Freedom Mortg. Corp. v. Engel
| Decision Date | 18 February 2021 |
| Docket Number | No. 1, No. 2, No. 3, No. 4,1, No. 2, No. 3, No. 4 |
| Parties | FREEDOM MORTGAGE CORPORATION, Appellant, v. Herschel ENGEL, Respondent, et al., Defendants. Ditech Financial, LLC, Formerly Known as Green Tree Servicing LLC, Appellant, v. Santhana Kumar Nataraja Naidu, Respondent, et al., Defendants. Juan Vargas, Respondent, v. Deutsche Bank National Trust Company, Appellant. Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2007-5, Asset-Backed Certificates, Series 2007-5, Appellant, v. Donna Ferrato, Respondent, et al., Defendants. Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2007-5, Asset-Backed Certificates, Series 2007-5, Appellant, v. Donna Ferrato, Respondent, et al., Defendants. |
| Court | New York Court of Appeals Court of Appeals |
Reed Smith LLP, New York City (Brian A. Sutherland of counsel), for appellant in the first above-entitled action.
Rosenberg Fortuna & Laitman, LLP, Garden City (Anthony R. Filosa, David Lapa and Solomon Rosengarten of counsel), for respondent in the first above-entitled action.
Legal Services NYC, New York City (Jacob Inwald and Christopher Newton of counsel), DC37 Municipal Employees Legal Services, New York City (Carrie Miller of counsel), Legal Aid Society of Rockland County, Inc., New City (Derek Tarson of counsel), Mobilization for Justice, Inc., New York City (Jeanette Zelhof, Joseph Rebella and Belinda Luu of counsel), and Western New York Law Center, Buffalo (Keisha A. Williams of counsel), for Legal Services NYC and others, amici curiae in the first above-entitled action.
Woods Oviatt Gilman LLP, Rochester (Natalie A. Grigg of counsel), Gross Polowy, LLC, Westbury (Stephan Vargas of counsel), and Schiller, Knapp, Lefkowitz & Hertzel LLP, Latham (Ryan E. Hertzel of counsel), for American Legal and Financial Network, amicus curiae in the first above-entitled action.
Young Law Group, PLLC, Bohemia (Justin F. Pane of counsel), for New York State Foreclosure Defense Bar, amicus curiae in the first above-entitled action.
McCarter & English, LLP, New York City (Adam M. Swanson and Sharix A. Alicea of counsel), and J. Robbin Law, PLLC, Armonk (Jonathan M. Robbin and Jacquelyn A. DiCicco of counsel), for New York Mortgage Bankers Association and another, amici curiae in the first above-entitled action.
McCalla Raymer Leibert Pierce, LLC, New York City (Richard P. Haber and Brian P. Scibetta of counsel), Schiller, Knapp, Lefkowitz & Hertzel, LLP, Latham (Ryan E. Hertzel and Daniel N. Young of counsel), and Aldridge Pite, LLP, Melville (Christopher E. Medina and Susan West of counsel), for USFN-America's Mortgage Banking Attorneys, amicus curiae in the first above- entitled action.
Berg & David, PLLC, Brooklyn (David Berg of counsel), for United Jewish Organizations of Williamsburg, Inc., amicus curiae in the first above-entitled action.
Day Pitney LLP, New York City (Christina A. Livorsi and Alfred W.J. Marks of counsel), for appellant in the second above-entitled action.
Law Office of Maggio & Meyer, PLLC, Bohemia (Holly C. Meyer of counsel), for respondent in the second above-entitled action.
Young Law Group, PLLC, Bohemia (Justin F. Pane of counsel), for New York State Foreclosure Defense Bar, amicus curiae in the second above-entitled action.
Villanti Law Group PLLC, Brooklyn (Christopher Villanti of counsel), for United Jewish Organizations of Williamsburg, Inc., amicus curiae in the second above-entitled action.
Adam Plotch, amicus curiae pro se in the second above-entitled action.
Greenberg Traurig, LLP, New York City (Patrick Broderick, Brian Pantaleo and Leah Jacob of counsel), for appellant in the third above-entitled action.
Justin F. Pane and Steinberg & Associates, Kew Gardens (Herbert N. Steinberg of counsel), for respondent in the third above-entitled action.
Francis M. Caesar, Chappaqua, amicus curiae pro se in the third above-entitled action.
Young Law Group, PLLC, Bohemia (Justin F. Pane of counsel), for New York State Foreclosure Defense Bar, amicus curiae in the third above-entitled action.
The Silber Law Firm, LLC, New York City (Meyer Y. Silber of counsel), for United Jewish Organizations of Williamsburg, Inc., amicus curiae in the third above-entitled action.
Adam Plotch, amicus curiae pro se in the third above-entitled action.
Greenberg Traurig, LLP, New York City (Brian Pantaleo and Patrick G. Broderick of counsel), for appellant in the fourth above-entitled action.
Wrobel Markham LLP, New York City (M. Katherine Sherman and David C. Wrobel of counsel), for respondent in the fourth above-entitled action.
Francis M. Caesar, Chappaqua, amicus curiae pro se in the fourth above-entitled action.
Young Law Group, PLLC, Bohemia (Justin F. Pane of counsel), for New York State Foreclosure Defense Bar, amicus curiae in the fourth above-entitled action.
These appeals—each turning on the timeliness of a mortgage foreclosure claim—involve the intersection of two areas of law where the need for clarity and consistency are at their zenith: contracts affecting real property ownership and the application of the statute of limitations. In Vargas v. Deutsche Bank Natl. Trust Co. and Wells Fargo Bank, N.A. v. Ferrato, the primary issue is when the maturity of the debt was accelerated, commencing the six-year statute of limitations period. Applying the long-standing rule derived from Albertina Realty Co. v. Rosbro Realty Corp. , 258 N.Y. 472, 180 N.E. 176 (1932) that a noteholder must effect an "unequivocal overt act" to accomplish such a substantial change in the parties' contractual relationship, we reject the argument in Vargas that the default letter in question accelerated the debt, and similarly conclude in Wells Fargo that two complaints in prior discontinued foreclosure actions that each failed to reference the pertinent modified loan likewise were not sufficient to constitute a valid acceleration. The remaining cases turn on whether the noteholder's voluntary discontinuance of a prior foreclosure action revoked acceleration of the debt, reinstating the borrower's contractual right to repay the loan over time in installments. Adopting a clear rule that will be easily understood by the parties and can be consistently applied by the courts, we hold that where the maturity of the debt has been validly accelerated by commencement of a foreclosure action, the noteholder's voluntary withdrawal of that action revokes the election to accelerate, absent the noteholder's contemporaneous statement to the contrary. These conclusions compel a reversal of the Appellate Division order in each case.
The parties do not dispute that under CPLR 213(4), a mortgage foreclosure claim is governed by a six-year statute of limitations (see Lubonty v. U.S. Bank N. A., 34 N.Y.3d 250, 261, 116 N.Y.S.3d 642, 139 N.E.3d 1222 [2019] )—in each case, the timeliness dispute turns on whether or when the noteholders exercised certain rights under the relevant contracts, impacting when each claim accrued and whether the limitations period expired, barring the noteholders' foreclosure claims. Because these cases involve the operation of the statute of limitations, we begin with some general principles. We have repeatedly recognized the important objectives of certainty and predictability served by our statutes of limitations and endorsed by our principles of contract law, particularly where the bargain struck between the parties involves real property (see ACE Sec. Corp., Home Equity Loan Trust, Series 2006–SL2 v. DB Structured Prods., Inc., 25 N.Y.3d 581, 593, 15 N.Y.S.3d 716, 36 N.E.3d 623 [2015] ). Statutes of limitations advance our society's interest in "giving repose to human affairs" ( John J. Kassner & Co. v. City of New York, 46 N.Y.2d 544, 550, 415 N.Y.S.2d 785, 389 N.E.2d 99 [1979] [citations omitted]). Our rules governing contract interpretation—the principle that agreements should be enforced pursuant to their clear terms—similarly promotes stability and predictability according to the expectations of the parties (see 159 MP Corp. v. Redbridge Bedford, LLC, 33 N.Y.3d 353, 358, 104 N.Y.S.3d 1, 128 N.E.3d 128 [2019] ). This Court has emphasized the need for reliable and objective rules permitting consistent application of the statute of limitations to claims arising from commercial relationships (see ACE Sec. Corp., 25 N.Y.3d at 593–594, 15 N.Y.S.3d 716, 36 N.E.3d 623, citing Ely–Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399, 403, 599 N.Y.S.2d 501, 615 N.E.2d 985 [1993] ; Ajdler v. Province of Mendoza, 33 N.Y.3d 120, 130 n. 6, 99 N.Y.S.3d 749, 123 N.E.3d 233 [2019] ).
Whether a foreclosure claim is timely cannot be ascertained without an understanding of the parties' respective rights and obligations under the operative contracts: the note and the mortgage. The noteholder's ability to foreclose on the property securing the debt depends on the language in these documents (see Nomura Home Equity Loan, Inc., Series 2006–FM2 v. Nomura Credit & Capital, Inc., 30 N.Y.3d 572, 581, 69 N.Y.S.3d 520, 92 N.E.3d 743 [2017] ; W.W.W. Assoc., Inc. v. Giancontieri, 77 N.Y.2d 157, 162–163, 565 N.Y.S.2d 440, 566 N.E.2d 639 [1990] ). In the residential mortgage industry, the use of standardized instruments is common, as reflected here where the relevant terms of the operative agreements are alike,1 facilitating a general discussion of the operation of the statute of limitations with respect to claims arising from agreements of this nature. In each case before us, the note and mortgage create a relationship typical in the residential mortgage foreclosure context: in exchange for the opportunity to purchase a home, the borrower promised to repay a loan in favor of the noteholder, secured by a lien on that real property, over a 30–year extended term through a series of monthly installment payments. As prescribed in the agreements, the borrower's failure to timely make monthly installment payments constituted a default.
For over a century, residential...
To continue reading
Request your trial
-
U.S. Bank v. Speller
...the holding of Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d 1 (2021), the decision which provoked the Legislature's ire. Prior to Engel, as discussed above, an "affirmative of revocation" was required to revoke a prior acceleration and return the parties to their pre-acceleration right......
-
Fed. Nat'l Mortg. Ass'n ("Fannie Mae") v. Kerendian
... ... (id. [emphasis added], quoting Pension Ben ... Guar. Corp. v R.A. Gray & Co., 467 U.S. 717, 730 ... As set ... forth above, the ... which the note holder had accelerated the full debt was, ... prior io Freedom Mtge Corp v Engel, 37 N.Y.3d 1 ... (2021), which holding was nullified by the FAPA, held to be ... ...
-
HSBC Bank U.S. v. Islam
...FAPA]) "had the effect of nullifying" (GMAT Legal Title Trust 2014-1 v Kator, 213 A.D.3d at 917) the holding in Freedom Mtge. Corp. v Engel (37 N.Y.3d 1) that the voluntary discontinuance of an action constitutes affirmative act of revocation of the acceleration of the debt. "FAPA amended C......
-
Windward Bora, LLC v. Mohamed
...cites Freedom Mortgage Corporation v. Engel, 37 N.Y.3d 1, reargument denied, 37 N.Y.3d 926 (N.Y. 2021), in support of this argument. In Freedom Mortgage, New York Court of Appeals determined that commencing the foreclosure action did not accelerate the Loan because the complaint “failed to ......