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Second Department Tolls Seven Years of Mortgage Interest Due to Lender’s “Unexplained Delay” in the Prosecution of its Foreclosure Action

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  • Posted on: Jul 1 2022

By Jonathan H. Freiberger

In our January 14, 2022, Blog Article entitled: “Don’t Let Undue Delay Cause You to Lose Your Interest in Interest”, we discussed, inter alia, the court’s discretion in the calculation of the amount of interest due to a lender in a mortgage foreclosure actions.  Regarding the court’s equitable powers, we stated:

CPLR 5001(a) provides, in relevant part that “in an action of an equitable nature, interest and the rate and date from which it shall be computed shall be in the court’s discretion.”  See also U.S. Bank, N.A. v. Peralta, 191 A.D.3d 924, 925 – 26 (2nd Dep’t 2021).  In that regard, a “foreclosure action is equitable in nature and triggers the equitable powers of the court.”  U.S. Bank Nat. Ass’n v. Williams, 121 A.D.3d 1098, 1101–02 (2nd Dep’t 2014) (numerous citations and internal quotation marks omitted).  “Once equity is invoked, the court’s power is as broad as equity and justice require.”  Onewest Bank, FSB v. Kaur, 172 A.D.3d 1392, 1394 (2nd Dep’t 2019) (citation and internal quotation marks omitted).  The court, in exercising its discretion, “is governed by the particular facts in each case.”  Peralta, 191 A.D.3d at 926 (citations omitted).

The Blog went on to discuss several cases in which the court addressed interest calculation reductions when faced with unexplained delays on lender’s part.

On June 15, 2022, the Appellate Division, Second Department, decided GMAC Mtge., LLC v. Yun, in which the Court modified supreme court’s order to the extent of “deleting the provision thereof denying that branch of the motion of the defendant Jenny Yun which was, in effect, to toll the accrual of interest between March 29, 2009, and September 21, 2016, and substituting therefor a provision granting that branch of the motion to the extent of tolling the accrual of interest between October 9, 2009, and September 21, 2016.”  Thus, the Court reduced the amount due and owing  from the borrower to the lender by a sum equal to almost seven years of mortgage interest.

The borrower in GMAC defaulted in appearing in the action.  Lender’s motion for a default judgment and order of reference was granted and the resulting order was entered on October 9, 2009.  After a judgment of foreclosure and sale was entered on December 17, 2016, borrower moved “to toll the accrual of interest between March 29, 2009, and September 21, 2016, and to stay the foreclosure sale of the property.”  Borrower’s motion was denied, and the subject appeal followed.

After generally discussing a court’s discretion in exercising its equitable powers with respect to the calculation of interest in a foreclosure action, the Court stated that “… [t]he exercise of that discretion will be governed by the particular facts in each case, including any wrongful conduct by either party, such as where the plaintiff’s conduct has prejudiced the defendant [and that] a tolling and cancellation of interest may also be warranted where there is an unexplained delay in prosecution of a mortgage foreclosure action.”  (Citations and internal quotation marks omitted.)

In applying the facts of GMAC to the law and modifying supreme court’s order, the Court concluded: 

Here, approximately seven years elapsed between the entry of the order of reference and the time the plaintiff moved for a judgment of foreclosure and sale. Contrary to the plaintiff’s contention, it failed to offer any explanation for this delay or establish that the defendant caused this delay, as the record demonstrates that the defendant’s motions and the stays due to the defendant’s bankruptcy petitions did not occur during the period for which the defendant sought to toll the accrual of interest. Since the defendant was prejudiced by the plaintiff’s unexplained delay of approximately seven years, during which time interest had been accruing, the interest on the loan should have been tolled from October 9, 2009, the date of entry of the order of reference, until September 21, 2016, when the plaintiff moved for a judgment of foreclosure and sale.  [Citations omitted.]


Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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