New York's court of last resort on Thursday "respectfully declined" to answer a certified question from a federal appeals court asking for its guidance on the retroactivity of the state's Foreclosure Abuse Prevention Act that lawmakers enacted in December 2022.
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Blank Rome partner Diana M. Eng told the Law Journal it's possible the New York Court of Appeals declined to answer because of the possibility that the Second Circuit can decide the appeal on other grounds, while not needing to reach the FAPA questions at all.
Eng noted that East Fork had argued that "it is entitled to quiet title even if the statute of limitations had not run out because the mortgage was not a valid encumbrance on the property, that U.S. Bank is estopped from arguing otherwise, and that the 2022 amended judgment of foreclosure and sale is not binding on East Fork due to jurisdictional and other defects."
Further, according to Eng, Circuit Judge Steven J. Menashi's concurring opinion discussed that the district court should have considered the res judicata effect of the foreclosure judgment on East Fork's quiet title claim because the quiet title action and the judgment of foreclosure arose out of the same transaction, Eng said.
Given the Court of Appeal's refusal to answer, Eng agreed "the financial services industry will continue to face uncertainty regarding FAPA, and financial institutions should continue to take steps to mitigate risks, such as engaging in loss mitigation to resolve cases, including language in stipulations and modifications to account for FAPA and increasing diligence when purchasing loan portfolios in the secondary market."
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"NY Top Court Punts Certified Foreclosure Question Back to 2nd Circuit," by Brian Lee was published in the New York Law Journal on October 25, 2024.
