The question in this case is whether a stipulation of discontinuance in a foreclosure action “decelerates” a mortgage by operation of law.
A mortgage foreclosure action is subject to a six-year statute of limitations. Generally, a separate cause of action accrues, and the limitations period runs separately, for each monthly payment missed. But if a mortgage is accelerated, the limitations period runs on the entire debt from the date of acceleration. Filing a foreclosure action accelerates the loan, but a lender can revoke its acceleration–or “decelerate” the loan–by an affirmative act.
Defendant originally obtained a loan secured by a mortgage on property in Flushing, Queens. The note and mortgage were transferred several times. In 2009, a prior holder of the note and mortgage commenced a foreclosure action that accelerated the loan. The action was voluntarily discontinued without prejudice through a stipulation that did not revoke the loan acceleration.
In 2016, Ditech Financial LLC held the note and mortgage and commenced this foreclosure action. Defendant moved to dismiss on timeliness grounds, arguing that six years had passed since the loan’s acceleration, but Supreme Court denied that motion. The Second Department reversed, finding that the stipulation withdrawing the prior foreclosure action had not decelerated the loan because it was “silent on the issue of the revocation of the election to accelerate” and did not “otherwise indicate that the plaintiff would accept installment payments from the appellant.”
The Court of Appeals granted defendant leave to appeal.