Diana M. Eng and Andrea M. Roberts ●

The Foreclosure Abuse Prevention Act (“FAPA”) has been heavily litigated since its enactment in December 2022. New York courts have issued conflicting decisions interpreting FAPA, including whether the statute applies retroactively to conduct that occurred prior to its enactment and whether retroactive application is unconstitutional. Lenders, mortgage servicers, and other financial institutions should take note that the Second Circuit has certified the question of FAPA’s retroactive application to the New York Court of Appeals. Thus, there will finally be a definitive answer regarding retroactivity.

In East Fork Funding, LLC v. U.S. Bank, National Association, As Trustee For Greenpoint Mortgage Funding Trust Mortgage Pass-Through Certificates, Series 2006-AR6, 2024 WL 4351792 (2d Cir. Oct. 1, 2024), the Second Circuit certified the question of whether Sections 4 and/or 8 of the Foreclosure Abuse Prevention Act, codified under Sections 203(h) and 3217(e) of New York’s Civil Practice Law and Rules (“CPLR”), apply retroactively to a voluntary discontinuance of an action that occurred prior to FAPA’s enactment. The Court of Appeals’ answer to this certified question will resolve conflicting decisions in the New York courts regarding whether FAPA applies retroactively. 

Summary of Facts & Background

In 2006, Sean and Patricia Dros (“Borrowers”) took out a loan to purchase property in Queens, New York. The Borrowers defaulted under the mortgage and the prior lender, GMAC Mortgage, LLC (“GMAC”), commenced a foreclosure action in July 2010 (“First Foreclosure”). In May 2011, GMAC voluntarily discontinued the First Foreclosure. In November 2011, GMAC commenced a second foreclosure action (“Second Foreclosure”). During the pendency of the Second Foreclosure, the loan was assigned to defendant U.S. Bank, National Association (“U.S. Bank”). In 2016, the Second Foreclosure was voluntarily discontinued. In July 2016, U.S. Bank commenced a third foreclosure action (“Third Foreclosure”). As of the date of the parties’ briefing of the appeal before the Second Circuit, a foreclosure sale had not yet occurred.

Read the full client alert on our website.