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mortgageWhen does an action for full foreclosure, and its applicable statute of limitation, accrue? The court seems reluctant to apply CPLR §206(a) to this question of law. The court has wrongly assumed the Fannie Mae New York form mortgage is similar to the New York statutory form and that an action for full foreclosure accrues when the mortgage debt matures or the maturity date is accelerated.

However, unlike the Fannie Mae New York form mortgage, the New York statutory form mortgage contains a “default-type” acceleration clause, i.e., a right of the mortgagee to reset the maturity date of the term loan based on the debtor’s default. (Real Property Law §258, Schedule M, para. 4.) The New York Uniform Commercial Code (NY-UCC or the Code), on the other hand, only permits an “insecurity-type” acceleration clause, i.e., a right of the mortgagee to reset the maturity date of the term loan based on the mortgagee’s insecurity (NY-UCC §1-309). Thus, any RMBS packager that would seek to securitize negotiable mortgage debt could only securitize mortgage notes that contained “insecurity-type” acceleration clauses. If residential mortgages contained “insecurity-type” acceleration clauses, there would be very few mortgages to securitize. Imagine a homeowner taking a mortgage which could be accelerated, not based on the homeowner’s default, but based on some unknown mortgagee’s insecurity.

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