future legislation remotely comparable to FAPA in terms of prejudicial impact and then exhaust challenges to any such legislation before the judiciary.

[1] Freedom Mtge. Corp. v. Engel, 37 N.Y. 3d 1 (N.Y. 2021).

[2] Engel at 19.

[3] CPLR §203(h), CPLR §3217(e).

[4] CPLR §205(c), CPLR §205(a).

[5] CPLR §§213(4)(a), (b).

[6] RPAPL §1301(3).

[7] RPAPL §1301(4).

[8] https://www.nysenate.gov/legislation/bills/2021/S5473.

[9] GMAT Legal Title Trust 2014-1 v. Kator, 213 A.D. 3d 915 (2d Dept. 2023).

[10] See Genovese v. Nationstar Mortgage LLC, 223 A.D. 3d 37 (1st Dept. 2023); U.S. Bank N.A. v. Simon, 216 A.D. 3d 1041 (2d Dept. 2023).

[11] See U.S. Bank N.A. v. Speller, 80 Misc. 3d 1233(A) (Sup. Ct., Putnam Cty., 2023); Wilmington Trust, N.A. as Trustee for MFRA Trust 2014-2 v. Gawlowski, 81 Misc. 3d 683 (Sup. Ct., Suffolk Cty., 2023).

[12] See Deutsche Bank Natl. Trust Co. v. DeLuca, 225 A.D. 3d 91 (3d Dept. 2024); Bayview Loan Servicing, LLC v. Dalal, 232 A.D. 3d 487 (1^st Dept. 2024); U.S. Bank Trust, N.A. v. Giangrande, 229 A.D. 2d 834 (2d Dept. 2024).

[13] See U.S. Bank National Association v. Lynch, 233 A.D. 3d 113 (3d Dept. 2024); Deutsche Bank National Trust Co. v. Dagrin, 233 A.D. 3d 1065 (2d Dept. 2024); 97 Lyman Ave., LLC v. MTGLQ Investors, L.P., 233 A.D. 3d 1038 (2d Dept. 2024).

[14] See U.S. Bank Natl. Assn. v. Fox, 2024 N.Y. Slip Op 74064 (N.Y. 2024).

[15] East Fork Funding, LLC v. U.S. Bank, National Association, 42 N.Y. 3d 981 (N.Y. 2024).

[16] U.S. Bank N.A. v. Gallant, 237 A.D. 3d 522, 523 (1^st Dept. 2025); Nationstar Mortgage LLC v. Worrell, 2025 N.Y. Slip Op 05813 (2d Dept. 2025); Fla Mortgage Capital I LLC v. Unknown Heirs at Law of Estate of Paul, 233 A.D. 3d 1452, 1453 (4^th Dept. 2024); contrast with Deutsche Bank National Trust Company v. Goldwasser, 237 A.D. 3d 1291 (3d Dept. 2025).

[17] U.S. Bank National Association v. Fox, 212 A.D. 3d 422 (1^st Dept. 2023).

[18] U.S. Bank National Association v. Fox, 216 A.D. 3d 445 (1^st Dept. 2023).

[19] Article 13 LLC v. Ponce De Leon Bank, 2025 N.Y. Slip Op 69132 (N.Y. 2025); Patti Van Dyke v. U.S. Bank, Natl. Assn., 2025 N.Y. Slip Op 69069 (N.Y. 2025).

[20] https://www.uscourts.gov/about-federal-courts/educational-resources/about-educational-outreach/activity-resources/supreme-court-procedures.

[21] Article 13 LLC v. Ponce De Leon Bank, 2025 N.Y. Slip Op 06536 (N.Y. 2025); Van Dyke v. U.S. Bank, Natl. Assn., 2025 N.Y. Slip Op 06537 (N.Y. 2025).

[22] See Ruth v. Elderwood at Amherst, 209 A.D. 3d 1281 (4^th Dept. 2022); Regina Metropolitan Co., LLC v. New York State Division of Housing and Community Renewal, 35 N.Y. 3d 332 (N.Y. 2020); Marrero v. Crystal Nails, 114 A.D. 3d 101 (2d Dept. 2013).

[23] See Malay v. City of Syracuse, 25 N.Y. 3d 323 (N.Y. 2015).

[24] Article 13 LLC v. Ponce de Leon Bank, 132 F. 4^th 586 (2d Cit. 2025); East Fork Funding LLC v. U.S. Bank National Association, 118 F. 4^th 488 (2d Cir. 2024).

 

CLICK HERE for the full publication available from ALFN’s website