On March 13, 2019, the Second Judicial Department in New York ruled that the reinstatement provision of Paragraph 19 of the standard FNMA mortgage does not prevent a lender from accelerating a mortgage loan prior to the entry of judgment or the scheduling of the sale. In its decision in Bank of New York Mellon, etc. v. Dieudonne, 2019 NY Slip Op 01732 (2d Dept. 2019), the appellate court upheld the trial court’s decision dismissing the foreclosure action based upon statute of limitations grounds finding that the borrower proved that the mortgage loan was accelerated through the commencement of a prior foreclosure action in 2010, thereby making the commencement of the 2016 foreclosure action untimely.
The appellate court rejected the lender’s arguments that acceleration of the mortgage loan could not have occurred through the commencement of the prior foreclosure action due to the borrower’s right to reinstate the loan under Paragraph 19 of the mortgage. Paragraph 19 of the standard FNMA mortgage provides the borrower with an opportunity to reinstate the mortgage prior to the entry of judgment or a scheduled sale. In reviewing the language of both Paragraphs 19 and 22 of the mortgage, the appellate court determined that the lender’s right to accelerate the mortgage debt under Paragraph 22 was not conditioned on the borrower’s right to de-accelerate the loan under Paragraph 19. Therefore, the lender failed to rebut the borrower’s showing that the mortgage loan was accelerated. This decision directly rejects the widely-cited trial court decision rendered in Nationstar Mtge, LLC v. MacPherson, 56 Misc.3d 339 (Sup. Ct. Suffolk Co., J. Whelan, 2017).
A full copy of the appellate decision can be found using the following link:
For questions on this decision or New York’s statute of limitations, please contact Margaret Cascino, Esq., Stern & Eisenberg’s New York Managing Attorney at email@example.com or 516-630-0288 x1310.
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