The Supreme Court of New York, Kings County, recently found that a notice sent by a mortgagee that reinstates the monthly payments and states that any previous acceleration is revoked is sufficient to constitute a deceleration of the underlying loan. Carter v US Bank Trust, NA, 2021 WL 291198 (NY Sup. Ct. January 27, 2021). Taken with the recent State Court of Appeal ruling Freedom Mortg. Corp. c. EngelIt is now clear that lenders in New York have at least two ways to slow down a loan: by voluntarily stopping foreclosure action or by sending an affirmative deceleration notice. In the case, the defendant had a mortgage on the plaintiff’s Brooklyn property, and when the plaintiff defaulted on her payment obligations, the defendant brought a foreclosure action on October 27, 2010, which was subsequently dismissed. On October 25, 2016, two days before the expiration of the limitation period, the defendant’s loan manager sent the plaintiff a notice of deceleration, in which he identified himself as the defendant’s manager and stated, in the relevant part : “Please note that to the extent that any previous acceleration may be applicable, we hereby revoke any prior and currently applicable acceleration of the loan, withdrawing any prior request for immediate payment of all amounts secured by the collateral instrument and let’s restore the loan as an installment loan. ”The plaintiff did not dispute that the notice was received before the expiration of the limitation period. The plaintiff subsequently sued for title to the property, and the defendant sought summary judgment, arguing that he had slowed down the loan by means of the notice.
The Kings County Supreme Court rendered summary judgment in favor of the defendant. While in New York, a six-year limitation period begins to run on the acceleration of mortgage debt, “a lender can revoke his choice to accelerate the mortgage. By a positive revocation act for a period of the six-year period of the limitation period. “The Court considered that the wording contained in the defendant’s notification was more than sufficient to constitute an affirmative act of revocation, since it” clearly and unambiguously required a resumption of the monthly payments “and also” provided monthly billing statements showing “regular monthly payments” and indicating that the mortgage is to be paid in monthly installments and not in a lump sum. ” Accordingly, the Court held that “the notification in question was an affirmative act which effectively accelerated the mortgage before the expiration of the limitation period”.