The New York Court of Appeals ruled in a foreclosure case that, absent a contemporaneous statement to the contrary from a lender, a voluntary stay revokes the acceleration when the loan was accelerated by the commencement of the action.
The recurring banks were represented by Day Pitney. Attorney Christina Livorsi argued the appeal in the case.
“We are very satisfied with the decision, because it will bring uniformity and certainty in an area of the law that the New York Court of Appeals recognized needs clarity and consistency for the sake of lenders and borrowers,” Livorsi said in a statement.
The failure in Freedom Mortgage Corp. v. Engel reversed the lower court’s decision. Judge Jenny Rivera offered the only disagreement with the majority ruling.
Chief Judge Janet DiFiore wrote in the majority opinion of the court, “Adopting a clear rule that will be easily understood by the parties and that the courts can apply consistently, we hold that when the maturity of the debt has been validly accelerated by the initiation of a foreclosure action, the voluntary withdrawal of said action by the note holder revokes the election to expedite, in the absence of the contemporaneous statement of the note holder to the contrary. “
The reasoning behind the decision was to remove any ambiguity during such proceedings.
“The impetus behind the requirements that an action be unequivocal and open to constitute a valid and sufficiently affirmative acceleration to effect a revocation is that these events significantly impact the nature of the parties’ respective performance obligations,” said DiFiore. “A rule that requires a post-hoc evaluation of the events that occur after the voluntary interruption (correspondence between the parties, payment practices and the like) to determine whether a revocation occurred previously leaves the parties without concrete contemporary guidance as to to its current contractual obligations, resulting in confusion that is likely to (perhaps inadvertently) lead to a violation, either because the borrower is unaware that the obligation to make installment payments has resumed or because the holder of the note he does not know that he must accept a deadline on time if it comes.
Rivera disagreed with the majority’s argument that an open act is necessary.
“I see no reason why an acceleration requires an unequivocal overt act, one that leaves no doubt as to the intention of the note holder, but revocation can be assumed by implication, requiring only that the note holder affirmatively reject the intention of revoke, ”Rivera wrote in his dissenting opinion.
Holly C. Meyer, representing the defendant, did not respond to a request for comment.