Three attempts, 12 years later – the court says the window closed for good
A mortgage servicer just lost the right to foreclose on a $397,765 loan after waiting too long between attempts, and there's no do-over.
The Appellate Division, Second Department handed down its decision on February 4, affirming what mortgage professionals have been learning the hard way since the Foreclosure Abuse Prevention Act took effect: you can't hit restart on the statute of limitations clock anymore.
Back in 2007, Tatsiana Kovaleva took out a $397,765 mortgage on her Brooklyn home with CitiMortgage. Three years later, when the loan went south, CitiMortgage filed for foreclosure in September 2010. That's when the clock started ticking on the six-year window to collect.
But then CitiMortgage changed its mind. The company discontinued the case in February 2011. The mortgage got sold to Nationstar Mortgage in April 2012, which tried again in December 2013 with a second foreclosure action. Nationstar also backed out, discontinuing that case in May 2019.
Fast forward to October 2022. By then, MTGLQ Investors had the loan and decided to take another crack at foreclosure. But there was a problem. More than twelve years had passed since CitiMortgage first accelerated the debt in 2010.
Kovaleva's lawyers argued the case was dead on arrival. The statute of limitations had expired, and under the new rules, those earlier discontinuances didn't buy the lender any extra time.
MTGLQ Investors pushed back hard. The company argued that applying FAPA retroactively violated due process and conflicted with the Takings and Contracts Clauses of the Constitution. The trial court wasn't buying it, and neither was the appellate panel.
The court laid out the math plainly. When CitiMortgage filed that first foreclosure complaint in 2010 and elected to accelerate the full amount due, the six-year countdown began. It didn't matter that the company walked away from the case. It didn't matter that two more servicers took their shots later. Once that initial six years ran out, the opportunity to foreclose was gone for good.
Under FAPA, specifically the changes to CPLR 3217(e) and 203(h), voluntary discontinuances no longer reset the limitations period. The court pointed to several recent cases applying the same principle and rejected the constitutional challenges outright.
For MTGLQ Investors, the outcome was brutal. The mortgage has been cancelled and discharged from the property records entirely. The company is out nearly $400,000 with no path forward.
The takeaway for servicers is straightforward. The days of strategic discontinuances and multiple bites at the apple are over. Once you accelerate a loan and start that six-year clock, you need to see it through or risk losing everything. There's no safety net, no extension, and as this case confirms, no successful constitutional argument to fall back on.
The decision adds to a growing body of cases enforcing FAPA's limitations provisions, making it clear that New York courts aren't interested in exceptions or workarounds.
