In a closely watched court case, a Sound Beach couple’s mortgage lender has until Friday to decide whether to try to take its foreclosure lawsuit to the state’s highest court or accept that it missed the six-year deadline to take back the couple’s home.
Fred and Theresa Tovar won their latest legal victory over their original mortgage lender, Beneficial Homeowner Services Corp., when the Appellate Division of the state Supreme Court ruled last month that the lender missed the six-year statute of limitations to foreclose on their home.
The unanimous ruling by a four-judge panel — affirming a 2014 lower-court decision — means that the mortgage lien on the Tovars’ home is “unenforceable,” their attorney, Ivan Young of Bohemia, said.
The lender must decide by Friday whether to seek permission from the Appellate Division or the Court of Appeals to take the case to the Court of Appeals, the state’s highest court.
Beneficial, an affiliate of HSBC, and the lender’s attorneys did not respond to requests for comment.
The loan servicer, Caliber Home Loans, declined to comment.
The Tovars’ mortgage lender filed a foreclosure lawsuit in 2007, the case was dismissed in 2012 and the lender filed a new lawsuit in 2014. Later that year, Beneficial sold the loan to U.S. Bank Trust N.A. U.S. Bancorp, parent company of U.S. Bank, declined to comment.
Fred Tovar, 58, said he is “pleased” about the ruling and feels cautiously optimistic that the foreclosure fight may be ending.
He said the couple couldn’t keep up with their mortgage payments after their cosmetic dental restoration business, DreamWork Cosmetic Inc., “took a big hit” in the mid- to late 2000s due to late payments by clients.
In 2012, superstorm Sandy damaged their waterfront home, Tovar said. The pair have spent roughly $140,000 out of pocket to repair the property, and it is not yet clear how much they will receive in aid from New York Rising, the state storm recovery agency, he said.
The Tovars’ foreclosure case has attracted intense interest among attorneys who represent homeowners and lenders, as it could result in some homeowners in foreclosure being allowed to shed their mortgages.
It is not known how many homeowners across New York are arguing their lenders missed the six-year deadline. Young said he is raising the deadline as a defense in at least 15 homeowners’ cases.
In a typical case, a lender filed a foreclosure lawsuit during the 2007-09 recession, starting the six-year clock. However, many foreclosure lawsuits were thrown out due to problems such as missing or defective legal documents from lenders. In some cases, by the time the lender filed a new lawsuit, the six-year clock had run out.
“As an attorney who typically represents lenders, I am not happy about the” Appellate Divison ruling, said Bruce Bergman, a Garden City-based attorney and author of the book “Bergman on Mortgage Foreclosures.”
“But I believe the decision is correct,” Bergman added.
From the lenders’ point of view, he said, “it doesn’t seem fair . . . An owner gets a free house.”
But, he said, statutes of limitations ensure that legal plaintiffs pursue cases in a timely way and defendants don’t have cases hanging over their heads forever.
“The statute of limitations needs to be upheld,” he said.