FAPA and Its Retroactive Application in New York
How a Landmark Decision Could Impact Suffolk and Nassau Counties Lender Rights and Foreclosure Litigation
The Foreclosure Abuse Prevention Act (FAPA) is a key statute reshaping foreclosure litigation in New York. Designed to prevent delays and systemic abuses in foreclosure cases, FAPA establishes stricter timelines for when a lender can commence a second action after an initial action is discontinued or dismissed for any reason.
What makes FAPA particularly groundbreaking is its retroactive application. The Court of Appeals, which is the highest court in New York, had previously held that a voluntary discontinuance, as well as many situations where a case was dismissed, reset the six-year time frame to commence an action. FAPA now held that a borrower can return to court and seek dismissal retroactively in any situation where this occurred.
The lenders argued that this violated their constitutional rights of due process. But New York’s Appellate Division, Second Department, recently upheld this contentious element of retroactivity in the landmark case of U.S. Bank National Association v. Dagrin (2024)
What Is FAPA and Why Does It Matter in New York?
FAPA was enacted to correct these lenders' long history of foreclosure abuse.
FAPA now mandates that lenders adhere to specific timeframes to enforce their rights, bringing more efficiency and fairness to foreclosure actions. Unlike many other statutes,
Critics argued that applying FAPA retroactively infringed upon lender rights and disrupted settled expectations in ongoing cases. Despite these challenges, New York courts reaffirmed its validity in the recent U.S. Bank National Association v. Dagrin decision.
The Significance of U.S. Bank National Association v. Dagrin
On December 24, 2024, the Appellate Division, Second Department, addressed the constitutionality of FAPA’s retroactive application. The court ruled that it was enforceable, clarifying the legislature’s intent and the legitimate public purpose of the statute.
Key takeaways from the Dagrin decision included the following points:
- Legislative Intent – The court affirmed that the legislature explicitly intended FAPA to apply retroactively to address widespread issues in foreclosure litigation.
- Reasonable Purpose – Retroactive enforcement was deemed rational and aligned with public policy goals of ensuring efficiency and fairness.
- Due Process – The court found that FAPA struck an appropriate balance, fairly considering the interests of both lenders and borrowers.
With this ruling, FAPA now serves as a pivotal tool for reforming foreclosure law while establishing necessary safeguards to protect against litigation abuse.
Implications for Suffolk and Nassau Counties Lenders, Borrowers, and Legal Professionals
The Dagrin decision has far-reaching consequences for all parties involved in foreclosure cases, including:
- Lenders must assess new and pending cases to ensure compliance with FAPA’s requirements. Missing deadlines could result in claims being dismissed, making diligence essential.
- Borrowers now have added leverage in defending foreclosure actions. FAPA’s provisions empower homeowners to challenge lender actions that fail to meet the statute’s deadlines.
Legal Practitioners must stay informed about FAPA’s impact on foreclosure cases and guide their clients accordingly. This includes closely monitoring pending litigation and adapting strategies to meet statutory requirements.
Take Action with James J. Quail & Associates, P.C. by Your Side
FAPA’s retroactive application marks a significant evolution in New York’s approach to foreclosure litigation. Whether you’re a borrower seeking protection or a lender navigating these complex legal changes, diligent representation is key to achieving a favorable outcome.
At James J. Quail & Associates, P.C., we are highly experienced in foreclosure law and provide tailored strategies to help our clients succeed in this evolving legal landscape.
Contact us for a free consultation to learn more about how FAPA may impact your foreclosure case in Suffolk and Nassau Counties, and to explore your legal options with our experienced attorneys.