Uncertain about what last week’s two NY high court rulings mean for the New York mortgage marketplace? Adam Swanson and Jessie Bonaros say that FAPA advocates did not obtain a “blanket win” in the two New York Court of Appeals rulings affirming the constitutionality of retroactively applying certain sections of New York’s Foreclosure Abuse Prevention Act of 2022 (FAPA) to time bar enforcement of certain mortgages. “They’re narrow, fact-specific rulings that leave major parts of the statute—and many pending foreclosure cases—in constitutional limbo,” Adam says. For example, in Article 13 LLC v. LaSalle National Bank Association, and Van Dyke v. U.S. Bank, Adam and Jessie explain that while the NY high court upheld the constitutionality of retroactively applying three FAPA provisions under the specific facts of those cases, they stressed that the lenders’ delays in waiting far beyond the six-year statute of limitations period and lack of diligence given their control over prior foreclosure actions were the driving factors in the ruling. Swanson and Bonaros say the court explicitly left open the constitutionality of retroactively applying other sections of FAPA—particularly Section 6’s foreclosure savings provision that can deem lenders as neglectful for even a single missed court conference rather than affording them the same traditional savings statute standards afforded to other plaintiffs in actions. Swanson and Bonaros say that the court also signaled that different facts could lead to different rulings on FAPA, such as where a lender is unaware of an earlier foreclosure filed by someone else or where a discontinuance or de-acceleration of an earlier foreclosure was timely prior to FAPA’s enactment in 2022.
For more commentary on the rulings, see article.