Can the statute of limitations defeat a lender? Yes, it can. In the 1990's a residential foreclosure was a pretty simple process, and for the lender could be completed in a relatively short amount of time. However, since 2008 the number of foreclosures have sky rocketed. Combine this with the fact that more homeowners are hiring attorneys to defend foreclosures, the implementation of the mandatory settlement conference, and borrower friendly legislation in the wake of the mortgage crisis, the foreclosure process can take years.
Some lenders have found out the hard way that there are hidden dangers when it comes to the statute of limitations, in Beneficial Homeowner Service Corp. v. Tovar, 61092/2014, NYLJ 1202725043582, at *1 (Sup., SUF, Decided December 22, 2014) - (appeal pending) the plaintiff lender had accelerated the amount due from the homeowners in 2007. It is well established that the Statute of Limitations begins to run on when the lender accelerates the debt. Between 2007 and 2012, the homeowners filed for protection under chapter 13 of the bankruptcy code. The bankruptcy was later dismissed. The homeowners thereafter brought a motion to dismiss the 2007 foreclosure action due to lack of service of the summons and complaint. The homeowners won and the case was dismissed. The lender did not file a second foreclosure action until 2014, but by this time the statute of limitations of 6 years had passed. The hidden threat to the lender is that the notice of acceleration from 2007 did not die with the dismissal of the first complaint. Case law is clear, that the lender must make an affirmative action to revoke an acceleration. If a lender demands acceleration of monies due and then enter in the foreclosure process, the lender must be on top of how long the foreclosure process is taking.
If you believe the Statute of Limitations may be close to expiring in your mortgage foreclosure case, you should contact our office for a free consultation.