A year ago, pending in New York were nearly 26,000 legacy foreclosures—foreclosures arising from mortgages originated between 2004 and 2008. Many of these mortgages went into default shortly after origination, which was common among toxic mortgages from that period.
Legacy foreclosures are running up against New York’s six-year foreclosure statute of limitations, CPLR §213(4). Once the statute of limitations has expired, “any person having an estate or interest in the real property” may sue to discharge the mortgage. RPAPL §1501(4). Thus, the New York foreclosure statute of limitations is both a shield and sword.
Lenders’ counsel must be vigilant. Mortgages are routinely being discharged under the statute of limitations. In Ventures Trust 2013-I-H-R by MCM Capital Partners v. Chitbahal, — N.Y.S.3d —, 2018 WL 6332341 (2d Dept. Dec. 5, 2018), the Second Department discharged a mortgage by review of “a copy of the complaint in the prior action,” which the court found acted to accelerate the loan.