On November 25, 2025, the New York Court of Appeals—the highest court in the state of New York—issued a decision in Article 13, LLC v. LaSalle National Bank Association, holding that New York’s Foreclosure Abuse Prevention Act (FAPA) applies retroactively to all foreclosure actions in which a final judgment of foreclosure and sale has not been enforced.
What Happened?
In December 2022, New York enacted FAPA to close a perceived loophole under prior case law that allowed the holders of mortgage notes to reset the statute of limitations on foreclosure. Previously, a noteholder could show that that the mortgage was not validly accelerated, or was voluntarily deaccelerated, which would reset the statute of limitations. Under FAPA, however, parties are estopped from asserting that an invalid acceleration or voluntary deacceleration reset the statute of limitations.
Two years before FAPA was enacted, Article 13 LLC—a junior mortgage holder on a property—brought a quiet title action before a federal district court seeking to cancel a senior mortgage as time-barred under the statute of limitations. Relying on pre-FAPA case law, the holder of the senior mortgage argued the statute of limitations had not run because the mortgage had not been validly accelerated. Mid-litigation, New York enacted FAPA, and the district court held that FAPA estopped the senior mortgage holder from making this argument.
The case went on appeal to the U.S. Court of Appeals for the Second Circuit, which certified the question of whether FAPA applied retroactively to the New York Court of Appeals. Based on FAPA’s plain language, the New York Court of Appeals first held that FAPA applies retroactively, at least for foreclosure actions in which a final judgment or foreclosure and sale has not been enforced. It then held that the retroactive application of FAPA does not violate substantive or procedural due process under New York’s constitution. The Court explained that retroactive application does not offend due process because it does not impair the vested rights of holders, which in the typical situation, are aware for years of the invalid acceleration and have every opportunity to take timely action to enforce their rights.
Why is it Important?
The New York Court of Appeal’s decision is significant because in cases where a prior foreclosure action was commenced (triggering the statute of limitations) but later discontinued without an express judicial determination that acceleration was invalid, lenders are now estopped from reviving the loan after the limitations period has expired. This puts an end to an old practice and represents a major shift in the mortgage foreclosure industry.
For mortgage servicers, this means that before proceeding with a foreclosure, they must first evaluate aged or delinquent loans to reassess whether pursuing foreclosure is viable. This is particularly true when prior foreclosures have been voluntarily discontinued, dismissed, or left dormant. Attempting to re-file may now lead to outright dismissal under FAPA.
For participants in the secondary market, it is now important to employ heightened diligence to determine whether mortgages held in trust are still enforceable. Mortgages or entire portfolios that were previously viewed as recoverable through renewed foreclosure actions may now be worth only their collateral value or even nothing at all.
What Do You Need to Do?
Mortgage servicers should review their foreclosure strategies, including their allocation of litigation resources, as time-barred loans may require alternative resolution strategies such as settlements or charge-offs.
Meanwhile, RMBS trusts and other holders of distressed mortgage portfolios should consider whether to audit their portfolio to identify mortgages with prior foreclosure actions that may now be time barred under FAPA. Or, in the case that they are junior lienholders, they should consider whether they can leverage FAPA in quiet title actions to cancel more senior mortgages that are now time-barred.
