In a recent case, E. Fork Funding LLC v. U.S. Bank, Nat'l Ass'n, the United States Court of Appeals for the Second Circuit has certified a novel question for the New York Court of Appeals ("NYCOA"): Whether Sections 4 and/or 8 of the Foreclosure Abuse Prevention Act ("FAPA") apply to a unilateral voluntary discontinuance of a mortgage action taken prior to the Act's enactment. In other words, will FAPA apply retroactively to dismiss cases where lenders voluntarily dismissed foreclosure actions in reliance on a resetting of the statute of limitations?
FAPA was enacted in 2022 in response to the NYCOA's decision in Freedom Mortg. Corp. v. Engel ("Engel"), a 2021 case in which the court ruled that a voluntary discontinuance of a foreclosure action resets the statute of limitations.1 Specifically, Section 4 and Section 8 of FAPA are at issue in the current case. Section 4 of the Act amended Section 203 of the Civil Practice Law and Rules ("CPLR") to state that, "Once a cause of action upon [a mortgage]...has accrued, no party may...unilaterally...effect a unilateral extension of the limitations period".2 Similarly, Section 8 of FAPA amended Section 3217 of the CPLR to provide that, "...the voluntary discontinuance [of an action on a mortgage]...shall not...toll, extend, revive or reset the limitations period to commence an action".3 Fork Funding pertains to a mortgage originated in 2006. The original mortgagors defaulted on the loan in 2010, and the original mortgagee - GMAC Mortgage, LLC ("GMAC") - commenced a...
