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foreclosure sign <i>Photo: Bigstock</i> Photo: Bigstock

On Jan. 20, 2021, the Appellate Division, Second Department addressed the often-confounding question of what evidentiary showing a foreclosing lender must make to defeat a defendant’s motion for dismissal on statute of limitations grounds. The court found, as many suspected, that a lender’s submission of a loan modification agreement coupled with proof of its voluntary discontinuance of a foreclosure action and cancellation of the notice of pendency are sufficient to raise an issue of fact. The decision brings much needed clarity to the Second Department’s statute of limitations jurisprudence and, perhaps more importantly, confirms the sanctity of settlement.

The facts in Bank of N.Y. v. Hutchinson, 2021 NY Slip Op 00284 (2d Dep’t Jan. 20, 2021) are straightforward. The defendant/mortgagor filed motion for summary judgment seeking, inter alia, dismissal of the complaint based on the expiration of the six-year statute of limitations period. In support of the motion, the defendant submitted evidence showing that the mortgage debt was accelerated by virtue of a prior foreclosure action commenced on Feb. 15, 2006 (the 2006 action) and that the 2006 action was voluntarily discontinued on April 2, 2007. In opposition, the plaintiff argued that it had revoked its election to accelerate the mortgage debt within the limitations period. The plaintiff submitted a loan modification agreement dated Nov. 6, 2006 and a consent to cancel lis pendens filed March 29, 2007. The Supreme Court denied the motion finding that although the defendant satisfied her prima facie burden to show that the action was time-barred, the plaintiff raised a triable issue of fact in opposition. The defendant appealed.

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