233 A.D.3d 1038
N.Y. App. Div.2024Background
- In 2007, Thomas Cush and others executed a consolidated mortgage securing a loan on Staten Island property; after the borrowers defaulted, a foreclosure action was filed in 2010 and the loan accelerated.
- The 2010 foreclosure was discontinued in 2013 by BAC (the original lender's successor), purportedly due to reinstatement of the loan.
- The mortgage was eventually assigned to MTGLQ Investors, L.P. In 2018, MTGLQ filed a new foreclosure action, by which time the property had been transferred to 97 Lyman Avenue, LLC.
- 97 Lyman sought to intervene in the 2018 foreclosure, was denied, and then commenced a new action in 2019 to discharge the mortgage as time-barred under RPAPL 1501(4).
- The trial court initially dismissed 97 Lyman's case, but after the enactment of the Foreclosure Abuse Prevention Act (FAPA), 97 Lyman successfully sought renewal, arguing FAPA applied retroactively and barred the 2018 foreclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the statute of limitations on foreclosure expire? | 2010 acceleration started 6-year clock; 2018 action is untimely | Discontinuance of 2010 action revoked acceleration per prior law | Yes, 2018 foreclosure was untimely under FAPA |
| Does FAPA apply retroactively? | Intended to restore longstanding rule, applies immediately | Retroactive application unconstitutional, violates due process and contract | Yes, FAPA applies retroactively by legislative intent |
| Is retroactive FAPA unconstitutional (due process)? | Legitimate legislative purpose, rational means | Not rational as applied; unfairly disadvantages lender | Application is constitutional |
| Is retroactive FAPA unconstitutional (Contract Clause)? | No substantial impairment of contract rights | Substantial impairment; right to de-accelerate is contractual | Application is constitutional |
Key Cases Cited
- Freedom Mtge. Corp. v. Engel, 37 NY3d 1 (voluntary discontinuance of a foreclosure action revokes acceleration under pre-FAPA law)
- U.S. Bank N.A. v. Medianik, 223 AD3d 935 (statute of limitations and acceleration in mortgage foreclosures)
- Milone v. US Bank N.A., 164 AD3d 145 (lender's right to revoke acceleration may be implied by mortgage contract)
- Matter of Regina Metro. Co., LLC v. NYS Div. of Hous., 35 NY3d 332 (standards for retroactive legislation and due process analysis)