Ever-Evolving Statute of Limitations Analysis in Mortgage Foreclosure Actions
New York Mortgage Statute of Limitations
By Justin F. Pane of The Young Law Group, PLLC
Published in The Suffolk Lawyer: The Official Publication of the Suffolk County Bar Association
This is part 1 of a series.
Pursuant to CPLR 213 (4), an action to foreclose a mortgage is subject to a six-year statute of limitations period. While the statute has remained unchanged since 1962, the Great Recession of 2008 produced a flood of residential mortgage foreclosure actions which now, 10 years later, forces the statute to be analyzed and reanalyzed so often that nearly every month New York’s appellate divisions issue new opinions and interpretations concerning the statute — with each new opinion invariably adding novel (and sometimes diverging) twists to the statute’s application.
On the basic fundamental principles underlying the statute of limitations applicable to mortgage foreclosure actions, all four appellate divisions agree that its purpose is fairness to a defendant and that “[w]ith respect to a mortgage payable in installments,separate causes of action accrue for each installment that is not paid, and the statute of limitations begins to run on the date each installment becomes due. However, even if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the statute of limitations begins to run on the entire debt.”1
Outside of the foregoing agreed upon fundamentals, each new appellate opinion issued concerning the statute of limitations period applicable to mortgage foreclosure actions can generally be characterized one of two ways — i.e., as either providing“more clarity” or “less clarity” to the issue.
The focus of part one of this two-part series concerning the ever-evolving statute of limitations analysis applied to mortgage foreclosure actions is upon recent appellate opinions having fostered uniformity of the law and bringing more clarity to the complex and nuanced nature of these type of cases. In turn, part two of this series will cover several splits currently existing between the appellate divisions on critical mortgage foreclosure statute of limitations issues which, of course,without resolution of these issues by the Court of Appeals, leaves the lower courts and its practitioners with “less clarity” on the issues.
Starting on a positive note, on March 13,2019, in the matter of Bank of N.Y. Mellon v Dieudonne,2 the Second Department finally addressed (and answered) a statute of limitations question of law that has nagged and divided lower courts throughout the state since April 3, 2017 — i.e., the date Honorable Thomas F. Whelan, J.S.C., rendered his scholarly, but controversial, Nationstar Mtge., LLC v MacPherson opinion.3 Byway of background, in MacPherson, Justice Whelan held that when paragraphs 19and 22 of the standard Fannie Mae/Freddie Mac form mortgage (uniform instrument form 3033) are read together, they collectively establish that a lender is effectively precluded from accelerating the maturity ofthe mortgage and calling the entire sum secured thereby immediately due and payable in full, until/unless a judgment is entered.4Justice Whelan’s well formulated and persuasive theory regarding a lender’s inability to accelerate a mortgage loan (even through the filing of a foreclosure action) before the entry of a judgment created a rift of diverging and inconsistent case law throughout the lower courts of New York.5 Thankfully,this rift was mended the unanimous opinion penned by Associate Justice Robert J.Miller in the matter of Bank of N.Y. Mellon v Dieudonne, wherein the Second Department declared, under no uncertain terms, that (i) entry of a judgment is not a condition precedent to the acceleration of a standard Fannie Mae/Freddie Mac form mortgage,(ii) acceleration of the same form mortgage may very well be accomplished by commencement of a foreclosure action, and (iii)MacPherson and its progeny are to no longer be followed.6
Additionally, in Milone v US Bank N.A.7,the Second Department was able to not only resolve the pivotal, but previously unanswered,question of what is required of a lender to effectively “de-accelerate” a previously accelerated mortgage (i.e., standing and unequivocal notice), but the Court also outlined a general rubric for the lower courts to follow in determining the sufficiency and effectiveness of a lender’s efforts to decelerate a mortgage loan, going so far as to provide specific examples of what kind of language and types of evidence the courts may accept or should be wary of when assessing the validity of an alleged deceleration event.8 Rounding out the frequently litigated issues concerning the “de-acceleration” of a mortgage loan, the Second Department has now also established through a series of opinions that a lender’s voluntary discontinuance of a mortgage foreclosure action cannot be deemed an affirmative act revoking the loan’s acceleration of the entirety of the sum due thereunder, as set forth and demanded in the underlying foreclosure complaint, unless the discontinuance papers(e.g., stipulation or motion) explicitly express (i) the lender’s revocation of the acceleration, (ii) that the loan is being reinstated to a monthly installment contract, and(iii) the lender’s agreement to accept regular installment payments from the borrower.9
Note: Justin F. Pane is a litigation attorney at Young Law Group, PLLC, where he provides advice and representation to individuals and businesses in connection with residential and commercial foreclosure actions.His effectiveness as a trial and appellate court litigator is due, in part, to his 10+years of professional experience in the real estate and mortgage banking industries, as well as to his passion and pursuit to continually better his knowledge and understanding of the law.
1 Freedom Mtge. Corp. v Engel, 163 AD3d 631,632 (2d Dept 2018) (internal quotations marks &citations omitted); accord CDR Creances S.A. v Euro-American Lodging Corp., 43 AD3d 45, 51(1st Dept 2007); Lavin v Elmakiss, 302 AD2d 638,639 (3d Dept 2003); Wilmington Sav. Fund Socy.,FSB v Gustafson, 160 AD3d 1409, 1410 (4th Dept2018).2 Bank of N.Y. Mellon v Dieudonne,___AD3d___,2019 NY Slip Op 01732 (2d Dept 2019).3 Nationstar Mtge., LLC v MacPherson, 56 Misc3d 339 (Sup Ct, Suffolk County 2017).4 See, MacPherson, 56 Misc 3d at 348-351.5 See e.g., Cypers v US Bank N.A., 2019 NY SlipOp 30549(U), *4 (Sup Ct, Westchester County2019); Wells Fargo Bank, N.A. v Rodriguez, 62Misc 3d 1211(A), 2019 NY Slip Op 50104(U),*2 (Sup Ct, Queens County 2019); HSBC Bank,USA, NA v Margineanu, 61 Misc 3d 973, 982-987 (Sup Ct, Suffolk County 2018) (all following MacPherson); contra e.g., Your New Home, LLCv JP Morgan Chase Bank, N.A.,___Misc 3d___,2019 NY Slip Op 29014, *2 (Sup Ct, Westchester County 2019); Sharova v Wells Fargo Bank,N.A.,___Misc 3d___, 2019 NY Slip Op 29001, *7(Sup Ct, Kings County 2019); U.S. Bank N.A. v Janes, 2018 NY Slip Op 33393(U), *3 (Sup Ct, NY County 2018) (all rejecting MacPherson).6 Dieudonne, 2019 NY Slip Op 01732 at *3.7 Milone v US Bank N.A., 164 AD3d 145 (2d Dept2018).8 See, Milone, 164 AD3d at 153-155.9 See, Engel, 163 AD3d at 633; accord Bank of NY Mellon v Craig,___AD3d___, 2019 NY Slip Op00846, *1 (2d Dept 2019); Deutsche Bank Trust Co. Ams. v Smith,___AD3d___, 2019 NY Slip Op01562, *1 (2d Dept 2019); U.S. Bank Trust, N.A. v Aorta, 167 AD3d 807, 809 (2d Dept 2018).
Link to original article: https://www.scba.org/eva/displayFile.php?id=3252