MORTGAGE FORECLOSURE - MORE ON ACCELERATION OF DEBT AND STATUTE OF LIMITATIONS

Your New Home LLC v. JP Morgan Chase Bank, NYLJ 2/28/19, Date filed: 2019-01-17 Court: Supreme Court, Westchester, Judge: Justice Terry Jane Ruderman, Case Number: 59896/2018:

"To avoid a determination that the debt was accelerated based on the commencement of the 2008 foreclosure action, defendant relies on the reasoning exemplified in Nationstar Mortgage, LLC v. MacPherson (56 Misc 3d 339, 350 [Sup Ct Suffolk County 2017]), which in effect created an exception to the rule that commencement of a foreclosure action accelerates the entire debt. Nationstar v. MacPherson held that where the terms of the mortgage give the mortgagor the right to reinstate the loan by paying only the arrears due — as is true here — a mortgage debt is not accelerated by the commencement of a foreclosure action, but solely by the judgment of foreclosure (id.; see generally Adam M. Swanson, Understanding Mortgage Acceleration and Its Statute of Limitations Implications, NYLJ, Jan. 3, 2019 at 4, col 4).

However, a number of trial-level courts have considered and rejected the holding in Nationstar Mortgage v. MacPherson (see e.g. U.S. Bank N.A. v. Janes, 2018 NY Slip Op 33393[U], 2018 NY Misc LEXIS 6688 [Sup Ct NY County 2018]; Persaud v. U.S. Bank Natl., 2018 N.Y. Slip Op 28328, NY Misc LEXIS 4722 [Sup Ct Queens County 2018]; but see Wells Fargo Bank, N.A. v. Fetonti, 2018 NY Slip Op 30193[U], 2018 NY Misc LEXIS 391 [Hon. Lawrence Ecker, J.]). As these cases emphasize, the Second Department has repeatedly and unwaveringly held, including within the past month, that acceleration of a mortgage occurs by the commencement of a foreclosure action with the filing of a summons and complaint (see e.g. 21st Mortgage Corp. v. Osorio, __ AD3d __, 2018 NY Slip Op 08618 [2nd Dept 2018]; U.S. Bank Trust, N.A. v. Aorta, __ AD3d __ , 2018 NY Slip Op 08528 [2nd Dept 2018]). Indeed, in the almost two years since Nationstar v. MacPherson was issued on April 3, 2017, the Second Department has not echoed or approved that holding. The only type of situation in which the Second Department has held that filing a foreclosure complaint does not accelerate the mortgage debt is where the lender did not at that time have the authority to accelerate the debt or sue to foreclose, such as where it was not yet the holder of the note (see e.g. U.S. Bank N.A. v. Gordon, 158 AD3d 832, 836 [2d Dept 2018]; Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980 [2d Dept 2012]).

Therefore, the filing of the complaint in the 2008 foreclosure action accelerated the debt, which acceleration was not timely revoked, and the six year limitations period has expired.

It is worth noting that defendant lender had ample opportunity to attempt to foreclose on the unit before the statute of limitations ran, but failed to do so, and that plaintiff, the current owner of the unit, does not owe defendant any debt."