This session’s commentary is about the Court’s decision in the Mortgage Acceleration Cases, i.e., Wells Fargo Bank NA v. Ferrato, Vargas v. Deutsche Bank National Trust Co., Ditech Financial, LLC v. Naidu, and Freedom Mortgage Corp. v. Engel. As we explained in our decision summary, in that case, a divided Court held that: a noteholder accelerates a debt only through clear, unequivocal acts; that discontinuing a foreclosure action will ordinarily de-accelerate a debt; and that a noteholder’s intent is irrelevant to the limitations inquiry.
We’re excited to share three comments on the Mortgage Acceleration Cases:
- Sara Manaugh is the Director of the Homeowner Defense Project at Staten Island Legal Services.
- Addressing primarily the Court’s ruling in Freedom Mortgage Corp. v. Engel, Manaugh argues that voluntary discontinuance of a mortgage foreclosure action rarely constitutes a clear and unambiguous act revoking a mortgage acceleration. In concluding otherwise, Manaugh argues, the Court’s decision “will allow lenders to avoid the harsh consequences of their own delay . . ., thereby drawing out foreclosure proceedings, and keeping homeowners in an intolerable state of instability and fear indefinitely.”
Stephen J. Vargas, Court of Appeals Issues Four Landmark Residential Mortgage Foreclosure Decisions to Provide Clarity and Consistency Regarding the Statute of Limitations.
- Stephen J. Vargas is a Supervising Attorney who oversees the Westbury office of Gross Polowy LLC, a consumer finance and residential real estate law firm that represents mortgage lenders and servicers in New York and New Jersey.
- Vargas argues that the Court’s Mortgage Acceleration Cases established bright-line rules about to accelerate a mortgage and revoke that acceleration that “afford significant consumer protections to delinquent mortgagors that would otherwise be unavailable.”
David P. Case, The Doctrine of Nullification Also Justifies the Result in the Mortgage Acceleration Cases.
- David P. Case is a partner at Fein, Such & Crane, L.L.P., where he litigates contested foreclosure actions.
- Case argues that the result in the Mortgage Acceleration Cases was also supported by the doctrine of “nullification,” under which voluntary discontinuance of an action means that “all . . . events that occurred within that action become a nullity.” Case argues that applying nullification in foreclosure actions fairly treats foreclosure plaintiffs like other contract parties, who would otherwise have “held the reigns on when . . . and how . . . to petition the government for a redress of wrongs.”
Many thanks to the authors for contributing their thoughts, which of course are theirs alone and do not represent the views of TwentyEagle.
Posted on 2021-03-23.