A recent New Jersey trial court decision, Deutsche Bank Nat’l Trust Co. v. Hochmeyer, 2017 N.J. Super. Unpub. LEXIS 102 (Ch. Div. 2017) rejected a mortgage foreclosure defense that relied on the relevant statute of limitations provision, N.J.S.A. 2A:50-56.1(a). The defendant had argued that his earlier 2007 default under his mortgage, and the triggering of his mortgage’s acceleration clause, had initiated the 6-year statute of limitations period that runs from the “maturity date” of a mortgage under N.J.S.A. 2A:50-56.1(a). He argued that the foreclosure claim brought against him in Deutsche Bank was barred as a result. The Court rejected the argument, and although its decision is non-precedential, it offered persuasive reasoning for why one type of statute of limitations defense should be off the table in New Jersey foreclosure cases.
The same provision has been used successfully by defendants in defeating foreclosure claims, for example, in the recent case Anim. Inv. Co. v. Shaloub, 2016 N.J. Super. Unpub. LEXIS 2777 where the court relied on N.J.S.A. 2A:50-56.1(a) to hold that a foreclosure claim was barred by the statute of limitations. The plaintiff had brought suit more than 6 years from the “maturity date” set forth under the mortgage. But in Anim. Inv. Co., decided by the same judge who decided Deutsche Bank, the “maturity date” that barred the claim was the date written on the note itself. By contrast, the defendant in Deutsche Bank asked the court to consider the acceleration of the mortgage to be considered its “maturity date.”
N.J.S.A. 2A:50-56.1(a) requires that “an action to foreclose a residential mortgage shall not be commenced following the earliest of: (a) [s]ix years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage or the note, bond or other obligation secured by the mortgage, whether the date is itself set forth or may be calculated from information contained in the mortgage or note, bond or other obligation.” The defendant in Deutsche Bank claimed that when his mortgage’s acceleration clause was invoked by the plaintiff in bringing a 2007 foreclosure claim, it became his mortgage’s “maturity date,” thus triggering this 6-year limitations period.
In support, the defendant cited directly to language in the 2007 complaint which said: “plaintiff, herein, by reason of said default elected that the whole unpaid principal due on the aforesaid obligation and mortgage…shall now be due.” The defendant also relied on the legal definition of “acceleration,” which Black’s Law Dictionary defines as “[t]he advancing of a loan agreement’s maturity date so that the entire debt is due immediately.” Although a similar argument under N.J.S.A. 2A:50-56.1(a) was rejected by the New Jersey District Court in Specialized Loan Servicing, LLC v. Washington, 2015 U.S. Dist. LEXIS 105794, the defendant sought to distinguish his case by arguing that unlike in Specialized Loan Servicing, the defendant considered the “maturity date” to be triggered by the date of the complaint, rather than the maturity of the loan itself. Deutsche Bank, supra, at *4-5.
The Court rejected these arguments, relying on two sources. First, the Court read the plain language of N.J.S.A. 2A:50-56.1(a) to compel the reading that the “maturity date” should be considered the date that is written on the note which specified the date of maturation. It noted that N.J.S.A. 2A:50-56.1(a) referred to the maturity date “set forth in the mortgage or note.” According to the well-known cannon that where a statute is clear and unambiguous on its face, its words will be interpreted according to their plain meaning, the Court concluded that “the text of the statute makes no mention of acceleration.” Therefore the Court concluded, the provision does not include the acceleration of the mortgage or note to be the “maturity date” of either obligation under N.J.S.A. 2A:50-56.1(a).
The Court also noted that its reading was most consistent with the legislative intent. “The purpose of the statute was to address problems caused by the presence on the record of residential mortgages which have been paid or which are otherwise unenforceable, as these mortgages constitute clouds on title which may render real property titles unmarketable and delay real estate transactions.” Deutsche Bank, supra, at *7. The argument advanced by the defendant in Deutsche Bank would not be consistent with that legislative intent. Worse, it would undermine the statute: “If acceleration could alter the maturity date in [the provision], the recorded mortgages would provide no guidance to title examiners, and the purpose of the statute would be frustrated.” Id. at *8.
The reasoning in Deutsche Bank is persuasive, and should be adopted by Courts in the future in New Jersey when faced with the same or similar defenses raised in foreclosure.