LAW OFFICE OF RONALD D. WEISS, PC OBTAINED ORDER FROM NASSAU COUNTY SUPREME COURT DISMISSING FORECLOSURE ACTION BECAUSE IT WAS BARRED BY THE STATUTE OF LIMITATIONS IN LIGHT OF THE PASSAGE OF THE NYS FORECLOSURE ABUSE PREVENTION ACT ON DECEMBER 30, 2022

In a recent landmark case decision, in U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR CSFB MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 2004-1 v. SUSAN YAGHOUTI et al Index #: 611631/2021, a 0 – DECISION + ORDER ON MOTION (see decision) a Decision and Order, by the Honorable David Sullivan, was entered on October 5, 2023, where there was a dismissal in the case, based on the Foreclosure Abuse Prevention Act of 2022. The decision, was based on a motion for leave to renew, by Ronald D. Weiss, PC, of the Court’s improper denial of the Defendant’s pre-Answer motion to dismiss the foreclosure action, based upon the passage of the Defendant’s motion to dismiss the foreclosure action pursuant to CPLR 3211(a)(5) because the action is barred by the applicable Statute of Limitations and for a declaratory judgment pursuant to RPAPL 5101(4) declaring the mortgage to be unenforceable and quieting title to the subject premises. In the subject case, the Plaintiff commenced a 2008 action and Discontinued it by filing a Stipulation of Discontinuance that included the self-serving statement that the Plaintiff lacked standing. This statement was defied by the facts of the case as the Court had previously found that the Plaintiff had proven its prima facie case when it awarded the Plaintiff an Order of Reference. The Plaintiff’s 2021 action was found to be barred by the applicable Statute of Limitations.
An action to foreclose a mortgage is governed by a six-year statute of limitations. CPLR § 213(4).

On December 30, 2022, the NYS Governor signed the Foreclosure Abuse and Prevention Act. (hereinafter referred to as “FAPA”). The FAPA Senate bill made very clear in the section of the bill called “Purpose and Intent of Bill” that their intent was to correct what were defined as “abuses of the judicial foreclosure process” where foreclosure plaintiffs and the courts through misinterpretation have engaged in judicial overreach leading to an easily manipulated and controlled foreclosure statute of limitations. The bill starts out stating: “The Legislature finds that there is an ongoing problem with abuses of the judicial foreclosure process; that the problem has been exacerbated by court decisions which, contrary to the intent of the Legislature, have given mortgage lenders and loan services opportunities to avoid strict compliance with remedial statutes and manipulate statutes of limitation to their advantage.”

The law was designed to prevent the abusive conduct that has taken place in this case. The Defendant has been forced to defend foreclosure actions for the past 15 years and has experienced constant stress due to the fear of losing her family home because of the pendency of two foreclosure actions by the Plaintiff and/or its predecessors in interest. The Plaintiff is trying to evade the Statute of Limitations by asserting that the loan was not accelerated by the commencement of the first foreclosure action in 2008 because the Plaintiff in that action, Greenpoint Mortgage Funding, Inc., lacked standing. These tactics by the foreclosing banks is exactly what the Foreclosure Abuse and Prevention Act was passed to curtail.

Since the Plaintiff commenced this action to enforce a mortgage secured on the subject premises, an instrument described under CPLR § 213(4), and the case is one “in which a final judgment of foreclosure and sale has not been enforced”, FAPA applies and has a retroactive effect.

In a case that was decided by the Appellate Division, Second Department after the passage of the Foreclosure Abuse Prevention Act of 2022, GMAT Legal Title Trust 2014-1 v. Kator, 213 AD3d 915, 184 NYS3d 805 (2nd Dept. 2023), The Court held that:

“Pursuant to CPLR 213(4), an action to foreclose a mortgage is subject to a six-year statute of limitations (see GSR Mtge. Loan Trust v. Epstein, 205 A.D.3d 891, 892, 169 N.Y.S.3d 334; MLB Sub I, LLC v. Clark, 201 A.D.3d 925, 926, 162 N.Y.S.3d 404). Even if the mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and payable, and the statute of limitations begins to run on the entire debt (see Bank of N.Y. Mellon Corp. v. Alvarado, 189 A.D.3d 1149, 1150, 134 N.Y.S.3d 245; Deutsche Bank Natl. Trust Co. v. Adrian, 157 A.D.3d 934, 935, 69 N.Y.S.3d 706). Acceleration occurs, inter alia, by the commencement of a foreclosure action wherein the plaintiff elects in the complaint to call due the entire amount secured by the mortgage (see Ditech Fin., LLC v. Connors, 206 A.D.3d 694, 697, 170 N.Y.S.3d 560; see Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 22, 146 N.Y.S.3d 542, 169 N.E.3d 912). The recently enacted Foreclosure Abuse Prevention Act (L 2022, ch 821; hereinafter FAPA) amended CPLR 213(4) by adding, among other things, paragraph (a), which provides that “[i]n any action on an instrument described under this subdivision, if the statute of limitations is raised as a defense, and if that defense is based on a claim that the instrument at issue was accelerated prior to, or by way of commencement of a prior action, a plaintiff shall be estopped from asserting that the instrument was not validly accelerated, unless the prior action was dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated.”(emphasis added).

In GMAT Legal Title Trust 2014-1 v. Kator, supra, the Court held that the Plaintiff was estopped from asserting that the debt was not validly accelerated by the commencement of the 2007 action based upon the Plaintiff’s lack of standing, because the 2007 action was not dismissed “based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated”. citing CPLR § 213(4)(a).

The Appellate Court made a similar determination in Bank of New York Mellon v. Stewart, 2023 WL 3328664, where it held that the Plaintiff’s voluntary discontinuance of the 2007 action barred the Plaintiff from asserting that the loan was not properly accelerated because the Plaintiff lacked standing. The Court further held that: “the voluntary discontinuance of the 2007 action did not act, ‘in form or effect, to waive, postpone, cancel, toll, extend, revive or reset the limitations period to commence an action and to interpose a claim’ (CPLR § 3217(e)). Therefore, the plaintiff failed to establish, prima facie, that this action is not time-barred.”

The Court never, in the 2008 Action, made a determination that the Plaintiff’s commencement of the foreclosure action did not accelerate the loan for purposes of the calculation of the Statute of Limitations period. Therefore, despite the discontinuance of the 2008 Action, the commencement of the 2008 Action was an act of acceleration.

Given FAPA’s policy to limit foreclosure actions to 6 Years, and given that under FAPA, the policy of FAPA (and not just the law of FAPA) should be applied retroactively, the commencement of the 2008 action should be deemed to be an “Acceleration”. The mortgage was legally, effectively and permanently accelerated upon the commencement of the 2008 Action.

The particular facts of the case were as follows: On October 24, 2008, Greenpoint commenced a foreclosure action against the Defendant-Appellant by filing a Summons and Complaint. In paragraph 7 of the Complaint, Greenpoint stated that: “At the time of the commencement of this action, Plaintiff was the holder of the aforementioned mortgage and the underlying debt instrument.” The mortgage that Greenpoint was foreclosing was the mortgage dated September 17, 2003 in the original sum of $380,000.00, which is the exact same mortgage that is the subject of the 2021 foreclosure action Greenpoint filed a Motion for Summary Judgment, an Order of Reference and an Order Amending the Complaint on or about September 29, 2009 (R 36-50). The Court granted Greenpoint’s Motion on July 7, 2010.On or about March 16, 2020, the Plaintiff-Respondent voluntarily dismissed the first foreclosure action after it had been pending for 12 years by filing a Stipulation of Discontinuance.

The Court never, in the 2008 Action, made a determination that Greenpoint’s commencement of the foreclosure action did not accelerate the loan for purposes of the calculation of the Statute of Limitations period. Therefore, despite the discontinuance of the 2008 Action, the commencement of the 2008 Action was an act of acceleration.

Given FAPA’s policy to limit foreclosure actions to 6 Years, and given that under FAPA, the policy of FAPA (and not just the law of FAPA) should be applied retroactively, the commencement of the 2008 Action should be deemed to be an “Acceleration”. The mortgage was legally, effectively and permanently accelerated with the filing of the 2008 Action. Due to the acceleration in 2008, the second 2021 foreclosure action was barred by the Statute of Limitations.

However, the above dismissal does not automatically eliminate the mortgage lien on the property due to the mortgage. The fact that the foreclosure action is dismissed and unenforceable does not mean that the mortgage lien is gone. It’s still there and would need to get paid if the defendant decided to sell or refinance the property. Therefore, our office will next seek to commence a Quiet Title Action under a new index number that we will obtain to eliminate the mortgage lien. A Quiet Title Action here is possible given that the statute of limitations for the action has expired.

RPAPL 1501(4) states, “Where the period allowed by the applicable statute of limitation for the commencement of an action to foreclose a mortgage, or to enforce a vendor’s lien, has expired, any person having an estate or interest in the real property subject to such encumbrance may maintain an action against any other person or persons, known or unknown, including one under disability as hereinafter specified, to secure the cancellation and discharge of record of such encumbrance, and to adjudge the estate or interest of the plaintiff in such real property to be free therefrom; provided, however, that no such action shall be maintainable in any case where the mortgagee, holder of the vendor’s lien, or the successor of either of them shall be in possession of the affected real property at the time of the commencement of the action. In any action brought under this section it shall be immaterial whether the debt upon which the mortgage or lien was based has, or has not, been paid; and also whether the mortgage in question was, or was not, given to secure a part of the purchase price.”

The combination of the new Foreclosure Abuse Prevention Act (FAPA), reinvigorating the Statue of Limitations in New York State, means that more NYS mortgage defendants will find that their mortgage is unenforceable and that RPAPL 1501(4) will allow the foreclosure defendant to become a plaintiff in a new case seeking an acknowledgement that the mortgage lien is not just not enforceable, but that the mortgage lien can be eliminated from the record.