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Washington State Court of Appeals Defines Acceleration and Reviews Statute of Limitations

Posted By USFN, Tuesday, September 11, 2018
Updated: Friday, September 7, 2018

September 11, 2018

by Wendy Walter
McCarthy Holthus LLP — USFN Member (Washington)

In a recent published decision, the Washington State Court of Appeals assisted creditors by more clearly defining acceleration in the context of a foreclosure of residential property in a nonjudicial case [Merceri v. The Bank of New York Mellon, No. 76706-2-1, 2018 Wash. App. LEXIS 1923 (Aug. 13, 2018)].

Background
The trial court had granted summary judgment to a borrower who was seeking to quiet title to her real property by claiming that the creditor had exceeded the six-year statute of limitations (SOL) on enforcement of her deed of trust. The borrower’s argument was that the notice of default and intent to accelerate, apparently issued to comply with the uniform instrument requirements to deliver a 30-day notice, and using the language “if the default is not cured … the mortgage payments will be accelerated with the full amount … becoming due and payable …” had triggered acceleration on March 18, 2010 (the date by which the 30-day notice of default was expired).

Following that notice, the loan had been transferred and the subsequent beneficiary and servicer issued several monthly payment statements (indicating the amount to reinstate the loan), and the successor nonjudicial foreclosure trustee had issued a notice of trustee’s sale on June 1, 2016. The borrower sued shortly after the notice of trustee’s sale, contending that more than six years had elapsed from the March 18, 2010 date and the date of the notice of trustee’s sale. The notice of trustee’s sale indicates the full amount required to pay off the debt.

Appellate Review
While reversing the trial court, the appellate justices analyzed the installment contract theory of default in Washington State; the accruing of the statute based on each missed payment; and whether the creditor must take affirmative action (known to the payor) that it intends to declare the whole debt due. The court in Merceri cites a 1909 Washington Supreme Court case, which holds that “[A] provision hastening the date of maturity of the whole debt is for the benefit of the payee, and if he does not manifest any intention to claim it, before tender is actually made, there is in law no default such as will cause the maturity of the debt before the regular time provided in the agreement.” Coman v. Peters, 52 Wash. 574, 578, 100 P. 1002 (1909).

The court applied this precedent to the facts at hand and found that the notice of default didn’t accelerate the loan. Additionally, neither were the monthly statements the affirmative act needed to fully accelerate the debt because they didn’t show the fully accelerated balance.

Conclusion
Creditors, beneficiaries, and servicers who are seeing challenges in Washington State relating to statute of limitations defenses and quiet title actions should analyze their cases to determine whether a payment statement — all required now since 2014 under the RESPA rules promulgated by the Bureau of Consumer Financial Protection — might help to limit an SOL defense or prove useful in a quiet title action. Merceri is a positive and much needed ruling in Washington.

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