US Bank sees legal setbacks in New York foreclosure suits

A New York court ruled against U.S. Bank in its effort to retroactively pursue a years-long foreclosure case that the state deemed unenforceable. 

A New York appellate court denied an appeal by the bank to reverse a 2023 legal decision that stated the bank's attempt to foreclose on defendant John Williams in 2019 exceeded the allowable six-year statute of limitations for it to act. 

Prior to 2019, the bank had started foreclosure proceedings on three other occasions, with the first occurring in 2008. The case was voluntarily discontinued in 2012. 

Two subsequent cases introduced in 2013 and 2014 were later consolidated but thrown out in 2019 after courts deemed the homeowner had not received proper notice. U.S. Bank refiled a claim later that year.

State laws, though, spell out that foreclosures must be completed within six years after first initiated, with the 2019 proceeding falling well beyond the 2008 reference point. U.S. Bank contended that its voluntary discontinuation of the first foreclosure reset the clock.

In 2022, the New York legislature passed the Foreclosure Abuse Prevention Act, which reinforced the six-year statute and prohibited lenders from retroactively pursuing past cases. Governor Kathy Hochul signed the bill into law at the end of that year. 

"Thus, contrary to the plaintiff's contention, the statute of limitations was not reset by the plaintiff's voluntary discontinuance of the 2008 foreclosure action," judges wrote in their decision. 

The appellate judges also deemed the plaintiffs challenging constitutionality of New York's FAPA "without merit" and ordered U.S. Bank to pay defendant's legal fees.   

No response to an inquiry sent to U.S. Bank was received prior to publication. 

A bank files class action against FAPA

The decision favoring Williams comes following several other developments that have generally ruled against servicers' attempts to challenge FAPA and move forward with foreclosure cases that first began years ago, including others involving U.S. Bank. 

A ruling in late 2025 determined that the law's application to loans that predated its signing was in line with the state's intent and that a previous foreclosure attempt did not automatically reset the clock. 

Prior to that decision, the Supreme Court declined to hear a different foreclosure case brought by U.S. Bank against a New York homeowner, which would have gone a long way toward defining the extent FAPA could be applied. 

In September 2025, WSFS Bank filed a class action complaint in federal court on behalf of mortgage banks against New York State seeking damages from retroactive application of FAPA. The filing noted that the bill's sponsor Sen. James Sanders stood to personally benefit from passage of the legislation. 

"By enacting FAPA, New York engaged in the seizure of vested rights and interests belonging to plaintiff and similarly situated lenders and investors," attorneys for WSFS wrote. Both Sanders and Hochul are also named as defendants in the case. 

In January, the state filed a motion to dismiss the case, which is currently pending.