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New York Foreclosure Defense - Statute of Limitations


New York Foreclosure Statute of Limitation (Pre-2023)

In February 2021, the Court of Appeals heard four appeals, two from the Second Department and two from the First Department at the intersection of two areas of law where the need for clarity and consistency was needed regarding the application of the statute of limitations for mortgage foreclosures (Freedom Mtge. Corp. v. Engel ). The opinion by one judge established that if the maturity of the debt has been validly accelerated by the commencement of the foreclosure action, the lender’s voluntary withdrawal of that action revokes the election to accelerate, absent the lender's contemporaneous statement to the contrary.

The Court of Appeals did caution that there may be issues of fact as to whether an acceleration was validly revoked, finding an issue of fact when a letter to a borrower from a prior lender sent within the limitations period constituted a timely affirmative act of revocation. Where a mailing is the claimed act of de-acceleration, the mortgagee must prove that the mailing was pursuant to the mortgage terms. The voluntary discontinuance rule in Engel was applied to multiple discontinuances but was not found applicable in Federal Natl. Mtge. Assn. v. Woolstone, where the complaint in the prior action was dismissed as against the defendant for failure to effectuate personal service. Even an improperly served complaint can constitute an election to accelerate. Engel has been recognized in the federal courts to vacate and remand on a pre-Engel grant of summary judgment that was on appeal when Engel came down.

Other Limitations

  • In Retemiah v. Bank of New York Mellon, the statute of limitations to enforce the mortgage had expired as a 2010 foreclosure action and the case was dismissed for lack of prosecution in 2014, but the lender avoided being time-barred by showing that the Court had failed to provide the notice required under CPLR 3216 and restoring the 2010 action.

  • While a pre-foreclosure notice or the commencement of a mortgage foreclosure action can trigger the statute of limitations, no acceleration occurs where the borrower was deceased when the action was commenced and neither an estate nor heirs substituted.

  • A bankruptcy filing acts to toll the time to commence a foreclosure action. However, the filing may also act to accelerate the loan on the date on which the bankruptcy court issued the order lifting the automatic bankruptcy stay on prior mortgagee's proof of claim and motion to lift the automatic bankruptcy stay.

    • 2023 Update

    On December 31, 2023, Governor Kathy Hochul signed into law a bill known as the "Foreclosure Abuse Prevention Act, which effectively strikes down lender revocation of the acceleration of the loan, restoring the statute of limitation standard as it was since 1965. The new law restores a common-sense principle that no party may unilaterally stop and restart the statute of limitations to revive what would otherwise be a time-barred action. This law ensures the fair application of the statute of limitations.

    We have found that some actions are time-barred by the statute of limitations. Failure to raise this objection properly may waive this defense altogether. Call our office today at 718-819-1674 so we may examine the fact pattern of your case and determine if your foreclosure action is time-barred.