The predecessor's own actions left nothing for MTGLQ to revive
A New York appellate court shut down a foreclosure stretching back to 2010 - because the lender's predecessor torpedoed it years ago.
The Appellate Division, Second Department, reversed a lower court order on September 30, holding MTGLQ Investors could not revive a foreclosure inherited through a chain of mortgage assignments from 2006.
The property sits in Levittown, Nassau County. The borrower took out the loan from Countrywide Home Loans in September 2006. The mortgage changed hands several times - to BAC Home Loans Servicing, then Green Tree Servicing (later renamed Ditech Financial), and finally MTGLQ Investors.
BAC launched the foreclosure in January 2010. The borrower answered pro se. Then in April 2013, BAC submitted affidavits seeking to discontinue the action. Nothing moved for nearly five years.
In January 2018, Ditech filed a fresh foreclosure on the same mortgage - without first getting leave of court on the original case. That move proved fatal.
MTGLQ later acquired the mortgage and, in March 2019, moved to restore the original 2010 action and substitute itself as plaintiff. The lower court granted that request. Four years on, in August 2023, MTGLQ pushed for summary judgment. The borrower cross-moved to vacate the 2019 restoration order and toss the complaint. The lower court said no.
The appellate panel disagreed.
BAC had effectively abandoned the first action through years of inactivity capped by the second foreclosure filing, the court found. The 2018 complaint itself alleged the first action had been "discontinued, otherwise disposed of by the Court, or is in the process of being discontinued."
Then came the statute. RPAPL 1301(3), as amended by New York's Foreclosure Abuse Prevention Act - effective December 30, 2022 - says when a lender files a second foreclosure while the first is still pending without leave of court, the earlier action "shall be deemed discontinued upon the commencement of the other action."
Nobody alleged Ditech ever sought that permission. Even if the original case had technically still been alive, the law extinguished it.
The court also brushed aside MTGLQ's argument that the borrower's earlier dismissed appeal blocked these issues. That appeal was from a decision, not an appealable order, so the questions had never been reviewed.
For servicers and foreclosure counsel running legacy books in New York, this one lands clearly: FAPA's automatic-discontinuance trigger is not theoretical, and a second filing without leave of court can permanently close the door on the original action.
