The reciprocity rule that turned broad fee language in the note against the lender that wrote it
A New York appeals court upheld a $100,020 attorneys' fee award against a mortgage lender - including the cost of fighting over the fees.
The lender is 21st Mortgage Corporation. In September 2014, it went to court on Staten Island to foreclose on a homeowner's mortgage. The move backfired, and it kept backfiring for the better part of a decade.
In 2015, the trial court tossed the foreclosure. The case was time-barred, the judge ruled - brought too late under the statute of limitations, the legal deadline for filing a claim. The homeowner won that round. But the same judge, on his own, imposed an "equitable mortgage," a court-created lien that kept the property tied to the lender.
She appealed. In October 2018, the Appellate Division, Second Department, handed her a cleaner result. It canceled and discharged the mortgage, erased the equitable mortgage, and held she could recover her attorneys' fees under New York's Real Property Law § 282. The only open question was the amount.
Answering it took time. A court-appointed referee - a neutral official who weighs the evidence and reports to the judge - held a two-day hearing and recommended a figure. In February 2023, the trial court confirmed it: $100,020.
21st Mortgage appealed a second time, now over the fees. On August 5, 2026, the court affirmed the award.
The mechanics are what matter here. Real Property Law § 282 is a reciprocity statute. When a mortgage gives a lender the right to collect its legal fees from a borrower, the law mirrors that right back - a borrower who wins can collect fees from the lender.
And the contract granted plenty. The note let 21st Mortgage recover "for all of its costs and expenses in enforcing this Note." The mortgage let it add "all reasonable attorneys' fees" to the borrower's balance. That single word, "all," carried the day.
The lender tried to draw a line. Its documents did not cover "fees on fees" - the cost of litigating over the fee award itself - so, it argued, the borrower should not get them either. The court disagreed. Because the lender could have recovered all its fees, fees on fees included, the borrower could too. The judges added that the fee question had already been settled on the first appeal, and that 21st Mortgage had waived its argument that a borrower represented by a not-for-profit legal services provider cannot recover fees at all.
The signal for lenders and servicers is plain. Broad fee language is standard, and in New York it cuts both ways.
