Just When You Thought It Could Not Get More Unanimous, The Court of Appeals Determines that FAPA’s Retroactive Application Does Not Violate the Due Process or Contract Clauses of the United States Constitution or the Right to Substantive and Procedural Due Process Under the New York Constitution – Part 1.

• Posted on: Dec 5 2025

By: Jonathan H. Freiberger

Last Week in our BLOG article: “It’s Unanimous – The Fourth Department Joins the Other Departments and Confirms the Retroactive Application of FAPA,” we again discussed FAPA and noted that on November 25, 2025, the New York Court of Appeals decided two cases: Article 13 LLC v. Ponce De Leon Fed. Bank, and Van Dyke v. U.S. Bank, N. A., in which the Court determined that retroactive application of FAPA’s provisions passes constitutional muster under the United States and New York Constitutions.[1] Today we will discuss Van Dyke and next week we will discuss Article 13 LLC.

FAPA

The Foreclosure Abuse Prevention Act (“FAPA”), which went into effect in December of 2022, “represents the Legislature’s response to litigation strategies and certain legal principles that distorted the operation of the statute of limitations in foreclosure actions.” Genovese v. Nationstar Mortgage LLC, 223 A.D.3d 37, 41 (1^st Dep’t 2023) (citation omitted). Thus, inter alia, FAPA’s provisions were designed to prevent lenders from circumventing statute of limitations problems in residential mortgage foreclosure actions by the simple expedient of accelerating and de-accelerating loans to restart the running of statutes of limitations. One of the main purposes of FAPA was to overrule the Court of Appeals decision in Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1 (2021), in which the Court held that if a lender accelerates a loan by the service of a foreclosure complaint, the lender’s discontinuance of that action is an “affirmative act” sufficient to de-accelerate the loan.

As is relevant to today’s discussion, “[s]ections 4 and 8 of FAPA overrule components of FAPA.” Van Dyke at *3. Section 4 of FAPA prevents a party from unilaterally resetting the statute of limitations on, inter alia, a residential mortgage note once the limitations period has accrued. Section 8 prevents a lender from resetting the limitations period to sue on, inter alia, a residential mortgage note by the voluntary discontinuance of a foreclosure action. Finally, “section 7 of FAPA estops a noteholder in a successive foreclosure action from challenging the validity of a loan acceleration made ‘prior to, or by way of commencement of’ a prior foreclosure action, unless the court in the prior action expressly determined, based on a timely raised defense, that the acceleration was invalid.” Id. Finally, section 10 of FAPA “provides that FAPA ‘shall take effect immediately and shall apply to all actions commenced on[, as relevant here, a residential mortgage loan agreement,] in which a final judgment of foreclosure and sale has not been enforced.’”

Van Dyke

In 2009, borrower (the plaintiff herein) defaulted on a loan secured by a mortgage and later that year the present lender’s (U.S. Bank) predecessor (BONY Mellon) commenced a foreclosure action (the “2009 Foreclosure Action”). In its complaint in the 2009 Foreclosure Action, the plaintiff lender (BONY Mellon) purported to accelerate the loan and alleged that it was the holder of the subject note or was authorized by the holder to commence the 2009 Foreclosure Action. The borrower asserted a lack of standing defense in its answer. The facts suggest that the lender in the 2009 Foreclosure Action (BONY Mellon) was not assigned the underlying promissory note until after that Action was commenced. Nonetheless, the 2009 Foreclosure Action was pending for more than ten years, during which time the underlying note and mortgage were assigned by BONY Mellon to U.S. Bank. The motion court denied the parties’ subsequent cross-motions for summary judgment on the issue of BONY Mellon’s standing to commence the 2009 Foreclosure Action due to the existence of fact issues related to BONY Mellon’s possession of the note at the commencement of that action. The parties’ cross-appeals were affirmed by the Appellate Division in 2020. In 2022, the 2009 Foreclosure Action was discontinued by a “So Ordered” stipulation that stated: “‘based upon’ Supreme Court’s affirmed order denying summary judgment on the issue of [BONY]Mellon’s standing, [BONY]Mellon had ‘failed to demonstrate that it had standing to commence the action.’” (Internal brackets omitted.) Further, the “stipulation did not address or purport to revoke [BONY] Mellon’s purported acceleration of the loan.”

In 2022, after the voluntary dismissal of the 2009 Foreclosure Action, the lender (U.S. Bank) commenced a new foreclosure action (the “2022 Foreclosure Action”) and, pursuant to RPAPL 1501(4), the borrower commenced the subject quiet title action (the “Quiet Title Action”).[2] In the complaint in the Quiet Title Action, the borrower alleges that the lender (U.S. Bank) accelerated the underlying loan more than six years earlier and, therefore, any action on the note and mortgage would be time-barred. The lender (U.S. Bank) moved to dismiss arguing that the loan was not validly accelerated in the 2009 Foreclosure Action and the borrower cross-moved for summary judgment. During the pendency of both motions, FAPA was enacted and the parties submitted supplemental briefing on the issue.

The motion court issued orders resolving the motions in the borrower’s favor. First, the court held that, pursuant to section 7 of FAPA, the lender is estopped from challenging the validity of BONY Mellon’s acceleration of the loan by the complaint in the 2009 Foreclosure Action and, accordingly, the limitations period in which to sue on the underlying obligation has expired. Additionally, the court rejected the challenge to the retroactive application of FAPA. The Appellate Division unanimously affirmed, and leave was granted to appeal to the Court of Appeals.

The Court of Appeals affirmed. First, the Court determined that sections 4, 7 and 8 of FAPA apply retroactively. The Court noted that retroactive application of statutes is not favored absent clear intent by the Legislature. Van Dyke at *5. Here, the Court found clear intent for the retroactive application of FAPA based on the legislative history and FAPA’s plain text.[3]

Next, the Court discussed its rejection of the lender’s argument that retroactive application of FAPA would violate its substantive and procedural due process rights under the United States constitution. As to the substantive due process challenge, the Court recognized that “legislation can implicate substantive due process where it takes away or impairs vested rights in respect to transactions or considerations already past, and where its retroactive application lacks an adequate rational basis. [Lender]’s substantive due process challenge raises both issues.” (Citations, internal quotation marks and ellipses omitted.) The lender articulated two vested property rights: (1) its property interest in the mortgage; and, (2) its interest in prosecuting the 2022 Foreclosure Action which, the lender argues, “was timely under the pre-FAPA laws in effect when the action was brought.” The lender’s arguments were rejected by the Court. As to the property interested in the mortgage, the Court noted that “it is the six-year statute of limitations, not FAPA itself, that has extinguished that interest.” Similarly, the estoppel bar of FAPA’s section 7 does not unconstitutionally impair any property rights in the mortgage.

The Court further rejected the lender’s argument that FAPA sections 4 and 8 infringe on its property interest because “but for FAPA, the filing of [BONY] Mellon’s 2009 foreclosure complaint did not trigger the limitations period in the first place, on the theory that under pre-FAPA law, the discontinuance of Mellon’s 2009 action rendered Mellon’s acceleration a ‘legal nullity.’” The lender argued that “retroactively giving that ‘nullity’ legal effect, FAPA has extinguished [lender]’s property interest.” The Court stated that such a position is not supported by case law; “certainly not in a manner capable of conferring a vested right.”

In rejecting a claimed vested right in prosecuting the 2022 Foreclosure Action, the Court stated that “assuming, without deciding, that a party may have a vested right in a timely commenced cause of action, [the lender] has not established as a legal matter that the 2022 [F]oreclosure [A]ction was timely brought under well-settled pre-FAPA law, and thus has not shouldered its ultimate burden of demonstrating FAPA’s constitutional invalidity as applied here.” (Citations, internal quotation marks and brackets omitted.)

Due process, according to the Court, also requires that retroactive application be supported by “a legitimate legislative purpose furthered by rational means.” (Citations and internal quotation marks omitted.) The Court recognized that there was a rational basis for applying FAPA’s relevant provisions to the action based on the abusive litigation practices employed by lenders prior to FAPA’s enactment. Also, to the extent that FAPA clarifies or alters the application of the six-year statute of limitations, retroactive application “rationally advances the strong public policy favoring finality, predictability, fairness and repose in human affairs.” (Citations and internal quotation marks omitted.)

The lender further argued that its procedural due process rights under the United States Constitution were adversely impacted because when the Legislature’s shortens applicable limitation periods, the parties must be afforded “a reasonable grace period in which to bring claims that were timely under the old limitations period but are untimely under the new limitations period.” (Citation omitted.) The Court rejected this argument and noted that FAPA “did not shorten the limitations period, [therefore,] procedural due process does not demand a reasonable grace period before FAPA’s relevant provisions take effect.”

The Court also rejected the lender’s challenge based on the Contract Clause of the United States Constitution, which prohibits a state law from operating “as a substantial impairment of a contractual relationship.” (Citations and internal quotation marks omitted.) With respect to a Contract Clause analysis, the Court stated that the:

initial inquiry contains three components: whether there is a contractual relationship, whether a change in law impairs that contractual relationship, and whether the impairment is substantial. Even where all three components are satisfied, the Contract Clause is not violated if the impairment has a significant and legitimate public purpose, and if the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption. Furthermore, unless the State itself is a contracting party, as is customary in reviewing economic and social regulation, courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure. [Citations, internal quotation marks and brackets omitted.]

Here, the Court concluded that even if the lender’s contractual rights were substantially impaired, the “necessity and reasonableness” of the provisions address questionable litigation practices and advance strong public policy considerations. Thus, the Court held that there are no Contract Clause violations.

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] This BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. To find such articles, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, topics that may be of interest you. As relates to today’s article, type “FAPA,” “statute of limitations,” “Engel,” “acceleration,” “quiet title” or “1501(4)” into the “search” box.

[2] This BLOG has written numerous of articles addressing RPAPL 1501(4). To find such articles, please see the BLOG tile on our website and type “1501(4)” into the “search” box.

[3] The Court based its discussion of the law in Article 13 LLC. Accordingly, the issue of retroactivity will be discussed in more depth in next Friday’s BLOG article.

Tagged with: Commercial Litigation, FAPA, Foreclosure Abuse Prevention Act, Mortgage Foreclosure, Real Estate Litigation