Mortgage Foreclosure SOL: 5-Prong Acceleration Test

A mortgage foreclosure lawsuit has a 6-year statute of limitations pursuant to CPLR §213(4). However, dismissal for statute of limitations purposes is largely dependent on lender error because lenders have the unilateral ability to deaccelerate a loan and thereby restart the accrual date of the statute of limitations. As a result, lenders may, through careful monitoring of the statute of limitations, avoid exposure to statute of limitations’ dismissal. To clarify, a lender cannot restart the accrual date for previously defaulted mortgage payments, which will continue to be subject to the 6-year statute of limitations and date of default accrual. Instead, a lender can only avoid statute of limitations dismissal with respect to future installment payments, which are only in default because of a lender’s prior election to contractually accelerate such payments, which is generally done by summons and complaint (e.g., pleading that lender “hereby elects to declare immediately due and payable the entire unpaid balance of principal”). It is these accelerated payments which may be deaccelerated to reset the accrual date for statute of limitations purposes and thereby preserve the lender’s right to future suit. However, whether a deacceleration election is effective has been fragmented in the case law until now.

Read the full article, be Andrew Lieb. Esq, published in The Suffolk Lawyer here.