The question in this case is whether a stipulation of settlement 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.
Plaintiff holds a mortgage securing a $225,000 loan to defendant. Defendant defaulted on the loan in 2008, and plaintiff commenced a timely foreclosure action. In 2013, the parties resolved that action through a settlement agreement that did not address the status of the underlying loan or reference plaintiff’s acceleration of it. Then, in 2015, plaintiff instituted another foreclosure action, claiming that defendant had again failed to make monthly payments. Defendant sought to dismiss the new foreclosure action, arguing that it was time-barred because more than six years had passed since his 2008 default.
Supreme Court held that the action was timely because the 2013 settlement agreement decelerated the loan. But the Second Department disagreed. That court held that the settlement did not decelerate the loan because, “inter alia,” the settlement did not mention revoking the acceleration and did not indicate that plaintiff would accept monthly payments from defendant.
The Court of Appeals granted defendant leave to appeal.