Two failed lawsuits, a decade of delays, and one federal rule that made it all moot
A Cayman Islands lender foreclosed on a Yonkers home after three tries over a decade - thanks to a federal immunity rule.
New York’s Appellate Division, Second Department, on November 4 affirmed a foreclosure judgment in favor of Blue Castle (Cayman), Ltd., ruling that the state’s six-year statute of limitations did not apply. The loan once passed through the Government National Mortgage Association, a federal entity better known as Ginnie Mae - and that changed everything.
The saga started in 2013 when LoanCare, a division of FNF Servicing, Inc., filed a foreclosure action against the borrowers and accelerated the entire mortgage debt on a Yonkers property. That action was dismissed in April 2016 for failure to prosecute. A subsequent assignee tried again in October 2018. That case was dismissed in November 2023 for failure to properly serve the borrowers.
Blue Castle commenced its own action in June 2024. The borrowers argued the case was time-barred: the debt was accelerated in 2013, New York’s six-year clock started then, and the deadline had long passed.
The court disagreed.
There is no federal statute of limitations for mortgage foreclosure actions brought by the United States or its federal agencies. That immunity does not expire when the loan changes hands - it follows the mortgage through the assignment chain to private holders.
Blue Castle submitted the note, endorsed to the Secretary of the US Department of Housing and Urban Development, along with a mortgage assignment to Ginnie Mae dated April 4, 2012. A subsequent assignment transferred the mortgage to Blue Castle on February 1, 2022. The court found Blue Castle, as a federal agency assignee, demonstrated that New York’s statute of limitations was inapplicable. The borrowers failed to raise a triable issue of fact.
The Supreme Court, Westchester County, had granted Blue Castle summary judgment - a ruling without a full trial - in February 2025 and entered a judgment of foreclosure and sale in July 2025. The Appellate Division affirmed, with Justices Duffy, Barros, Warhit, and Ottley concurring unanimously.
For servicers and lenders sitting on aged loans that once passed through federal agency hands, the message is direct: the statute of limitations defense borrowers commonly raise may carry no weight if the loan’s chain of title ran through Ginnie Mae, HUD, or another federal entity. That immunity transfers to private assignees - even after years and failed prior actions.
This decision is a slip opinion and remains subject to revision before publication in the Official Reports.
