The statute of limitations is set by statute in various types of cases. The statute of limitations to bring a foreclosure case on a defaulted mortgage is 6 years from the date of default or from the date of the acceleration of a mortgage. For a variety of reasons, foreclosure cases sometimes are initiated and then withdrawn, dismissed or discontinued. If a foreclosure case is withdrawn or dismissed the statute of limitations usually starts running from the start of the original foreclosure case. If the second foreclosure case is not initiated within 6 years from the date of the acceleration of the mortgage in the first case, the statute of limitations if plead is a complete defense to the foreclosure action.
Acceleration of the Mortgage
When the homeowner defaults on making the payments on their mortgage the financial institution can accelerate the maturity of the loan. The financial institution can declare all of the payments are presently due and owing on the mortgage. The financial institution is not limited to foreclosing on the past due payments. They can recover the entire unpaid balance of principal and interest on the mortgage. To do this, the financial institution accelerates the mortgage.
The Acceleration.
The acceleration of a mortgage requires the financial institution to notify the homeowner. This is usually done by sending a letter to the homeowner advising them notice of the acceleration or simply by starting a foreclosure lawsuit. It should be noted a default letter which states the loan balance “may be” accelerated if the homeowner does not become up to date on his mortgage payment, does not necessarily accelerate the loan. In order to accelerate the loan the notice of default must state that the loan “will” be accelerated if the default is not cured.
De-Acceleration of the Mortgage
A new issue with regard to the acceleration of the mortgage involves financial institutions taking action to de-accelerate the mortgage. There is currently case law that “a lender may revoke its election to accelerate the mortgage but it must do so by an affirmative act of revocation occurring during the 6 year statute of limitations period subsequent to the initiation of the prior foreclosure action.” This can be accomplished by a letter to the homeowner.
Conclusion
If you believe that you have a statute of limitations defense in a foreclosure case, it is important that you retain an experienced foreclosure defense counsel with regard to this issue. The re-accelerating of the statute of limitations defense to the foreclosure lawsuit should be dealt with immediately upon receiving a copy of the summons and complaint. The statute of limitations must be pled as an affirmative defense in your answer if you hope to utilize it as a defense to the lawsuit. Remember if the statute of limitation defense applies you may be looking at having a free home in your near future!
Elliot S. Schlissel, Esq. is the managing partner of Schlissel DeCorpo LLP. Elliot has been litigating foreclosure defense matters for more than 45 years throughout the Metropolitan New York area. He can be reached for a free consultation at 800-344-6431 or e-mailed at Elliot@sdnylaw.com.
