In Wells Fargo Bank, N.A. v. Valerie J. Portu aka Valerie M. Portu, et al, the Appellate Division Third Department partially granted Defendant’s cross motion for summary judgment dismissing the complaint.http://decisions.courts.state.ny.us/ad3/Decisions/2020/528559.pdf
In April 2006, defendant Valerie Portu and her now deceased husband execution a note in the amount of $147,962 in favor of First Alternative Mortgage Corp. The note was secured by a mortgage held by MERS as nominee for lender. After defendant defaulted on the October 2008 payment, plaintiff sent a letter statement the loan was in default and cautioned that failure to make a payment “will result in acceleration of the Mortgage Note.”.
In August 2015, the Supreme Court found plaintiff failure to provide a reasonable excuse for default, and, lacked standing. The Court went on to dismiss the complaint by order entered July 13, 2016.
On March 2, 2016, plaintiff notified defendant as follows: “Previously your loan was accelerated and all sums . . . were declared immediately due and payable. [Plaintiff] hereby de-accelerates the [l]oan, withdraws its prior demand of immediate payment of all sums. . . and reinstates the [l]oan as an installment loan.” The letter further advised that defendant was still in default, and that plaintiff had “a variety of homeowners’ assistance programs” to discuss. No further payments were made by defendant and plaintiff commenced this second foreclosure action on October 11, 2016. Thereafter, plaintiff moved for summary judgment and defendant cross-moved to dismiss the complaint as barred by the statute of limitations. Supreme Court partially granted defendant’s cross motion by finding that the foreclosure action was time-barred, while allowing the action to continue as to plaintiff’s claim seeking reimbursement for taxes and insurance paid on the property. Plaintiff appealed.
Plaintiff’s purported de-acceleration letter was issued on the eve of the expiration of the statute of limitations. Although the letter expressly “reinstates the [l]oan as an installment loan,” it does not demand the resumption of monthly payments or provide monthly invoices for payment due. Instead, the letter specifies that defendant remained in default for failing to make the required monthly installment payments since November 1, 2008 and offers to discuss “a variety of homeowner’s assistance programs.” Not to be overlooked is that the March 2, 2016 letter was followed by two June 13, 2016 letters providing 30 days to cure the default by making a payment due of $101,831, as well as a 90-day notice required under RPAPL 1304 — a condition precedent to initiating a foreclosure action. In our view, this proffer does not constitute a valid de-acceleration, as plaintiff simply put defendant on notice of its obligation to cure an eight-year default and then promptly embarked on the notices required to initiate a second foreclosure action. It followed that plaintiff’s second action was properly dismissed as untimely.
Thus, the Court issued a firm warning against pre-textual de-acceleration letters. A reasoned that “a de-acceleration letter is not pretextual if….. it contains an express demand for monthly payments on the note, or, in the absence of such express demand, it is accompanied by copies of monthly invoices transmitted to the homeowner for installment payments, or other comparable evidence”.
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