If a borrower stops paying his loan and the lender decides to forfeit it, the borrower must first accelerate the loan. In other words, the lender must tell the lender that the loan is outstanding and the lender has to repay everything now. If the borrower does not do that, the lender will eventually pursue a foreclosure litigation and, if all goes well for the borrower, the borrower loses its real estate. Properties for sale in Doha
In New York, the legal process may take at least one or two years, even if the borrower has no worthy defendants. In general, the borrower makes no loan payments during that entire period, does not pay property tax and allows the mortgaged property to deteriorate. (The politicians of New York like to blame the creditor for the deterioration.)
Sometimes a lender accelerates the loan and doesn't do anything, but instead sits on her hands. If this in New York or elsewhere continues for six years, the lender loses its right to foreclose. The borrower must not reimburse the loan. This happens incredibly frequently.
This can make it very important to determine if a lender has actually accelerated a credit and if the lender has ever withdrawn and cancelled the acceleration.
New York law allows a creditor to speed up a loan in the context of a foreclosure dispute. No separate acceleration notice is required. Starting the foreclosure dispute with the right language in the complaint, the acceleration is adequate.
If the lender withdraws this forfeiture proceedings later, will that automatically withdraw the acceleration, then the six-year clock ends? The answer is obvious: if the start of foreclosure disputes has accelerated the loan, the voluntary withdrawal of the same proceedings obviously delayed the loan. This voluntary withdrawal revoked implicitly the original acceleration notice, which was only an element of the withdrawn foreclosure proceedings.
Although this result seems very obvious, the courts in New York have not always seen it like that. Rather, they sometimes declared that the lender was not sufficient to withdraw its litigation in order to delay the loan. Then if the lender didn't do anything for a few more years, and that could and did occur, the courts concluded that the six-year limitation statute had expired because when the loan began to forfeit, it never stopped although the lender had withdrawn its foreclosure.
If the lender claimed that it had decelerated the loan by withdrawing the action for foreclosure, the courts sometimes requested more: a formal notice of deceleration or something more to show that the loan lender did not expect the borrower to pay the loan immediately. Sometimes the courts attempted to discern the state of mind of the lender as to what the lender intended when the forfeiture case was withdrawn.
The body of law, motivated by objective courts that are aimed at protecting borrowers and encouraged by "public interest" lawyers, gave defaulting borrowers a new line of defense when a lender finally woke up and decided to try to forestall them again. It was a defense line that could raise complex factual questions. This delayed further foreclosure proceedings while the borrower continued without paying the credit, without paying property taxes and without keeping the mortgaged property.
The receptivity of courts to defenses such as these helps to foster forfeiture proceedings in New York courts. It explains in part why these actions take so long.
The Court of Appeals, New York's highest court, has recently cut this thicket. In a friendly decision to lenders, the court ruled that if a lender accelerates a loan by initiating a foreclosure action, then the withdrawal automatically delays the loan. This proposal may appear obvious. But it wasn't always apparent to the lower courts of New York. The Court of Appeal has now removed a tempting derailment technique.
The courts continue to welcome a broad range of other creative defenses against borrowers who have stopped paying their loans. New York foreclosures are therefore likely to take at least one to deux years, even if the borrower does not have any worthy defenses.