Retroactive Estoppel and Mortgage Acceleration: The New York Court of Appeals' Interpretation of FAPA § 7 in Article 13 LLC v. Ponce De Leon Federal Bank

I. Introduction

A. The Case in Context

The decision in Article 13 LLC v. Ponce De Leon Federal Bank, 2025 NY Slip Op 06536 (Nov. 25, 2025), is a major interpretation of New York’s Foreclosure Abuse Prevention Act of 2022 (“FAPA,” L 2022, ch 821), particularly its Section 7, now codified at CPLR 213(4)(b). The New York Court of Appeals was asked by the United States Court of Appeals for the Second Circuit to resolve two pivotal questions about:

How far back FAPA reaches (its retroactive application); and
Whether that retroactivity violates due process under the New York Constitution.

Chief Judge Wilson, writing for a unanimous Court, holds that FAPA § 7 applies to all foreclosure-related actions in which a final judgment of foreclosure and sale has not yet been enforced, including actions commenced long before FAPA’s enactment, and that this retroactive operation does not violate substantive or procedural due process under N.Y. Const., art. I, § 6.

B. Parties and Procedural Posture

Article 13 LLC – Respondent (plaintiff below). It acquired the junior mortgage on a Brooklyn residential property and brought a quiet title action seeking to cancel the senior mortgage as time-barred under CPLR 213(4).
Ponce De Leon Federal Bank, et al. – Original defendants in the federal quiet title action; the litigation ultimately focuses on the senior mortgage now held through a securitized trust.
LaSalle National Bank Association / U.S. Bank – Appellant. U.S. Bank is successor to LaSalle and serves as trustee and document custodian for the mortgage trust holding the senior mortgage. It is the effective “senior mortgagee” whose rights are at stake.
Office of the New York State Attorney General – Intervenor-respondent, defending the constitutionality and proper interpretation of FAPA.

The federal district court (E.D.N.Y.) initially found a factual dispute as to whether the servicer that filed a 2007 foreclosure had standing (held the note) and thus whether that action validly accelerated the mortgage. After FAPA’s enactment, the district court reconsidered and held that FAPA § 7 retroactively estopped U.S. Bank from disputing the validity of that 2007 acceleration, making the senior mortgage time-barred. The Second Circuit then certified two state-law questions to the New York Court of Appeals.

C. The Certified Questions

The Second Circuit asked:

“Whether, or to what extent does, Section 7 of the Foreclosure Abuse Prevention Act, codified at N.Y. C.P.L.R. § 213(4)(b), apply to foreclosure actions commenced before the statute's enactment.”
“Whether FAPA's retroactive application violates the right to substantive and procedural due process under the New York Constitution, N.Y. Const., art. I, § 6.” (Art. 13 LLC v Ponce De Leon Fed. Bank, 132 F.4th 586, 594 [2d Cir 2025]).

D. Statutory Framework: FAPA § 7 and § 10

The central provision, CPLR 213(4)(b), as added by FAPA § 7, provides:

“[A] defendant shall be estopped from asserting that the period allowed by the applicable statute of limitation for the commencement of an action upon the instrument has not expired because the instrument was not validly accelerated prior to, or by way of commencement of a prior action, unless the prior action was dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated.”

FAPA § 10 contains the reach-back language:

“This act shall take effect immediately and shall apply to all actions commenced on [a residential mortgage loan agreement] in which a final judgment of foreclosure and sale has not been enforced.”

Together, these provisions lie at the heart of the Court’s analysis: Do they apply to older, pending or even future actions arising from pre-FAPA accelerations, and if so, is that constitutional?

II. Summary of the Opinion

A. Answer to Certified Question 1 – Retroactivity

The Court of Appeals answers that Section 7 of FAPA does apply to foreclosure-related actions arising out of mortgage loans where no final judgment of foreclosure and sale has been enforced as of FAPA’s effective date. In practical terms:

For all such actions (including those commenced before FAPA and those commenced later),
if there was an earlier foreclosure action that purported to accelerate the debt,
and that earlier action was discontinued or dismissed without an express judicial determination, on a timely raised defense, that there was no valid acceleration,
then the party defending against the statute of limitations bar (often the lender or mortgage holder) is estopped from arguing that the limitations period did not begin with that earlier action because the acceleration was allegedly invalid.

Thus, even if a prior foreclosure was brought by a party that lacked standing or could not prove it held the note, Section 7 causes the six-year statute of limitations for foreclosure under CPLR 213(4) to run from the commencement of that action—unless a court had explicitly ruled, on a timely defense, that there was no valid acceleration.

B. Answer to Certified Question 2 – Due Process

On the due process question, the Court answers in the negative: FAPA’s retroactive operation violates neither:

Substantive due process – because no vested right is impaired and, even assuming some protected interest, the retroactivity is rationally related to legitimate legislative purposes; nor
Procedural due process – because FAPA does not shorten the existing six-year limitations period and thus does not trigger the “reasonable time” requirement recognized in earlier New York case law when limitation periods are shortened retroactively.

The Court therefore upholds both the retroactivity and constitutionality of FAPA § 7.

III. Detailed Analysis

A. Precedents and Legislative Backdrop

1. The Mortgage Crisis and “Shadow Inventory”

The Court situates FAPA within the aftermath of the 2007–2008 mortgage crisis. Mass securitization made it difficult to identify who held the note at any given time, while a surge in foreclosure filings led to:

Thousands of foreclosure actions commenced but not diligently prosecuted;
A “shadow inventory” of foreclosure cases sitting dormant; and
Homeowners left in “judicial limbo,” continuing to occupy properties under unresolved, long-pending foreclosure cases.

Administrative and legislative responses began even before FAPA:

Administrative Orders (2010–2011) required counsel in foreclosure actions to affirm the factual accuracy of their filings, particularly to combat “robo-signing.”
CPLR 3012-b (2013) mandated that foreclosure counsel certify that the plaintiff possessed the note and mortgage at commencement, attaching them to the complaint.

These changes signaled to lenders and servicers that the procedural environment was shifting toward greater scrutiny of standing and documentation in foreclosure litigation.

2. The Law of Acceleration Before FAPA – Engel

A central background case is Freedom Mortgage Corp. v Engel, 37 NY3d 1 (2021), where the Court of Appeals resolved uncertainty about whether a voluntary discontinuance of a foreclosure action constitutes an effective “de-acceleration” of the mortgage debt.

Key points from Engel:

Acceleration converts a mortgage from an installment obligation to a single, immediately due debt; the six-year limitations period then runs on the full amount from the acceleration date.
The Court held that a voluntary discontinuance of a foreclosure action does generally operate as a revocation of acceleration (absent an express contrary statement by the noteholder).
As a result, lenders could effectively “reset” the limitations period by dismissing and then refiling, restoring the loan to installment status and later re-accelerating.

Legislators viewed Engel as enabling lenders to prolong or revive foreclosure rights indefinitely, especially when combined with arguments that earlier accelerations were invalid for lack of standing. That decision was a direct catalyst for FAPA.

3. Lower-Court Foreclosure and Limitations Cases

The Court notes that the mortgage crisis produced extensive litigation over limitations, acceleration, and related issues, with cases such as:

Wells Fargo Bank N.A. v Grover, 165 AD3d 1541 (3d Dept 2018);
Bradley v New Penn Fin., LLC, 198 AD3d 1273 (4th Dept 2021);
CitiMortgage, Inc. v Ramirez, 192 AD3d 70 (3d Dept 2020);
U.S. Bank N.A. v Gordon, 158 AD3d 832 (2d Dept 2021);
Bank of N.Y. Mellon v Slavin, 156 AD3d 1073 (3d Dept 2017);
Deutsche Bank Natl. Trust Co. v Gouin, 194 AD3d 479 (1st Dept 2021).

Collectively, these decisions addressed issues such as:

What kinds of conduct constitute acceleration or de-acceleration;
How trial payments or loan modifications affect limitations; and
How savings statutes (e.g., CPLR 205[a]) apply to successive foreclosure filings.

The Legislature expressed concern that these decisions, particularly combined with Engel, created inconsistent and borrower-disadvantaging applications of CPLR 213(4).

4. Standing and Note Possession – The “Invalid Acceleration” Strategy

FAPA § 7 is particularly aimed at a litigation strategy that developed in the wake of securitization and standing challenges. The Court cites several cases where foreclosure actions were dismissed or challenged because the plaintiff could not prove possession of the note at commencement:

U.S. Bank, N.A. v Collymore, 68 AD3d 752 (2d Dept 2009);
Wells Fargo Bank, N.A. v Burke, 125 AD3d 765 (2d Dept 2015);
Bank of N.Y. v Silverberg, 86 AD3d 274 (2d Dept 2011);
Aurora Loan Servs., LLC v Taylor, 25 NY3d 355 (2015).

In such cases, lenders or their successors, often years later, would argue that:

The original foreclosure was brought by an entity that did not hold the note or could not prove it;
Therefore, that action did not validly accelerate the loan; and
Accordingly, the six-year statute of limitations never began to run—or at least did not begin when the earlier action was filed.

FAPA § 7 directly targets that tactic by codifying an estoppel rule: absent an express judicial determination of no valid acceleration (on a timely defense), parties may not later deny the acceleration to avoid the statute of limitations.

5. Retroactivity Doctrine – Gleason and Majewski

On retroactivity, the Court applies its well-established framework:

General presumption: Statutory amendments are presumed prospective, absent clear language or necessary implication requiring retroactivity (In re Gleason (Michael Vee, Ltd.), 96 NY2d 117, 122 [2001]; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577 [1998]).
Gleason factors for inferring retroactivity:
1. Whether the Legislature made a specific pronouncement or conveyed a sense of urgency;
2. Whether the statute was designed to correct an unintended judicial interpretation; and
3. Whether the statute reaffirms what the Legislature believes the law should be.

The Court finds all three factors satisfied for FAPA, and, importantly, notes that FAPA’s sponsors themselves explicitly cited Gleason’s retroactivity analysis in the Bill Jacket.

6. Due Process Framework – Vested Rights and Rational Basis

For the constitutional analysis, the Court draws on:

Vested rights doctrine – A right is “vested” only if it is absolute, unconditional, and not contingent, often grounded in contract or another independent source (Forti v New York State Ethics Com’n, 75 NY2d 596, 615 [1990]; Black’s Law Dictionary; U.S. Mortg. & Trust Co. v Ruggles, 232 App Div 9 [1st Dept 1931]).
No vested right in a specific limitations period – Brothers v Florence, 95 NY2d 290, 300 (2000) (“[a] potential litigant has no vested interest in, or right to, a specific limitations period”).
No vested right in the Legislature’s inaction – No right exists in a lack of regulation or in having a given legal doctrine (e.g., estoppel) freeze in place.
Substantive due process standard – Retroactive legislation must be supported by a rational legislative purpose, furthered by rational means (American Economy Ins. Co. v State of New York, 30 NY3d 136 [2017]; Pension Benefit Guar. Corp. v R.A. Gray & Co., 467 US 717 [1984]; United States v Carlton, 512 US 26 [1994]; Usery v Turner Elkhorn Min. Co., 428 US 1 [1976]).

This framework is then applied to FAPA § 7’s retroactive reach.

B. Legal Reasoning on Retroactivity (Certified Question 1)

1. The Plain Statutory Text

The Court begins with the statutory language, applying ordinary principles of interpretation:

FAPA § 10: the Act “shall take effect immediately and shall apply to all actions [on residential mortgage loan agreements] in which a final judgment of foreclosure and sale has not been enforced.”
By using “all actions” and tying application to the status of the foreclosure judgment (enforced or not) rather than to when the action was filed, the Legislature unmistakably indicated an intent for FAPA to govern both:
- Pending cases at the time of enactment; and
- Future cases based on older transactions or accelerations, provided no final foreclosure sale had been enforced.

Thus, the statutory text itself is a “specific pronouncement” of retroactive reach in the sense used by Gleason.

2. Application of the Gleason Factors

The Court finds strong evidence of legislative intent for retroactive application:

Specific pronouncement and urgency – Section 10’s “take effect immediately” coupled with “all actions” reflects both immediacy and breadth. The legislative memoranda emphasize “an urgent need” to overrule Engel and respond to abusive practices.
Correcting judicial interpretations – FAPA was explicitly framed as legislation to “overrule” Engel and “restore longstanding law,” as well as to correct or clarify lower-court decisions on limitations and foreclosure procedure.
Reaffirming legislative judgment about what the law should be – The sponsors repeatedly state that FAPA “clarifies the meaning of existing statutes” and ensures that the statute of limitations applies equally, consistent with the Legislature’s original understanding that lenders should not be able to manipulate the clock by technical arguments about prior accelerations.

The fact that the Senate Memorandum expressly cited the Court’s own retroactivity analysis in Gleason reinforces that the Legislature legislated with those criteria in mind.

3. How Section 7 Operates in Practice

Under CPLR 213(4)(b) as amended:

In any “action upon the instrument” (which includes foreclosure and related actions concerning the note or mortgage),
the party defending the action by arguing that the limitations period has not expired cannot rely on the argument that an earlier action did not validly accelerate the loan, unless:
- The earlier action was dismissed based on an express judicial determination; and
- That determination was made upon a timely interposed defense that challenged the validity of the acceleration.

Consequences:

If a servicer or other party filed a foreclosure that purported to accelerate the debt, the six-year limitations period starts as of that commencement, even if years later a successor argues that the plaintiff lacked standing at the time.
Discontinuance or dismissal for reasons other than an express finding of “no valid acceleration” does not undo the acceleration for limitations purposes.
Future actions by the noteholder or its successors must be brought within six years of that original action (subject only to tolling or extension permitted under FAPA’s related provisions, e.g., CPLR 203[h]; GOL 17-105), or they will be time-barred.

The Court therefore concludes that Section 7 necessarily has retroactive effects: it reaches back to treat older, previously commenced foreclosure actions as valid accelerations for purposes of limitations, notwithstanding later standing challenges, unless they fall within the statute’s explicit exception.

C. Legal Reasoning on Due Process (Certified Question 2)

1. Defining the Asserted Right

Substantive due process analysis begins by carefully defining the right at stake. U.S. Bank framed its right as the “right to enforce its mortgage.” The Court narrows this:

FAPA does not change the underlying six-year statute of limitations for foreclosure actions under CPLR 213(4);
Therefore, U.S. Bank’s true complaint is not about the right to enforce the mortgage, but about the right to contest the validity of the original acceleration (i.e., to assert that the 2007 foreclosure did not start the clock because the plaintiff lacked standing).

That narrower right—the ability to collaterally attack a prior acceleration long after the fact—is not contractual and not vested in the constitutional sense.

2. Vested Rights Analysis

The Court reiterates core principles:

A “vested right” is a completed and unconditional entitlement, often grounded in contract; mere expectations based on existing law are insufficient.
There is no vested right in:
- A particular statute of limitations duration (Brothers);
- The absence of future legislative changes; or
- A particular application of common-law doctrines such as estoppel.

Applying these rules:

U.S. Bank’s asserted interest—waiting past the six-year period and then attacking the prior acceleration’s validity to avoid the limitations bar—is at most a strategic use of existing procedural law, not a vested property right.
Especially in a “changing regulatory environment” for foreclosures (e.g., administrative orders, CPLR 3012-b), sophisticated noteholders could not reasonably expect the statutory and procedural landscape to remain static.

The Court also emphasizes that U.S. Bank and its predecessor were fully aware of the earlier action and had possession of the note for almost the entire lifespan of that case. They could have:

Discontinued the prior action within six years; and
Refiled a new, properly documented foreclosure action during the limitations period.

Instead, they effectively seek a right to benefit from their own or their agent’s lack of diligence. That is not a constitutionally protected vested right.

3. Substantive Due Process – Rational Basis Review

Even assuming some legally cognizable interest is implicated, the statute survives rational basis review. The question is whether:

There is a rational legislative purpose for FAPA’s retroactivity; and
The retroactive means chosen are rationally related to that purpose.

The Court identifies several expressly stated legislative purposes:

To curb “abuses of the judicial foreclosure process,” especially serial foreclosure filings and manipulation of limitations through standing-based “invalid acceleration” arguments;
To prevent cases that should be time-barred from being litigated indefinitely;
To relieve burdens on courts and avoid re-litigation of stale claims where defenses and documentation have been undermined by the passage of time;
To ensure that CPLR 213(4)’s statute of limitations applies equally to all litigants, including current foreclosure participants.

Retroactively estopping parties from denying the validity of past accelerations is a rational way to:

Prevent revival of long-dormant claims;
Provide finality and repose to borrowers and subsequent lienholders; and
Reduce repetitive and abusive foreclosure litigation.

In a companion case decided the same day, Van Dyke, the Court similarly concluded that applying FAPA retroactively to “shield as many borrowers as possible” from such abuses is rational.

4. Procedural Due Process – The Brothers v Florence Argument

U.S. Bank invokes Brothers v Florence, where the Legislature shortened a limitations period from six years to three. There, the Court held that when a limitations period is newly created or made shorter, due process requires that potential litigants be afforded a “reasonable time” to sue before the new bar takes effect.

The Court explains why Brothers is inapposite:

FAPA did not shorten the six-year statute of limitations for mortgage foreclosure actions; it left CPLR 213(4) intact.
Holders of the note and mortgage had the full six-year period to:
- Identify any standing defect in a pending foreclosure;
- Discontinue the defective action; and
- File a new action with clear evidence of note possession.
FAPA does not deprive them of a reasonable opportunity to bring claims; it simply prevents them from evading the consequences of not acting within six years.

Because FAPA did not retroactively curtail the limitations period or newly impose one, the “reasonable time to sue” requirement from Brothers is not triggered. Accordingly, no procedural due process violation is found.

5. Open Question: “Complete Stranger” Foreclosures

In a notable footnote, the Court explicitly leaves unresolved whether:

A holder of a note and mortgage who was unaware of a prior foreclosure action brought by a complete stranger to the note could raise an as-applied due process challenge to Section 7.

That issue is not presented in Article 13, because U.S. Bank and its predecessor were well aware of the prior action and held the note during almost all of its pendency. This reservation foreshadows potential future litigation over the statute’s reach in truly anomalous scenarios.

D. Practical Impact and Strategic Consequences

1. On Foreclosure Practice and Litigation Strategy

The decision fundamentally reshapes how lenders, servicers, and foreclosure counsel must approach limitations and prior actions:

No “standing-based reset”: Lenders can no longer rely on arguments that older foreclosure actions were jurisdictionally defective (e.g., due to lack of note possession) to claim that the six-year limitations period never began.
Consequences of early missteps: If a servicer or predecessor filed a foreclosure while not holding the note, that filing still generally starts the limitations period, unless:
- The action was dismissed with an express judicial finding of “no valid acceleration”; and
- That finding resulted from a timely raised defense.
Heightened importance of early diligence: Noteholders must ensure proper standing at the time of the first foreclosure filing and must monitor servicers’ actions closely, because the initial filing may fix the acceleration date for limitations purposes.
Finality for borrowers and junior lienors: After six years from an initial foreclosure filing, if no valid tolling applies, foreclosure rights are cut off; junior lienholders (like Article 13) and property owners may seek to clear title relying on limitation defenses.

2. On Securitized Mortgage Trusts and Servicers

Given that many securitized trusts rely on multiple servicers over time, with complex document custody chains, the decision has particular implications:

Trustees can be bound by the actions of servicers that may have imperfect documentation or note possession at the time of filing.
If servicers commenced foreclosures without fully curing assignment and possession issues, those actions may nonetheless fix the acceleration date.
Trustees must now evaluate their entire litigation history to identify potential time-barred loans in light of FAPA § 7’s retroactive estoppel.

3. On the Court System and Policy Goals

The Court emphasizes FAPA’s policy aims:

Clearing “judicial limbo”: Dormant foreclosure actions and old accelerations that have languished beyond six years must now give way to finality.
Reducing stale litigation: Courts are spared from re-litigating ancient disputes where evidence and witnesses are no longer available.
Rebalancing equities: Borrowers and subsequent lienors are less subject to revived or serial foreclosures based on old defaults and procedural maneuvering.

In this sense, Article 13 confirms that FAPA is not merely a prospective reform but a broad, system-wide clean-up mechanism.

4. Relationship to Other FAPA Provisions

Although the opinion primarily interprets CPLR 213(4)(b), it briefly notes related FAPA provisions:

CPLR 203(h) and General Obligations Law § 17-105 restrict waivers or extensions of the foreclosure limitations period, while permitting extension only through a signed writing or explicit statutory authorization.

These provisions, together with § 7, are designed to close off both:

Contractual attempts to circumvent limitations (e.g., informal or unilateral “agreements” to extend time); and
Litigation-based attempts to reset the clock through de-acceleration or “invalid acceleration” arguments.

IV. Complex Concepts Simplified

For non-specialists, several key concepts in the opinion merit plain-language explanation.

1. Acceleration of a Mortgage

Most residential mortgages are payable in monthly installments. An “acceleration clause” allows the lender, upon default, to declare the entire unpaid balance (principal plus interest) immediately due. Legally:

Before acceleration: Each missed installment has its own limitations period.
After acceleration: A single cause of action accrues for the entire debt, and the six-year limitations period begins on that acceleration date.

2. De-acceleration

“De-acceleration” is the lender’s act of undoing the acceleration, restoring the loan to installment status. Under Engel, an unqualified voluntary discontinuance of a foreclosure action normally counts as de-acceleration, which resets the limitations structure. FAPA was designed in part to limit lenders’ ability to use de-acceleration to avoid time-bars.

3. Statute of Limitations for Foreclosure (CPLR 213[4])

CPLR 213(4) generally imposes a six-year statute of limitations on:

Actions on mortgage notes; and
Foreclosure actions on mortgages.

Once a loan is accelerated, the lender has six years from the date of acceleration to bring a foreclosure action (absent tolling). After that, the claim is time-barred.

4. Estoppel Under CPLR 213(4)(b)

“Estoppel” here means a party is legally prevented from making a particular argument. Under FAPA § 7:

If a prior action purported to accelerate the mortgage, a party cannot later argue that:
“The statute of limitations has not expired because that earlier action did not validly accelerate the mortgage.”
Unless a court previously dismissed the earlier action with an express judicial finding that there was no valid acceleration, based on a timely defense.

In other words, the law treats the earlier action as a valid trigger of the limitations period, regardless of later standing arguments.

5. Vested Rights

A vested right is a fully formed and legally secure entitlement. Examples:

Ownership of property under a contract; or
A judgment duly rendered by a court.

Expectations about how procedural rules (like statutes of limitations) will operate in the future are not vested rights. The Legislature may change statutes of limitations and related doctrines prospectively and, to a large degree, retroactively, as long as due process constraints are respected.

6. Substantive vs. Procedural Due Process

Substantive due process limits what the government can do: laws cannot be arbitrary or irrational deprivations of certain recognized liberty or property interests.
Procedural due process focuses on how the government acts: ensuring that individuals have fair notice and a reasonable opportunity to assert or defend rights before being deprived of them.

In Article 13, the Court held:

Substantively, FAPA’s retroactivity has rational purposes and uses rational means; and
Procedurally, it does not retroactively cut short any limitations period so as to deny a reasonable chance to sue.

V. Conclusion

Article 13 LLC v. Ponce De Leon Federal Bank is a pivotal decision in New York foreclosure jurisprudence. It establishes that:

FAPA § 7 applies retroactively to all residential mortgage-related actions where a final judgment of foreclosure and sale has not been enforced, including actions rooted in pre-FAPA accelerations and filings.
Section 7’s estoppel rule is constitutionally valid under the New York Constitution’s due process clause:
- No vested right exists in the ability to attack the validity of a prior acceleration long after the fact; and
- The Legislature’s choice to retroactively limit such challenges is rationally related to legitimate goals of curbing foreclosure abuses, promoting finality, and easing court burdens.

The new precedent has several systemic implications:

It curtails lenders’ ability to manipulate the statute of limitations by characterizing earlier, potentially defective foreclosure actions as nullities.
It incentivizes early, diligent, and documented foreclosure practice, particularly in the context of securitized mortgages and complex servicing arrangements.
It supports the Legislature’s effort to clear New York’s “shadow inventory” of long-running, unresolved foreclosure matters and to protect homeowners and junior lienors from indefinite uncertainty.

At the same time, by expressly leaving open potential as-applied challenges in extreme scenarios (such as actions brought by “complete strangers” to the debt unknown to the noteholder), the Court signals that the constitutional analysis may be more nuanced at the margins. Nevertheless, as a general matter, Article 13 cements FAPA’s role as a robust, retroactive reform of foreclosure practice in New York, reshaping the balance of power between lenders and borrowers in the realm of statute-of-limitations defenses.