Scott E. Mollen

Foreclosure—Timeliness and Required Proofs for a Valid De-Acceleration of Note Obligations Underlying Residential mortgage Foreclosure Actions—Appellate Division Second Department Disagreed with the First Department as to Acceleration Language—Standing is Required for Both an Acceleration and a De-Acceleration

A plaintiff appealed, in an action commenced pursuant to RPAPL 1501(4) to cancel and discharge a mortgage and note, from a trial court order which granted the defendant lender's motion pursuant to CPLR 3211(a) to dismiss the complaint with prejudice and denied the plaintiff's cross motion for summary judgment on the complaint. The court addressed the “the timeliness and required proofs for the valid de-acceleration of note obligations underlying residential mortgage foreclosure actions.”

In connection with the purchase of a home, the plaintiff had executed a note in the amount of $1,235,000, which was secured by a mortgage. The lender identified on the note was “A”. The mortgage was assigned to defendant lender “B”. The plaintiff thereafter defaulted on the note obligations. By letter dated Nov. 16, 2008, a loan servicing company, “C,” advised the plaintiff that her account was in default and that if the delinquent amount and fees were not paid with 30 days, “the circumstances 'will result in the acceleration of your mortgage note…and that once acceleration has occurred, a foreclosure action, or any other remedy permitted under the terms of your mortgage or deed of trust, may be initiated.” The plaintiff did not remedy the default and on Jan. 13, 2009, “B” commenced a foreclosure action.

“B's” standing appeared to “have been an issue…in the foreclosure action,” since a Supreme Court preliminary conference order directed “B” “to produce the original note by Oct. 5, 2011. No original note was thereafter produced, and on Feb. 29, 2012, the foreclosure action was dismissed.”