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In Citimortgage, Inc. etc. v. Salko, 179 A.D. 3^rd 1009, 2020 WL 465495, 2020 N. Y. Slip Op. 00566, following dismissal of the first complaint for lack of jurisdiction for improper service, mortgagee’s successor brought a foreclosure action against mortgages, and the mortgage counterclaims against mortgagee for alleging violations of the FDCPA. In the Appellate Divisions review, they held that denial of the cross motion that conditioned discontinuance of the foreclosure on tolling mortgage interest, late fees and expenses from the alleged default, or payment of attorney’s fees, was warranted. However, the trial court’s sua sponte order removing the previous acceleration of the mortgage debt and directing the mortgage remain as an installment contract was not warranted.https://law.justia.com/cases/new-york/appellate-division-second-department/2020/2018-02512.html

In March 2005, Salko executed a note in the principal amount of $937,500 in favor of ABN AMRO Mortgage Group, Inc. On May 20, 2011, CitiMortgage, Inc.as successor by merger to ABN AMRO, commenced an action against the Salkos, among others, to foreclose the mortgage. The defendant served an answer and, thereafter, moved to dismiss the complaint insofar as asserted against him for lack of personal jurisdiction due to improper service. In an order dated April 18, 2012, the Supreme Court granted the defendant’s motion, which was unopposed, and dismissed the complaint insofar as asserted against him.

In June 2014, the plaintiff commenced this action to foreclose the mortgage against the defendant only, with the intention of consolidating this action with the 2011 action against the remaining defendants. 

The Salkos interposed an answer with affirmative defenses and a counterclaim alleging, inter alia, violations of the FDCPA. In March 2017, the plaintiff moved to discontinue this action without prejudice and to dismiss or sever the Salkos‘ counterclaim, asserting that it had determined that it could not prove its compliance with RPAPL 1304. The defendant cross-moved to condition the discontinuance of the action on the payment of counsel fees to him, the tolling of all mortgage interest, late fees, and expenses from the date of the alleged default on the mortgage loan, and the severance and continuation of the counterclaim.

“In an action of an equitable nature, the recovery of interest is within the court’s discretion. The exercise of that discretion will be governed by the particular facts in each case, including any wrongful conduct by either party” (Prompt Mtge. Providers of N. Am., LLC v. Zarour, 155 A.D.3d 912, 915, 64 N.Y.S.3d 106 [internal quotation marks omitted]; see CPLR 5001[a]; BAC Home Loans Servicing, L.P. v. Jackson, 159 A.D.3d 861, 862, 74 N.Y.S.3d 59; Citicorp Trust Bank, FSB v. Vidaurre, 155 A.D.3d 934, 934–935, 65 N.Y.S.3d 237; U.S. Bank N.A. v. Williams, 121 A.D.3d 1098, 1102, 995 N.Y.S.2d 172; Dayan v. York, 51 A.D.3d 964, 965, 859 N.Y.S.2d 673).

Here, the Appellate Court found the equities supported denying those branches of the motion for tolling of interest, late fees, expenses, legal fees etc. (which was requested) However, they found the Supreme Court’s sua sponte, revocation of the acceleration and mortgage remaining as an installment contract exceeds the discretion of the Court and modified the Orders accordingly.

For more information regarding this case, please contact  Deborah Gallo, Director of Operations at [email protected]

In Ditmid Holdings, LLC. Vs. JP Morgan Chase Bank, N.A., AD2nd, 2/26/2020, 2020 WL912994, 2020 N.Y. Slip Op. 01326, the Appellate Division, affirmed the lower Court’s decision granting the Plaintiff’s motion for summary judgment.https://law.justia.com/cases/new-york/appellate-division-second-department/2020/2017-02354.html   This was an action under RPAPL Section 1501(4) to cancel and discharge a recorded mortgage. On or about February 20, 2008, Washington Mutual commenced a foreclosure on the subject property. Pursuant to the terms of the note and mortgage alleged the default in payment and elected to call the full amount due.   A second action to foreclose was filed on December 8, 2009. In November 2013, the Supreme Court directed dismissal of the complaint in the Washington Mutual foreclosure action as abandoned under CPLR 3215(c) and the JPMorgan action was dismissed for failure to appear at a scheduled conference.

On November 6, 2014, the plaintiff commenced this action against JP Morgan to cancel and discharge the mortgage. After issue was joined, plaintiff moved for summary judgment, defendant opposed and cross moved for summary judgment. The Supreme Court granted Plaintiff’s motion and denied JPMorgan’s cross motion.   JPMorgan appealed from the January 26, 2017 decision. The law is well settled that, 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 A.D.2d 604, 605, 720 N.Y.S.2d 161; see BH 263, LLC v. Bayview Loan Servicing, LLC, 175 A.D.3d at 1376, 109 N.Y.S.3d 142; Bank of N.Y. Mellon v. Dieudonne, 171 A.D.3d 34, 37, 96 N.Y.S.3d 354).

JPMorgan’s attempted to use a letter written by Salaii (original mortgagor) as acknowledgment of the debt. However, the Court found that the letter was not an unqualified acknowledgment of the debt, but a request settlement. Therefore, it was insufficient to reset the statute of limitations. Additionally, the Court found that the reinstatement provisions in section 19 of the mortgage did not prevent the mortgagee from validly accelerating the mortgage debt. (see Bank of N.Y. Mellon v. Dieudonne, 171 A.D.3d at 39, 96 N.Y.S.3d 354). Therefore, the Appellate Division agreed with the Supreme Court’s decision.  

Another cautionary tale, that correspondence in contemplation of settlement cannot be used as the sword or the shield, as well as, another application of the Dieudonne decision.

For more information regarding this case, please contact Deborah Gallo, Director of Operations at [email protected]

In 1081 Stanley Ave., LLC . Bank of New York Mellon Trust Company, N.A. , Supreme Court, Appellate Division, Second Department, New York, January 29, 2020, 2020WL 465549; 2020 NY Slip Op. 00559, the Appellate Court reversed and the plaintiff’s motion for summary judgment on the complaint was granted and defendant’s cross motion for summary judgment dismissing the complaint was denied.https://law.justia.com/cases/new-york/appellate-division-second-department/2020/2017-06386.html

The instant action was commenced pursuant to RPAPL 1501(4) to cancel and discharge a mortgage in the sum of $551,200.00. In March 2009, Bank of New York Trust Company, NA commence an action against Batista to foreclose the mortgage. (Mortgage was thereafter further assigned). By order dated November 14, 2013, the Supreme Court dismissed the 2009 action as abandoned under CPLR 3215(c).

The Plaintiff herein, acquired the premises pursuant to a deed dated June 22, 2015, and commenced an action against Bank of New York Trust pursuant to RPAPL article 15 to cancel and discharge the mortgage. In the complaint is was alleged that any interest of the defendant was barred by the statute of limitations.   Defendant filed an answer alleging, among other items, that the acceleration of the debt was revoked prior to expiration of the statute of limitations and that Batista had acknowledged the debt, thereby restarting the statute of limitations. The plaintiff moved for summary judgment on the complaint, and the defendant cross-moved for summary judgment dismissing the complaint. The Supreme Court denied the plaintiff’s motion and granted the defendant’s cross motion. The plaintiff then appealed.

A lender may revoke its election to accelerate the mortgage, but, it must do so by an affirmative act of revocation occurring during the six-year statute of limitations period. The defendant submitted the affidavit of Mark Syphus, a Document Control Officer of Select Portfolio Servicing, Inc., the defendant’s attorney-in-fact and loan servicer, to which was annexed a letter addressed to Batista, dated December 29, 2014, stating that the acceleration of the mortgage debt was “hereby rescinded.” However, the defendant failed to show that the letter dated December 29, 2014, constituted an affirmative act revoking the acceleration, since the defendant submitted no evidence that the letter was sent to Batista.

Additionally, defendant failed to show that certain authorizations signed by Batista constituted acknowledgments sufficient to revive the statute of limitations. The authorizations were attempts to negotiate loan modifications and not unqualified acknowledgments of the debt sufficient to reset the running of the statute of limitations.

Another lesson in the necessity of documentary evidence of mailing for a de-acceleration letter to have the intended effect.

For more information regarding this case, please contact  Deborah Gallo, Director of Operations at [email protected]

In U.S. Bank Nat’l Ass’n as Tr. for Structured Adjustable Rate Mortg. Loan Tr., Mortg. Pass-Through Certificates, Series 2005-23 v. Haskins, 2019 WL 6888654 (S.D.N.Y. Dec. 18, 2019). The District Court for the Southern District of New York granted the plaintiff’s motion for summary judgment on a strict foreclosure claim against a junior lienholder not named in the foreclosure.

The junior lien was filed in March 2014. The foreclosure’s initial lis pendens was filed in February 2011, expired on February 2014 and was not refiled until April 2014. Thus, the judgment lien was filed during the gap period in the lis pendens. The foreclosure was completed, and plaintiff purchased the property at foreclosure sale.Thereafter, the Plaintiff brought a strict foreclosure in order to extinguish the missed judgment. The parties moved for cross summary judgment.

The Court found that defendant’s lien was junior to plaintiff’s mortgage, and that the lien survived the foreclosure sale and remained on the property since it was filed during the gap period.   The Court differentiated between the fact that the plaintiff brought the action under RPAPL 1352 (strict foreclosure), versus RPAPL 1503 (re-foreclosure), and 1352 does not require the plaintiff prove the absence of fraud or willful neglect. Thus, defendant’s allegation that re-filing of the lis pendens was negligent was found irrelevant.The Court granted the plaintiff’s motion for summary judgment, denied defendant’s cross motion, and ordered that defendant had… “60 days to notify of his intent to exercise his right of redemption, pay the mortgage debt, along with the value of improvements made to the property, to maintain his interest in the property.”

For more information regarding this case, please contact Deborah Gallo, Director of Operations at [email protected]

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”.

For more information regarding this case, please contact Deborah Gallo, Director of Operations at [email protected]