No Reset by Discontinuance or “Deceleration”: Second Department Applies FAPA Retroactively to Time‑Bar Mortgage Foreclosure (Wells Fargo Bank, N.A. v. Salko)

No Reset by Discontinuance or “Deceleration”: Second Department Applies FAPA Retroactively to Time‑Bar Mortgage Foreclosure

Introduction

In Wells Fargo Bank, N.A. v. Salko (2025 NY Slip Op 04743), the Appellate Division, Second Department, issued a significant decision that consolidates and advances New York’s post‑FAPA (Foreclosure Abuse Prevention Act) jurisprudence. The court reversed an order and judgment of foreclosure and sale, holding that the action was time-barred under CPLR 213(4) because the statute of limitations began when the lender accelerated the debt by commencing a foreclosure in 2011. The court further held that a 2017 “deceleration” letter and prior orders discontinuing earlier foreclosure actions did not reset or revive the limitations period, and it applied FAPA retroactively to reach that result. The panel also rejected the lender’s constitutional challenges to FAPA.

Parties and posture:

  • Plaintiff-Respondent: Wells Fargo Bank, N.A. (assignee of CitiMortgage, Inc., successor by merger to ABN AMRO Mortgage Group, Inc.).
  • Defendants-Appellants: David and Nilsa Salko (homeowners/borrowers).
  • Court below: Supreme Court, Suffolk County; Referee appointed and foreclosure sale ordered.
  • On appeal: Second Department reversed, dismissed the action as time-barred, and awarded costs to the borrowers.

Core issues:

  • When did the six-year statute of limitations accrue for this mortgage foreclosure?
  • Can a lender’s discontinuance of prior foreclosure actions or a unilateral “deceleration” letter reset the statute of limitations?
  • Does FAPA apply retroactively to pending foreclosure actions and, if so, is such application constitutional?

Summary of the Judgment

The Second Department held that:

  • The six-year limitation period began running on May 20, 2011, when CitiMortgage commenced a foreclosure action and elected in the complaint to accelerate the entire debt.
  • The 2019 foreclosure commenced by Wells Fargo was therefore untimely unless the limitations period had been validly reset or revived.
  • Pursuant to FAPA—specifically CPLR 3217(e) and 203(h)—neither the orders discontinuing the 2011 and 2014 foreclosure actions nor the March 13, 2017 deceleration letter reset or revived the limitations period.
  • FAPA applies retroactively to actions “in which a final judgment of foreclosure and sale has not been enforced,” and the lender’s constitutional arguments (Due Process, Takings, Contracts Clause) against retroactive application fail.
  • Result: The court reversed the order and judgment of foreclosure and sale, denied the bank’s dispositive motion, granted the borrowers’ cross‑motion to declare the deceleration letter invalid and to dismiss the complaint as time-barred, and deemed the borrowers’ renewal arguments academic.

Case Background and Procedural Timeline

  • 2005: David and Nilsa Salko executed a $937,500 note to ABN AMRO, secured by a mortgage on their Huntington residence.
  • 2011: CitiMortgage (ABN AMRO’s successor) filed a foreclosure, electing to call due the entire debt—thereby accelerating the loan (the “2011 action”).
  • 2012: The Supreme Court dismissed the 2011 complaint as to David for improper service.
  • 2014: CitiMortgage commenced a second foreclosure against David only (the “2014 action”).
  • 2016: CitiMortgage assigned the mortgage to Wells Fargo.
  • 2017: CitiMortgage moved to discontinue both the 2011 and 2014 actions; it sent the borrowers a March 13, 2017 letter purporting to “decelerate” the loan. The Supreme Court granted discontinuance and denied the borrowers’ requests to invalidate the deceleration letter and for interest tolling.
  • 2018–2020: On appeal from earlier orders, the Second Department modified to strike the Supreme Court’s sua sponte revocation of acceleration but otherwise affirmed (CitiMortgage, Inc. v. Salko, 179 AD3d 1009).
  • 2019: Wells Fargo commenced the present foreclosure action.
  • 2022: The Supreme Court granted Wells Fargo’s motion for summary judgment and an order of reference and denied the borrowers’ cross-motion to dismiss as time-barred.
  • Dec. 30, 2022: FAPA took effect (L 2022, ch 821).
  • 2023–2024: The Supreme Court confirmed the referee’s report and entered a judgment of foreclosure and sale; it denied the borrowers’ motion to renew based on FAPA.
  • 2025: The Second Department reversed, applying FAPA retroactively; it dismissed the foreclosure as time-barred.

Detailed Analysis

1) Precedents and Authorities Cited

The decision synthesizes several strands of New York foreclosure law and post‑FAPA case law:

  • Statute of Limitations for Mortgage Foreclosures:
    • CPLR 213(4): Six-year period for actions “upon a bond or note, the payment of which is secured by a mortgage upon real property.”
    • EMC Mtge. Corp. v Patella, 279 AD2d 604: Once accelerated, the entire debt is due and the statute runs on the whole debt.
    • Nationstar Mtge., LLC v Weisblum, 143 AD3d 866; US Bank Trust, N.A. v Reizes, 222 AD3d 907: In installment mortgages, each missed payment is a separate accrual unless and until the loan is accelerated, at which point the clock runs on the entire balance.
    • U.S. Bank NA v Schaer, 223 AD3d 928; Wells Fargo Bank, N.A. v Hussain, 186 AD3d 1459: Acceleration may be effectuated by commencing a foreclosure action and electing in the complaint to call the full amount due.
  • Effect of Discontinuance and “Deceleration” after FAPA:
    • CPLR 3217(e) (added by FAPA): In foreclosure actions covered by CPLR 213(4), a voluntary discontinuance—whether by motion, order, stipulation, or notice—does not waive, cancel, toll, extend, revive, or reset the limitations period “unless expressly prescribed by statute.”
    • CPLR 203(h) (added by FAPA): Once the cause of action accrues, no party may “unilaterally” waive, postpone, cancel, toll, revive, or reset accrual, or otherwise effect a unilateral extension of the limitations period, “unless expressly prescribed by statute.”
    • Wells Fargo Bank, N.A. v Edwards, 231 AD3d 1189; MTGLQ Invs., L.P. v Lila, 226 AD3d 889; Bank of N.Y. Mellon v MS Global Group, LLC, 222 AD3d 821; U.S. Bank N.A. v Medianik, 223 AD3d 935; Anglestone Real Estate Venture Partners Corp. v Bank of N.Y. Mellon, 221 AD3d 943: Collectively recognize and apply FAPA’s rules that neither discontinuance nor unilateral deceleration resets or revives the statute of limitations.
    • HSBC Bank USA, N.A. v Corrales, 224 AD3d 816; Kandinov v Deutsche Bank Natl. Trust Co., 227 AD3d 685; US Bank Trust, N.A. v Reizes, 222 AD3d 907: Unilateral deceleration letters are ineffective post‑FAPA to revive the limitations period.
  • Retroactivity of FAPA:
    • Genovese v Nationstar Mtge. LLC, 223 AD3d 37: Sets out retroactivity factors and concludes FAPA is remedial, urgent, and intended to rewrite unintended judicial interpretations, signaling retroactive application.
    • U.S. Bank N.A. v Lynch, 233 AD3d 113; Wilmington Trust, N.A. v Farkas, 232 AD3d 524; Bayview Loan Servicing, LLC v Dalal, 232 AD3d 487: Apply FAPA retroactively in pending matters per L 2022, ch 821, § 10 (“effect immediately” and applies where a final foreclosure judgment “has not been enforced”).
  • Constitutional Challenges:
    • Deutsche Bank Natl. Trust Co. v Dagrin, 233 AD3d 1065; 97 Lyman Ave., LLC v MTGLQ Invs., L.P., 233 AD3d 1038; Wilmington Trust, N.A. v Farkas, 232 AD3d 524; Bayview Loan Servicing, LLC v Dalal, 232 AD3d 487: Retroactive application of FAPA does not violate Due Process, Takings, or the Contracts Clause.
  • Appellate Procedure:
    • Matter of Aho, 39 NY2d 241, 248; CPLR 5501(a)(1): An appeal from an intermediate order is subsumed in the appeal from the ensuing final judgment/order; issues are reviewable on the appeal from the order and judgment of foreclosure and sale.
  • Prior Litigation Between the Parties:
    • CitiMortgage, Inc. v Salko, 179 AD3d 1009: The court previously modified orders that had sua sponte revoked acceleration; the modification is consistent with FAPA’s later prohibition on courts and parties using discontinuance to reset accrual absent statutory authorization.

2) The Court’s Legal Reasoning

The panel’s analysis proceeded in three steps: accrual, non‑reset under FAPA, and retroactivity/constitutionality.

  1. Accrual and timeliness:
    • Acceleration occurred on May 20, 2011 when CitiMortgage sued and elected in the complaint to call due the entire balance. Under EMC Mtge. Corp. v Patella and related authority, this started a single six‑year clock on the whole debt.
    • Wells Fargo commenced the instant action on January 25, 2019—more than six years later—establishing a prima facie statute of limitations defense for the borrowers (see Wilmington Sav. Fund Socy., FSB v Avenue Basin Mgt., Inc., 211 AD3d 1085; U.S. Bank N.A. v Nail, 203 AD3d 1095).
  2. Discontinuances and the “deceleration” letter did not reset or revive the statute:
    • CPLR 3217(e), as enacted by FAPA, states that a voluntary discontinuance “shall not, in form or effect, waive, postpone, cancel, toll, extend, revive or reset the limitations period” unless a statute expressly says otherwise. Therefore, the 2017 and 2018 discontinuance orders did not reset the statute.
    • CPLR 203(h), also enacted by FAPA, bars a party from “unilaterally” reviving or resetting accrual. Thus, the March 13, 2017 deceleration notice could not undo the already‑accrued cause of action or extend the limitations period.
    • The Second Department relied on consistent post‑FAPA authorities reaching the same conclusion (Edwards; Lila; MS Global Group; Medianik; Anglestone; Corrales; Kandinov; Reizes).
  3. Retroactive application of FAPA and constitutional claims:
    • Retroactivity: FAPA “took effect immediately” and applies to all CPLR 213(4) actions “in which a final judgment of foreclosure and sale has not been enforced” (L 2022, ch 821, § 10). Applying Genovese and related decisions, the court held the Legislature clearly intended retroactivity: FAPA is remedial, conveys urgency, and was designed to rewrite unintended judicial interpretations and reaffirm legislative policy concerning limitations in foreclosure cases.
    • Constitutional arguments: The bank’s claims under Due Process, Takings, and the Contracts Clause failed. Recent Appellate Division cases uniformly reject such challenges to FAPA’s retroactive application (Dagrin; 97 Lyman Ave.; Farkas; Dalal). The court found no constitutional impediment here.

Because the action was time‑barred and the purported deceleration and discontinuances were legally ineffective to salvage it, the court reversed the foreclosure judgment, denied the bank’s motion for summary judgment, granted the borrowers’ cross‑motion to dismiss, and awarded costs to the borrowers. The borrowers’ alternative requests (e.g., equitable tolling of interest, renewal based on a change in law) were rendered academic.

3) Impact and Practical Implications

The decision carries substantial practical consequences for foreclosure litigation in New York:

  • For lenders and servicers:
    • Once a loan is accelerated by filing a foreclosure complaint electing to call the full balance due, the six‑year clock begins for the entire debt. Filing a later action outside six years is fatal unless an expressly authorized statutory toll applies.
    • Post‑FAPA, neither voluntary discontinuances (even by stipulation, see CPLR 3217[e]) nor unilateral “deceleration” letters will revive or reset the limitations period. Portfolio reviews should identify loans accelerated more than six years ago and evaluate exposure.
    • Constitutional challenges to FAPA’s retroactive application are unlikely to succeed in the Appellate Division given the growing body of uniform authority.
  • For borrowers:
    • The statute of limitations defense remains potent, especially where an earlier foreclosure accelerated the debt more than six years before the current action.
    • Borrowers can challenge reliance on deceleration notices and prior discontinuances as a means to resuscitate stale claims under FAPA.
  • For courts and practitioners:
    • FAPA applies retroactively to all covered actions without an enforced final foreclosure judgment. Pending motions and trials must accord with CPLR 203(h) and 3217(e).
    • Where prior orders suggested that discontinuance or sua sponte “revocation” of acceleration could reset accrual, those outcomes must be revisited in light of FAPA and controlling Appellate Division precedent.
    • The decision promotes finality: lenders cannot serially discontinue and recommence to evade limitations, and unilateral letters cannot undo accrual.

Complex Concepts Simplified

  • Acceleration: The lender’s election to declare the entire unpaid balance immediately due, often by commencing a foreclosure and stating in the complaint that the full amount is called due. This starts a single six‑year statute of limitations on the whole debt.
  • Deceleration: An attempt to revoke/undo acceleration and return the loan to installment status. After FAPA, a unilateral deceleration letter cannot reset or revive the limitations clock once accrual has occurred (CPLR 203[h]).
  • Voluntary discontinuance (CPLR 3217): A plaintiff’s termination of an action. FAPA’s CPLR 3217(e) now specifies that such discontinuance does not affect the statute of limitations in foreclosure actions, whether by motion, order, stipulation, or notice.
  • CPLR 213(4): Provides a six-year limitations period for actions to enforce a note secured by a mortgage on real property.
  • “Final judgment of foreclosure and sale has not been enforced”: FAPA’s retroactivity clause reaches pending actions unless the final judgment has been carried through to enforcement (e.g., sale completed and enforced). If not enforced, FAPA applies.
  • Order of reference and referee’s report: In foreclosures, a referee is often appointed to compute amounts due. If the action is time-barred, these steps become moot.
  • Appeal from intermediate order vs. final judgment: Under Matter of Aho and CPLR 5501(a)(1), issues from an intermediate order merge into the appeal from the final order/judgment; a separate appeal from the intermediate order is dismissed, but the issues are still reviewed.
  • Retroactivity and “remedial” statutes: A remedial statute corrects or clarifies procedures and may apply to pending cases if the Legislature clearly signals that intent—here, FAPA did so.

Conclusion

Wells Fargo Bank, N.A. v. Salko confirms and sharpens New York’s post‑FAPA landscape: once a mortgage debt is accelerated by filing a foreclosure complaint electing to call the full balance due, the six‑year limitations period under CPLR 213(4) begins to run on the entire debt. After FAPA, neither voluntary discontinuance of earlier foreclosure actions nor a unilateral deceleration letter can revive or reset that clock (CPLR 3217[e], 203[h]). The Second Department applied FAPA retroactively to a pending case, found no constitutional barrier to doing so, and dismissed the action as time-barred.

The decision is a strong signal to lenders and servicers: limitations strategy must conform to FAPA, and reliance on pre‑FAPA practices (discontinuance or deceleration letters) will not rescue stale claims. For borrowers, the ruling underscores the continued vitality of statute‑of‑limitations defenses in foreclosure actions. More broadly, Salko advances uniformity and finality by enforcing legislative limits on serial foreclosure filings and unilateral attempts to manipulate accrual, thereby shaping foreclosure practice across New York going forward.

Case Details

Year: 2025
Court: Appellate Division of the Supreme Court, New York

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