The question in this case is whether plaintiff failed to affirmatively revoke acceleration of mortgage debt, where plaintiff voluntarily discontinued foreclosure action.
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.
In this case, plaintiff is a bank that commenced five separate actions to foreclose on a mortgage secured by defendant’s property. The first (2008) was settled after the parties agreed to a loan modification and defendant started making monthly payments. The second (2009) and third (2011) foreclosure actions were dismissed by the court because they sought to foreclose on the original loan, not the loan modification. A fourth action (2015) was suspended after the bank failed to comply with Supreme Court’s scheduling orders.
The bank commenced its fifth foreclosure action–the action that is subject to this appeal–in 2018. Supreme Court denied defendant’s motion to dismiss the action as untimely, but the First Department reversed. The First Department held that the first (2008) foreclosure action accelerated the mortgage loan, and the voluntary discontinuance of that action did not constitute an “affirmative act of revocation” sufficient to constitute a deceleration. Alternatively, the court held that the second (2009) foreclosure action accelerated the loan, and that action’s dismissal did not “undo” the acceleration. The fifth (2018) foreclosure action was untimely, the court held, because it was not commenced within six years of either acceleration.
The First Department granted the bank leave to appeal.