The debt was accelerated in 2007. FAPA made sure it stayed that way
Appellate court has upheld the dismissal of a foreclosure action against borrowers, ruling that the statute of limitations ran out years before suit was filed.
The Appellate Division, Second Department, affirmed a Westchester County Supreme Court order on September 16, granting summary judgment to the borrowers and killing the case on timeliness grounds.
The mortgage traces back nearly two decades. In March 2007, GMAC Mortgage filed a foreclosure action against the borrowers over property in New Rochelle. By demanding the full balance due, GMAC accelerated the debt - starting the six-year statute of limitations clock.
GMAC voluntarily discontinued that action in December 2009. Nine years later, in November 2018, Ditech Financial filed a fresh foreclosure action on the same mortgage. U.S. Bank National Association later stepped in as successor in interest to Ditech.
The borrowers hit back with a simple argument: the clock started in 2007, and six years had long passed by 2018.
They initially lost. In May 2022, the trial court denied their motion, reasoning that the voluntary discontinuance had revoked the acceleration and restarted the limitations period.
Then New York enacted the Foreclosure Abuse Prevention Act.
Foreclosure Abuse Prevention Act (FAPA), signed into law in late 2022, changed how lenders could reset the statute of limitations on accelerated mortgage debt. Armed with the new statute, the borrowers moved to renew their earlier motion. The trial court reversed course - vacating its 2022 ruling, granting summary judgment, and dismissing the complaint.
U.S. Bank appealed. It did not go well.
The appellate court held the borrowers had shown the debt was accelerated in March 2007 when the original foreclosure action was filed. The voluntary discontinuance two years later "did not de-accelerate the mortgage or revive or renew the statute of limitations," the court wrote. And while the case had been stayed twice for Chapter 13 bankruptcy filings by one of the borrowers, the combined tolling still fell short of making the 2018 action timely.
U.S. Bank also challenged FAPA's retroactive application as unconstitutional. The court called that argument "without merit.”
For servicers managing legacy portfolios in New York, the takeaway is blunt: once a debt is accelerated, walking away from the foreclosure action does not reset the clock - and FAPA has shut the door on the strategies that once made it possible.
