Foreclosure Statute of Limitations Leaves Bad Taste in Judge’s Mouth – In Re: Washington
“…with figurative hand holding the nose, the Court, for the reasons
set forth below, will grant Debtor’s motion for summary judgment.”
“The Court will proceed to gargle in an effort to remove the lingering bad taste.”
In the case I linked above, the New Jersey US Bankruptcy court denied foreclosure of an unpaid mortgage because the claimant securitization trust FAILED to sue within 6 years after it had accelerated the note because of non-payment. The New Jersey 6 year foreclosure statute of limitations, enacted in 2009 as an adjunct to the 1995 Fair Foreclosure Act, forbids foreclosure later than 6 years after accelerating the note.
I see the banks’ moaning about this decision as an effort to have their cake and eat it too. The bank accelerates the note, making the whole balance due immediately, but still wants the statute of limitations to expire AFTER the originally scheduled maturity date of the note(typically 20 or 30 years.)
A similar dispute has arisen in Florida, and the courts simply cannot face the reality that creditors who fail properly to litigate
foreclosure deserve to lose their claim against the borrower. The Florida Supreme Court has failed to weigh in on the matter so far, but has granted certiorari to determine whether the Statute of Limitations applies to accelerated notes. See Bartram v. U.S. Bank, Nat’l Ass’n, 140 So. 3d 1007 (Fla. 5th DCA 2014), cert granted, (Fla. Sept. 11, 2014)(No. SC14-1265).
- See Bartram consolidation with other cases .
- See Bartram’s initial brief.
- See US Bank initial brief.
- See US Bank’s answer brief.
The Third District has opined that a dismissal with prejudice
de-accelerates the note as a matter of law. I disagree, but anyway see Deutsche Bank Trust Company Americas v. Beauvais, 3D14-575, 2014 WL 7156961 (Fla. 3d DCA 2014). The Third DCA also held that a threat to accelerate does not constitute an acceleration. See Snow v. Wells Fargo Bank, N.A., 2015 WL 160326 (Fla. 3d DCA Jan. 14, 2015).
In my opinion, a threat to accelerate does not constitute an
acceleration, but NO dismissal, with or without prejudice, stops the
statute of limitation clock from ticking or restarts it. The clock
starts ticking on the payment stream at the instant the first breach
occurs or on the entire amount of the note with accrued interest and
collection costs the instant the creditor accelerates the note.
The big rub in all this lies with the concept of acceleration. The borrower must make payments in a stream of payments, and every payment has an associated statute of limitations. But if, because of a breach, the creditor accelerates the note, making the entire balance due and payable forthwith, the statute of limitations clock starts ticking at the acceleration because the payment stream obligation no longer exists, by operation of the law of the contract.
Let us back off from all this to see it in crystal clear context. What difference does a foreclosure or related statute of limitations make when the lender or others injured the borrower at the inception of the loan through such heinous acts as these:
- appraisal fraud
- loan application fraud
- bait and switch tactics
- excessive origination fees
- excessive interest
A borrower who attacks the injurious parties over these can end up with millions of dollars in compensatory and punitive damages, or the house free and clear, without the gruelling terror of a foreclosure battle.
If you want to know how to find such injuries as those I listed above,
plus dozens more, visit this web site:
Then, give me a call
727 669 5511