Acceleration Clauses in Foreclosure Actions: New Rules

Industry Update
February 7, 2017

Adam Leitman Bailey and Adam M. Swanson
Attorneys at Law, Adam Leitman Bailey, P.C.
Source: New York Law Journal

The use of an acceleration clause in a mortgage foreclosure action provides an important and expedient tool when foreclosing on a property. This article focuses on recent case law and discusses some of the benefits and pitfalls when using an acceleration clause and how to overcome these obstacles.

Under New York CPLR §213(4), a mortgagee faces a six-year statute of limitations to foreclose a mortgage. Since a mortgage is payable in installments, the six-year period begins to run on each default. Upon acceleration, the entire unpaid balance becomes due and the six-year period begins to run on the entire unpaid balance of the mortgage debt.1

Depending on the terms of the mortgage, acceleration may be automatic, or at the option of the mortgagee. Generally, in the standard form residential mortgage, acceleration is at the option of the “lender.”2 Where acceleration is optional, an affirmative action must be taken to accelerate. The mortgagee may be required to make its election in compliance with terms within the mortgage. The borrower must be provided with clear and unequivocal notice of the election to accelerate.3

Electing to Accelerate
Notice of election to accelerate may be accomplished informally through written notice to the borrower4 or formally through commencement of a foreclosure lawsuit.5 In Wells Fargo Bank v. Burke (Burke) 94 A.D.3d at 983 (2d Dept. 2012), the court made clear that no acceleration can be effective and the statute of limitations on the whole does not accrue, unless service of process upon the borrower is effected to give the clear and unequivocal notice necessary for acceleration.

A mortgagee should not accelerate until commencement of the foreclosure action to keep the statute of limitations from accruing until the last possible moment. The wording of any notice of default, which is required by the standard form mortgage, is crucial to ensure the notice does not effect an acceleration. The notice of default should state that “failure to pay the total amount past due, plus all other amounts becoming due hereafter [on or before a date certain] may result in acceleration.”6 Stating that failure to cure “will” result in acceleration (or using similar definitive words) may result in a determination that the notice of default itself effected acceleration.7

Dismissed Lawsuits
After acquiring a mortgage or servicing rights, a mortgagee may discover a prior dismissed foreclosure lawsuit, a pending dormant foreclosure lawsuit or a mortgage that was referred to foreclosure but the action was never commenced. Before re-commencing or taking any action, some due diligence is necessary to make sure the statute of limitations has not expired.

Such due diligence did not occur in a recent case on the subject. In Kashipour v. Wilmington Savings Fund Society, 144 A.D.3d 985 (2d Dept. 2016), borrowers commenced an action on Sept. 3, 2015 to discharge their first mortgage, alleging the statute of limitations expired. “As proof that the mortgage debt had been accelerated…plaintiffs submitted a copy of the summons and complaint…commenced by the defendant’s predecessor-in-interest on Aug. 20, 2009.” The prior foreclosure action had been commenced by Greenpoint Mortgage Funding and that case dismissed for failure to serve statutory notices. The lower court found that the prior dismissal was not on the merits and the statute of limitations had not expired. The appellate court reversed, finding that “whether the foreclosure action was dismissed on the merits was not relevant.” The appellate court remanded for entry of judgment cancelling the mortgage of record as a result of the more than six years since the exercise of the acceleration clause.

Pro-Active Strategies
Avoiding an outcome like Kashipour requires pro-active strategies to guard mortgage securities. Many of the strategies may also be followed generally as a best practices when administering any defaulted mortgage loan. The first step is to determine if the mortgage has been accelerated: (a) by its terms, (b) by notice to the borrower, or (c) by the commencement of a foreclosure lawsuit. If the mortgage has been accelerated and is still within the six-year statute of limitations, the mortgagee may revoke acceleration so long as “there is no change in the borrower’s position” in reliance on acceleration.8 Some decisions suggest revocation requires delivering a clear and unequivocal notice to borrower, similar to the requirements for acceleration.9

Parial Payment of Debt
Incorporating terms complying with Sections 17-105(1) and 17-101 of the General Obligations Law into loss mitigation documents could save a mortgage about to be nullified.10 Such language may be included in a (1) loan modification application, (2) temporary payment plan agreement, (3) forbearance agreement, (4) settlement agreement, or (5) loan modification agreement.

The drafter must ensure the borrower: (1) expressly acknowledges the debt and (2) expressly promises to repay the debt. Anything less may create a new obligation which will not save a time-barred mortgage.11

The following provisions must be followed to have an enforceable contract:

Section 17-105(1) of the General Obligations Law provides that:

[A] promise to pay the mortgage debt, if made after the accrual of a right of action to foreclose the mortgage and made, either with or without consideration, by the express terms of a writing signed by the party to be charged is effective…to make the time limited for commencement of the action run from the date of the waiver or promise.

Section 17-101 of the General Obligations Law provides that:

An acknowledgment or promise contained in a writing signed by the party to be charged thereby is the only competent evidence of a new or continuing contract whereby to take an action out of the operation of the provisions of limitations of time for commencing actions under the civil practice law and rules other than an action for the recovery of real property. This section does not alter the effect of a payment of principal or interest.

Additionally, Section 17-107 of the General Obligations Law provides that after “a payment on account of a mortgage indebtedness,” the statute of limitations begins to “run from the date of payment.” When asserting that a part payment has renewed the statute of limitations, “the burden is upon the creditor to show that it was accompanied by circumstances amounting to an absolute and unqualified acknowledgment by the debtor of more being due.”12

Voluntary Discontinuance
Dismissal of a foreclosure action by the court does not revoke acceleration,13 even dismissal sua sponte.14 Whether voluntary discontinuance of a foreclosure action revokes acceleration is not settled and the subject of pending litigation. If a mortgagee has a pending foreclosure action, but there is some defect that may prevent entry of favorable judgment, it may be best to fail and allow dismissal. After dismissal, the mortgagee may re-commence within six months under CPLR §205.15

If a pending foreclosure suit will be dismissed by stipulation, then the stipulation should include: (1) an express agreement and acknowledgement that mortgagee’s acceleration is revoked and (2) an acknowledgement of debt by the borrower with an affirmative statement that borrower intends to repay the debt.

Emerging Legal Theories
In addition to traditional tools such as equitable estoppel, there are some new and lesser-known defenses to defeat the statute of limitations. Below is a non-exhaustive list of new and lesser-known defenses.

Standing. Standing is re-emerging, but this time in a favorable way for the mortgagee. Where the defaulted mortgage was the subject of prior foreclosure actions commenced by the wrong party (e.g. MERS), acceleration may have been void. If the party commencing the prior foreclosure action was not a holder or assignee of the note then, “it therefore never had authority to accelerate the debt or to sue to foreclose.”16 The prior foreclosure action did not accelerate the debt and the statute of limitations has not even begun to run.

Service of Process on the Borrower. In Burke, the court explained it was service of the complaint that effected acceleration. Where the complaint was not served, one reported decision found acceleration was ineffective.17 Another reported decision found that filing, but failing to serve did not effect acceleration until later when the borrower had notice of the lawsuit.18

Mortgagee in Possession. Authority holds that the statute of limitations does not run against a “mortgagee in possession” of the collateral property. The legal rationale is that the mortgagor’s acquiescence to the mortgagee’s possession of the collateral is a “continuing acknowledgement of the debt.”19 Possession must be actual. Thus, where a mortgagee has taken extensive measures to secure and improve or remediate the property, the mortgagee may claim the statute of limitations was tolled because it was a mortgagee in possession.

Pre-Acceleration Notices. Acceleration must conform with contractual requirements in the note or mortgage.20 The notice of default may be “a condition precedent to the enforcement of the mortgage.”21 At least one reported decision determined that failure to give proper notice of default nullifies acceleration, bringing the mortgage back within the statute of limitations.22 Courts similarly hold that the notices required under RPAPL §§1303 and 1304 are “condition[s] precedent to the commencement of the action” for which “strict compliance” is required.23 A similar argument can be made that failure to provide these notices may also nullify an acceleration.

Bankruptcy Plan. The filing of a Chapter 13 petition in the Bankruptcy Court (personal debt restructuring) and a Chapter 13 plan, may renew the limitations period. Often overlooked, the Chapter 13 plan (which may be a court form) requires that the debtor acknowledge the debt and agree to repay it. Such an express acknowledgement and agreement to repay brings the mortgage within Section 17-105(1) of the General Obligations Law, and renews the limitations period.24

Recent case law gives powerful weapons to borrowers and lenders in this decade-old foreclosure battle. This article attempts to help practitioners and in-house counsel understand the implications of triggering the acceleration clause to foreclose a mortgage.


1. Wells Fargo Bank v. Burke, 94 A.D.3d 980, 982 (2d Dept. 2012).

2. See Paragraph 22 of the “New York—Single Family—Fannie Mae/Freddie Mac Uniform Instrument,” Form No. 3033, at (last visited Jan. 23. 2017 at 10:30 a.m.); (last visited Jan. 23. 2017 at 10:30 a.m.).

3. Wells Fargo Bank, 94 A.D.3d at 982-83.

4. EMC Mortg. v. Patella , 279 A.D.2d 604, 605–06 (2d Dept. 2001).

5. Clayton Nat. v. Guldi, 307 A.D.2d 982 (2d Dept. 2003).

6. Goldman Sachs v. Mares, 135 A.D.3d 1121, 1122, (3d Dept. 2016).

7. See, e.g. Deutsche Bank v. Unknown Heirs of Estate of Souto, 52 Misc. 3d 1210(A) (N.Y. Sup. Ct. NY C’nty July 5, 2016) (“Those cases would be controlling if the letter warned that plaintiff ‘may accelerate’ but the instant notice said ‘will accelerate'”).

8. Federal Natl. Mtge. Assn. v. Mebane , 208 A.D.2d 892, 894 (2d Dept. 1994).

9. Bank of N.Y. Mellon v. Slavin , 54 Misc. 3d 311, 41 N.Y.S.3d 408, 411 (Sup. Ct. N.Y. Nov. 21, 2016) (“the revocation should be clear, unequivocal, and give actual notice to the borrower of the lender’s election to revoke in sum, akin to the manner plaintiff gave notice to exercise the option to accelerate”).

10. Possible regulatory restrictions that may be presented are beyond the scope of this Article.

11. Petito v. Piffath , 85 N.Y.2d 1, 8 (1994).

12. Id. at 9

13. Clayton Nat. v. Guldi, 307 A.D.2d 982 (2d Dept. 2003).

14.F ed. Nat. Mortg. Ass’n v. Mebane , 208 A.D.2d 892, 894 (2d Dept. 1994).

15. N.Y. CPLR §205 (“If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to
obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff…may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period.”).

16. EMC Mtg. v. Suarez, 49 A.D.3d 592, 593 (2d Dept. 2008).

17. See, e.g. MSMJ Realty v. DLJ Mortgage Capital, 52 Misc. 3d 314, 317 (N.Y. Sup. Ct. Kings C’nty Mar 7, 2016) (after borrower successfully established she was not served in the prior foreclosure action and a new action seeking to discharge the mortgage was commenced, the court said “[t]here is no possible interpretation of the law under which the court could find that the mortgage which is held by DLJ has been accelerated.”).

18. 21st Mortg. Corp. v. Osorio , 51 Misc.3d 1219(A) (N.Y. Sup. Ct. Queens C’nty May 9, 2016).

19. Ernst v. Lange , 190 A.D. 917, 917 (2d Dept. 1919) (“she was a mortgagee in possession, and the statute of limitations did not run against the debt”); LaPlaca v. Schell, 68 A.D.3d 1478, 1479 (3d Dept. 2009) (“the statute of limitations will not run against a mortgagee in possession”).

20. Wells Fargo Bank, N.A., 94 A.D.3d at 983.

21. GMAC Mortg. v. Bell , 128 A.D.3d 772 (2d Dept. 2015).

22. Mejias v. Premium Capital Funding, 23 Misc. 3d 1115(A) (N.Y. Sup. Ct. Richmond C’nty Apr. 7, 2009) (“the requisite notice of default issued to the borrowers on July 6, 2008 was a nullity” because it was sent before the loan was assigned to Wells Fargo.)

23. Aurora Loan Services v. Weisblum , 85 A.D.3d 95 (2d Dept. 2011).

24. See P SP-NC v. Raudkivi, 138 A.D.3d 709 (2d Dept. April 6, 2016).



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.