PIB Law Obtains Favorable Decision in New York State Court Foreclosure Action Involving Revocation of Acceleration Under Engel Print PDF

On July 29, 2021, Parker Ibrahim & Berg LLP successfully defended against an order to show cause in New York state court, in which the defendants to the foreclosure action – i.e., the deceased borrower’s heirs – sought to vacate final judgment, based in part upon an argument that the estate’s appointed representative was not served and neglected to defend the action, thus failing to fulfill his fiduciary obligation to the estate. 

In Deutsche Bank National Trust Company as Trustee for Long Beach Mortgage Loan Trust 2006-6 v. Ira Zimmerman, et al. (Sup. Ct. Dutchess County, Index No. 2018-50132), Justice Greenwald concluded that defendants’ arguments lacked credibility, opining that they were aware of the action and there was no evidence to establish that the representative was not served. Moreover, Justice Greenwald found that defendants should have made these arguments in their earlier (unsuccessful) appeal of the foreclosure judgment.

In addition, the court rejected defendants’ argument that the action was barred because a prior foreclosure action had been commenced more than six years prior to the current action. The prior foreclosure action had been voluntarily discontinued. As such, citing to the Court of Appeals’ decision in Freedom Mortgage Corp. v. Engel,  2021 NY Slip Op 01090 (Feb. 18, 2021), the court ruled that acceleration had been revoked by the voluntary discontinuance.

Finally, in an apparent weighing of the equities, the court concluded that “defendants have not demonstrated any rights superior to Plaintiff or prejudice”, stating:

Plaintiff has asserted that this action is an in rem proceeding, as it is not seeking deficiency against the Defendant’s estate. Plaintiff asserts that no payment of the mortgage has been made since February 1, 2012 and as the Defendant’s estate obtained discharge in a bankruptcy action, it is no longer obligated to make payments on the subject loan. Yet Plaintiff remains responsible for maintenance, taxes and insurance of the subject property until the property is sold. In light of this, Defendants have failed to explain the detriment faced by the sale or any effects on its rights should the Court deny its application.

Diane Ragosa and Peter Swift led the PIB Law team on this matter.