A New York appeals court just shut down lenders' ability to restart foreclosure deadlines – here's what every mortgage professional needs to know
A New York appeals court has ruled lenders can’t reset foreclosure deadlines by refiling cases, sending a clear compliance warning to mortgage professionals statewide.
The case, decided on September 24, 2025, involved HSBC Bank USA, N.A. and Suffolk County homeowner Rita Barrett. HSBC first began foreclosure proceedings against Barrett in January 2011, seeking to foreclose a consolidated mortgage on her property. In June 2013, HSBC voluntarily discontinued that action through a stipulation. In September 2017, HSBC filed a new foreclosure action on the same mortgage.
Barrett responded by arguing that the six-year statute of limitations for mortgage foreclosure actions had expired. She pointed out that the debt was accelerated when HSBC filed the 2011 action, making the full amount due at that time. Since more than six years had passed before the 2017 action was filed, Barrett contended that the claim was time-barred under New York law.
The Supreme Court of Suffolk County initially ruled in favor of HSBC, granting the bank’s motion for summary judgment and denying Barrett’s cross-motion to dismiss the complaint. Barrett appealed, and the case went to the Appellate Division, Second Judicial Department.
On appeal, the appellate court reversed the lower court’s ruling. The judges determined that the six-year statute of limitations began running when HSBC accelerated the debt by commencing the 2011 foreclosure action. The court cited the Foreclosure Abuse Prevention Act (FAPA), effective December 30, 2022, which states that voluntary discontinuance of a foreclosure action does not de-accelerate the debt or reset or revive the statute of limitations. Once a lender accelerates a mortgage debt by commencing a foreclosure action and seeking the full balance due, the statute of limitations begins, and discontinuing the action does not restart the clock.
HSBC argued that the 2011 complaint did not constitute a valid acceleration because it was unverified and that their counsel lacked authority to accelerate the debt. The appellate court rejected these arguments, finding that the commencement of the 2011 action and the demand for the full balance were sufficient to accelerate the debt under New York law. The court also rejected HSBC’s challenges to the retroactive application and constitutionality of FAPA.
As a result, the appellate court denied HSBC’s motion for summary judgment and granted Barrett’s cross-motion, dismissing the foreclosure complaint as time-barred.
For mortgage professionals, this decision highlights the importance of monitoring statutory deadlines in foreclosure actions. The ruling clarifies that, under New York law and the Foreclosure Abuse Prevention Act, lenders cannot revive expired foreclosure claims by discontinuing and refiling cases. The outcome underscores the need for careful compliance and risk management in handling mortgage enforcement actions.
HSBC Bank USA, N.A. v Barrett provides clear guidance on the statute of limitations for mortgage foreclosures in New York. It reinforces that once a debt is accelerated, the statute of limitations begins to run, and lenders must act within that period or risk losing the ability to enforce the mortgage. This case is a significant development for mortgage lenders, servicers, and their insurers, emphasizing that there are no do-overs when it comes to statutory deadlines in foreclosure litigation.
