In New York, foreclosure actions are governed by a six-year statute of limitations. This period begins when a foreclosure action is filed, also known as the acceleration of the loan. Once accelerated, the lender has six years to recover amounts due—such as interest, taxes, and insurance—dating back from the filing date.
However, for years, banks found ways to manipulate this deadline, often with court approval or indifference. That changed with the passage of the Foreclosure Abuse Prevention Act (FAPA) in December 2022. This landmark legislation was enacted to curb systemic abuse and restore fairness in the judicial foreclosure process.
No More Unilateral Resetting of the Statute of Limitations
Before FAPA, lenders could unilaterally “de-accelerate” a loan—either through discontinuing a foreclosure action or by sending a letter to the borrower— effectively resetting the statute of limitations. This allowed banks to restart the clock at will, even if more than six years had passed since the original acceleration.
FAPA ended this practice.
- Section 4 amended CPLR 203(h) to prohibit any party from unilaterally waiving, postponing, canceling, tolling, reviving, or resetting the statute of limitations after acceleration.
- Section 8 added CPLR 3217(e) to state that a voluntary discontinuance— whether by motion or court order—does not reset or affect the statute of limitations.
This amendments ensure that once a foreclosure case is filed, the clock cannot be reset unless clearly authorized by law.
No More Standing Games to Avoid the Statute of Limitations
To initiate a valid foreclosure, the plaintiff must have standing, typically proven by ownership of the note and mortgage. In the past, banks sometimes argued that a prior foreclosure action didn’t count—because the plaintiff supposedly lacked standing—so the statute of limitations never began running.
FAPA shut down this loophole.
- Section 7 added CPLR 213(4)(b): The lender can no longer claim that the statute of limitations did not commence due to a lack of standing unless there was a judicial finding in the first action confirming the plaintiff lacked standing.
This prevents banks from using a technicality to escape the consequences of filing untimely lawsuits.
No More “Two Bites at the Apple”
Before FAPA, lenders would sometimes file a second foreclosure action while a prior one was still pending. They would pursue the second and leave the first inactive—resurrecting it only if the second failed, effectively hedging their bets.
FAPA addressed this tactic directly.
- RPAPL 1301(3) was amended to require that court permission be obtained before a second foreclosure action can be filed while a prior one is still pending.
- If a second action is filed without permission, the first action is deemed discontinued, and—under the new CPLR 3217(e)—this discontinuance does not reset the statute of limitations.
This discourages strategic litigation and encourages banks to proceed properly the first time.
Dismissals for Inaction Are Now Treated as Abandonment
Under CPLR 3215(c), if a lender fails to take steps to enter a defendant’s default within one year, the case is subject to dismissal. Previously, courts did not consider this inaction to be an “abandonment,” allowing lenders to refile under CPLR 205(a), which gives plaintiffs six months to refile a dismissed case.
FAPA corrected this inconsistency.
- A new provision, CPLR 205-a, makes clear that a dismissal of a foreclosure action under CPLR 3215(c) is considered abandonment and therefore disqualifies the lender from benefiting from the six-month extension under CPLR 205(a).
This change adds real consequences for lenders who neglect their cases.
Conclusion
The Foreclosure Abuse Prevention Act has fundamentally altered the foreclosure landscape in New York. It eliminates the most commonly abused loopholes banks used to manipulate the statute of limitations and file untimely actions.
If multiple foreclosure actions have been filed during the life of a mortgage, it’s critical to consult with an experienced foreclosure defense attorney. You may have strong grounds to argue that the statute of limitations has expired.
Stay tuned for my next blog, where I’ll be reviewing the constitutional implications and challenges raised by FAPA.