Retroactive Application of the New York Foreclosure Abuse Prevention Act Yudu Zang

Abstract

At the end of 2022, the New York State Legislature enacted the Foreclosure Abuse Prevention Act (“FAPA”). FAPA brought several significant changes to the then-current statutes and legal rules concerning a mortgagee’s ability to toll or reset the statute of limitations of a foreclosure action through voluntary discontinuance. FAPA’s enactment spurred a wave of litigation, and the disputes focus heavily on the extent and validity of FAPA’s retroactive application. However, the lower courts in New York have issued inconsistent opinions. Given the lack of scholarship and any Court of Appeals decision, this Note ventures to recommend better solutions to the legal questions currently in contention and provide more coherent rules and standards for future cases. It argues that FAPA’s urgent remedial goal lowers the hurdle to overcome presumption against retroactivity under state common law. It then distinguishes, more clearly than the current FAPA case law, what events or prior court decisions in a foreclosure action should vest within the mortgagee a property or due process right that cannot be violated by retroactive application. Finally, it notes that if FAPA’s retroactive application substantially impairs express contract terms, it would violate the Contract Clause of the Constitution, despite the exception elaborated by the Second Circuit.