A Suffolk state Supreme Court judge has dismissed a foreclosure action on a $2.47 million mortgage on a Westhampton home, citing New York’s six-year statute of limitations.
Bohemia-based Young Law Group PLLC, attorneys for Samuel Rudick, defendant in the case, argued that lender U.S. Bank failed to begin its foreclosure action in time.
In 2003, Samuel Rudick and Patricia Rudick, who is now deceased, took out a $1.75 million loan for their Westhampton home. The Rudicks had the loan modified a year later, before taking out a second mortgage on the home in 2006. Later that year the two loans were consolidated with a third note, totaling $2.47 million.
The original lender, JP Morgan Chase Bank, placed a lien on the home before sending a note of default to the Rudicks, “stating that they had defaulted on their mortgage loan by failing to tender their monthly payments,” Judge Joseph Santorelli wrote in his ruling Tuesday. In 2008 JP Morgan commenced a foreclosure action.
“At some point that action was discontinued, and then the bank commenced a second foreclosure action,” said Ivan Young of the Young Law Group. According to documents, that second, 2014 action was dismissed for missing the six-year deadline started by the first foreclosure action. “Then they [U.S. Bank] commenced a third foreclosure action, in 2015.”
Young, who said he has worked on “a dozen” foreclosure cases invoking the statute of limitations in the last two years, said what made the Rudicks’ case more complex was the change in lenders. The first two actions were initiated by JP Morgan Chase, before the loan balance was transferred to U.S. Bank in 2014.
The lender still has a mortgage lien on the property, but Rudick can now file court papers seeking to have the lien removed, Young said.
U.S. Bank has until Nov. 3 to file a notice of appeal if it will try to get the dismissal of the foreclosure overturned. A spokesman for the lender declined to comment.
Young said he has worked on four cases in which judges dismissed foreclosure actions because lenders missed the six-year deadline. In one, a Brooklyn family was able to get the $75,000 mortgage lien on their property removed, so they now own it free and clear, Young said. In another case, a lender has appealed the dismissal of a foreclosure action on a Sound Beach home; the Appellate Division is expected to hear oral arguments soon, Young said.
Under state law, the clock starts running when a lender first files a foreclosure case declaring the entire loan due, Young said. If that original case gets dismissed, the lender must file a new case within six years of calling in the loan.
The Rudicks’ house, at 18 Alden Lane in the hamlet of Quiogue, is known as the Frederick Burrell Cottage and was built during the 1910s, according to a Southampton Town historic resources survey.
A small number of Long Island homeowners have sought to have their foreclosures dismissed for exceeding the statute of limitations in recent years. The dismissals show how slow the foreclosure process is in New York.
In 2007, lenders filed more than 13,000 foreclosure cases against homeowners, more than double the number in 2005, according to Nesconset-based real estate data company LI Profiles. The number peaked in 2009 at more than 19,000.
With Maura McDermott and Laura Mann