New Court Appellate Court Reveals Dangers of Forbearance and Modification Agreements

I have long argued that any correspondence or agreements executed by homeowners as “borrowers” presented a danger of waiving all of their home equity. This is true as to the fundamental equation and to the statute of limitations.


The fundamental equation is that when the homeowner is contacted there is no loan account receivable and therefore no creditor. BUT if the homeowner subsequently signs correspondence or an agreement that among other things acknowledges the existence of the loan account receivable, that is unpaid, that there is a default, and that it is still due, it will work against the homeowner in litigation. That is the classic “Yes, but” defense which almost never works. Hence an illusory (virtual debt) becomes real in the eyes of the court.


Deutsche Bank established its prima facie entitlement to judgment as a matter of law dismissing the first cause of action, which sought to cancel and discharge of record its mortgage on the subject property. Even assuming that the statute of limitations to foreclose on Deutsche Bank’s mortgage would have expired sometime in 2014, Deutsche Bank demonstrated that the borrowers subsequently executed the lien modification agreement. That agreement provides, among other things, that “[e]ven though the [borrowers’] personal liability on the note is discharged, the terms of the [original] Lien Documents remain in effect,” and the “Lien Holder continues to have an enforceable lien on the Property.” [e.s.]In addition, the lien modification agreement provides that “[t]he Lien Documents, as modified by this Agreement, are duly valid, binding agreements, enforceable in accordance with their terms and are hereby reaffirmed.” Thus, the borrowers explicitly acknowledged their obligation to pay the existing debt to Deutsche Bank, and the language of the lien modification agreement was sufficient to revive the statute of limitations period (seeGeneral Obligations Law § 17–101 ; Jeffrey L. Rosenberg & Assoc., LLC v. Lajaunie,54 A.D.3d 813, 815864 N.Y.S.2d 471 ; cf.Yadegar v. Deutsche Bank Natl. Trust Co.,164 A.D.3d at 94783 N.Y.S.3d 173 ; Karpa Realty Group, LLC v. Deutsche Bank Natl. Trust Co.,164 A.D.3d at 88884 N.Y.S.3d 174 ). [e.s.]

Commodore Factors Corp. v. Deutsche Bank, 189 A.D.3d 766, 768 (N.Y. App. Div. 2020)

One Response

  1. The automatic Covid forebearances did not require any docs with homeowners signatures.

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