Both threw everything at the wall – including the Constitution. Nothing stuck
Fannie Mae and U.S. Bank both lost foreclosure cases in New York on the same day – and FAPA was the reason.
On March 11, 2026, New York's Appellate Division, Second Department, threw out mortgage foreclosure actions brought by two of the biggest names in the industry. In both cases, the court ruled the lenders waited too long to file, and a state law enacted in late 2022 made sure there was no workaround.
If you are servicing legacy loans in New York, these two rulings deserve your attention.
In the first case, Federal National Mortgage Association v. Brach, Fannie Mae was attempting to foreclose on a Brooklyn property tied to a mortgage from December 2002. A prior foreclosure action had been filed in September 2008, which accelerated the full mortgage debt. That action was voluntarily dropped in 2014. Fannie Mae then filed a fresh case in May 2018 – nearly ten years after the clock had started on New York's six-year statute of limitations. The court said the case came too late. Fannie Mae also argued that summary judgment was premature because discovery was still ongoing. The court rejected that too, finding that Fannie Mae failed to show that further discovery could lead to relevant evidence.
The second case, U.S. Bank v Bookspan, followed a similar arc but raised a different wrinkle. This one involved a property in Flushing, Queens. An entity called Alliance Funding Company had filed a foreclosure action in April 2003, accelerating the debt. That case was voluntarily discontinued in January 2017. U.S. Bank then filed its own action in June 2017, more than fourteen years after the acceleration. U.S. Bank tried a creative argument: it claimed Alliance never had the authority to accelerate the debt in the first place, meaning the clock never started running. The court was not persuaded.
What ties both cases together is the Foreclosure Abuse Prevention Act, or FAPA, which New York signed into law at the end of 2022. Before FAPA, lenders had a couple of reliable strategies for getting around the statute of limitations. One was to drop a foreclosure case and argue that doing so reset the clock. Another was to challenge whether the entity that originally accelerated the debt had standing to do so – and if it did not, the reasoning went, then the limitations period never began.
FAPA shut both of those doors. In the Fannie Mae case, the court confirmed that voluntarily discontinuing a prior action does not de-accelerate the debt or restart the limitations period. In the U.S. Bank case, the court applied FAPA's estoppel rule: a lender cannot argue that a prior acceleration was invalid unless the earlier case was dismissed by a judge specifically on those grounds. Since the 2003 case was voluntarily dropped, not dismissed on a judicial finding about standing, U.S. Bank had no way around it.
Both lenders also challenged FAPA on constitutional grounds. The court rejected those arguments in both cases, citing a growing line of appellate decisions that have already put the question to rest.
For mortgage professionals, the takeaway is straightforward. If you are managing portfolios with older New York loans that went through prior foreclosure actions, the window to act may already be closed. The strategies that once gave lenders a second chance – dropping cases and refiling, or attacking the standing of the entity behind a prior foreclosure – no longer hold up in court. FAPA has reshaped the landscape, and these two rulings on March 11 are the latest confirmation that New York's appellate courts are applying the law consistently and without exception.
The legal direction is clear. When two of the largest mortgage players in the country lose on the same day in the same court under the same law, that is not a coincidence. That is a pattern.
