The Appellate Division, First Department, Holds That FAPA’s Retroactive Application Does Not Invalidate Stipulation In Prior Foreclosure Action Tolling Statute of Limitations

By Jonathan H. Freiberger

On March 17, 2026, the Appellate Division, First Department, decided HSBC Bank USA, N.A. v. Nicholas, a mortgage foreclosure action that addresses many of the issues raised in our prior BLOG articles. HSBC involves the Foreclosure Abuse Prevention Act (“FAPA”), and the statute of limitations in foreclosure actions. By way of brief background, FAPA went into effect in December of 2022, and “represents the Legislature’s response to litigation strategies and certain legal principles that distorted the operation of the statute of limitations in foreclosure actions.” Genovese v. Nationstar Mortgage LLC, 223 A.D.3d 37, 41 (1^st Dep’t 2023) (citation omitted). Thus, inter alia, FAPA’s provisions were designed to prevent lenders from circumventing statute of limitations problems in residential mortgage foreclosure actions by the simple expedient of accelerating and deaccelerating loans to restart the running of statutes of limitations. FAPA applies retroactively. See, e.g., Van Dyke v. U.S. Bank, N.A., 2025 WL 3272341 (Court of Appeals 2025).

Further, a mortgage foreclosure action is governed by a six-year statute of limitations. CPLR 213(4); see also Anglestone Real Estate Venture Partners Corp. v. Bank of New York Melon, 221 A.D.3d 943, 946 (2nd Dep’t 2023). When mortgage payments are payable in installments, the six-year period runs from each missed payment, but, upon acceleration, the statute of limitations begins to run anew on the entire accelerated debt. Anglestone, 221 A.D.3d at 946; see also Mills v. Deutsche Bank Nat. Trust, 235 A.D.3d 740 (2nd Dep’t 2025). Acceleration can be accomplished by making a demand for payment of the full amount due under the subject loan due to a default or by the commencement of a foreclosure action in which the lender demands payment of all sums due under the mortgage. Caprotti v. Deutsche Bank National Trust Co., 220 A.D.3d 1126, 1127 (3rd Dep’t 2023); GMAT Legal Title Trust 2014-1 v. Kator, 213 A.D.3d 915, 916 (2nd Dep’t 2023).

HSBC BANK

HSBC commenced a mortgage foreclosure action in 2008, which accelerated the loan (the “First Foreclosure Action”). The First Foreclosure Action was discontinued, without prejudice, pursuant to a stipulation by which the parties agreed that any claims one party had against the other would be tolled until June 1, 2013 (the “Stipulation”). A subsequent foreclosure action was commenced in 2018 (the “Second Foreclosure Action”). In response to HSBC’s motion for summary judgment in the Second Foreclosure Action, the borrower cross-moved to dismiss arguing that the Second Foreclosure Action was time-barred under FAPA. The motion court denied HSBC’s motion and granted the borrower’s cross-motion. The motion court found that FAPA was applicable and the voluntary discontinuance did not deaccelerate the loan and reset the applicable limitations period. For technical reasons beyond the scope of this article, the motion court also found the Stipulation was invalid and did not toll the statute of limitation. HSBC appealed.

The First Department reversed; holding that Stipulation tolled the statute of limitations, notwithstanding FAPA. The Court reiterated that FAPA’s application was retroactive. Nonetheless, the Court found that the Stipulation was compliant with, and enforceable under, CPLR 2104 and operated to toll the applicable limitations period. The Court also found that the Stipulation, which was signed by counsel, did not have to be signed by the parties themselves pursuant to GOL § 17-105(1) because “GOL § 17-105(5)(b) provides that ‘[t]his section does not change the requirements or the effect with respect to the accrual of a cause of action, nor the time limited for commencement of an action based upon . . . a stipulation made in an action or proceeding.’” Therefore, the Stipulation did not have to comply with GOL § 17-105(1).

The Court also found that CPLR 3217, which was also amended by FAPA, did not impact its decision. In so doing, the Court stated:

CPLR 3217, also amended by FAPA, now provides, in relevant part, that “the voluntary discontinuance” of a mortgage foreclosure action “on . . . stipulation . . . shall not, in form or effect, waive, postpone, cancel, toll, extend, revive or reset the limitations period to commence an action . . . unless expressly prescribed by statute” (CPLR 3217[e]). However, the Senate Sponsor’s Memorandum in Support clarifies that FAPA does not prevent parties from agreeing to extend the limitations period for a foreclosure action; rather, it identifies General Obligations Law § 17-105 as “the exclusive means” to do so (see Senate Sponsor’s Mem in Support of 2022 NY Senate Bill S5473D). The Sponsor’s Memo repeatedly warned of lenders’ “unilateral” acts, including lenders’ “unilateral ability to toll or extend the time prescribed by law to commence an action”; their ability to “unilaterally manipulate” the limitation period; and their ability to effect a “unilateral ‘de-acceleration’” (id.). And it explained that a “bare stipulation of discontinuance or a lender’s unilateral decision to revoke its demand for full payment is not a method prescribed by the Legislature for waiving, extending, or modifying the statute of limitations” (id.). This language suggests that the Legislature did not intend to abrogate the ability of parties to extend the statute of limitations by explicit agreement, even if the stipulation also voluntarily discontinued the action.

After reiterating why FAPA does not violate a lender’s substantive and procedural due process rights and that the retroactive application of FAPA does not constitute a regulatory taking, the Court held that:

Simply put, despite FAPA’s retroactive application, the parties’ 2011 stipulation in which they expressly agreed to toll the limitations period to June 1, 2013 effectively tolled the limitations period to that date. Plaintiff’s commencement of this action on February 16, 2018, less than six years later, was thus timely. 

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.