MORTGAGE FORECLOSURE - A SUCCESSFUL STANDING DEFENSE IN FIRST ACTION DEFEATS SECOND ACTION

This is an example of where a homeowner won a battle but lost the war. It illustrates a problem of asserting the standing defense.

US Bank Trust, N.A. v Williams, 2019 NY Slip Op 00634, Decided on January 30, 2019, Appellate Division, Second Department:

"In March 2015, the plaintiff commenced this action to foreclose a mortgage alleging, inter alia, that the defendant Una Williams (hereinafter the defendant) had defaulted in her mortgage payment due July 1, 2006, and on all payments due thereafter. Thereafter, the defendant moved pursuant to CPLR 3211(a)(3) and (5) to dismiss the complaint for lack of standing and as barred by the statute of limitations. The Supreme Court denied the motion, and the defendant appeals.

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As to that branch of the defendant's motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint as barred by the applicable six-year statute of limitations (see CPLR 213[4]), "[w]ith respect to a mortgage payable in installments, separate causes of action accrue[ ] [*2]for each installment that is not paid, and the statute of limitations begins to run, on the date each installment becomes due" (Wells Fargo Bank, N.A. v Burke, 94 AD3d 980, 982; see U.S. Bank N.A. v Gordon, 158 AD3d 832, 835; Wells Fargo Bank, N.A. v Cohen, 80 AD3d 753, 754). 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" (EMC Mtge. Corp. v Patella, 279 AD2d 604, 605; see U.S. Bank N.A. v Gordon, 158 AD3d at 835; Wells Fargo Bank, N.A. v Burke, 94 AD3d at 982). "Where the acceleration of the maturity of a mortgage debt on default is made optional with the holder of the note and mortgage, some affirmative action must be taken evidencing the holder's election to take advantage of the accelerating provision, and until such action has been taken the provision has no operation" (Wells Fargo Bank, N.A. v Burke, 94 AD3d at 982-983; see U.S. Bank N.A. v Gordon, 158 AD3d at 835; Esther M. Mertz Trust v Fox Meadow Partners, 288 AD2d 338, 340). "[U]nder certain circumstances, the commencement of a foreclosure action may be sufficient to put the borrower on notice that the option to accelerate the debt has been exercised" (U.S. Bank N.A. v Gordon, 158 AD3d at 836; see Wells Fargo Bank, N.A. v Burke, 94 AD3d at 983; EMC Mtge. Corp. v Smith, 18 AD3d 602, 603).

Here, the defendant contended that the commencement of a prior mortgage foreclosure action by HSBC Mortgage Services Inc. (hereinafter HSBC), in November 2006 was sufficient to accelerate the mortgage debt. However, in support of her motion, the defendant submitted a copy of an amended order of the Supreme Court dated September 30, 2014, which granted the defendant's motion to dismiss the prior mortgage foreclosure action on the ground that HSBC did not have standing to commence that action because it was not the holder of the note and mortgage at the time that action was commenced. Since HSBC was not the holder of the note and mortgage at the time of the commencement of the prior mortgage foreclosure action, it lacked the authority to accelerate the debt through the complaint in that action (see Milone v US Bank National Association, 164 AD3d 145; U.S. Bank N.A. v Gordon, 158 AD3d at 836; Wells Fargo Bank, N.A. v Burke, 94 AD3d at 983; EMC Mtge. Corp. v Smith, 18 AD3d at 603). Thus, the defendant failed to meet her initial burden of demonstrating, prima facie, that this action was untimely (see U.S. Bank N.A. v Gordon, 158 AD3d at 835-836; Campone v Panos, 142 AD3d 1126, 1127).

Accordingly, we agree with the Supreme Court's determination to deny that branch of the defendant's motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint as barred by the statute of limitations."