Bank of New York Mellon faces a reckoning from residential foreclosure cases in New York that date back to the subprime mortgage crisis.
The bank — along with its debt-collector partners Shellpoint Mortgage Servicing and law firm McCabe, Weisberg & Conway — are accused by a class-action lawsuit of systematically trying to foreclose on mortgages after the state’s six-year statute of limitations had passed.
Mark Anderson, an attorney at the Queens-based law firm Shiryak, Bowman, Anderson, Gill and Kadochnikov, which filed the case, said his firm noticed an uptick in foreclosure cases initially filed in the wake of the subprime crisis more than a decade ago and now being revived, despite the statute of limitations expiring.
“I have over 500 cases that are dealing with this issue — and that’s just my firm,” said Anderson. He believes thousands of homeowners could qualify to be part of the suit if it gets class-action status.
The complaint was filed in the United States District Court for the Southern District of New York in November. The defendants are accused of resurrecting foreclosure actions that have expired and, in doing so, violating the Fair Debt Collection Practices Act, which prevents debt collectors from using false and deceptive representations.
Anderson said his firm filed the suit now because of recent federal court rulings that he believes are favorable to holding to foreclosure firms, servicers and banks liable for violations of the act.
The law awards consumers statutory damages of $1,000 per violation, attorneys’ fees and — in some cases — damages for proven emotional or physical harm.
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Bruce Bergman, a partner at Berkman Henoch who specializes in representing lenders and servicers in mortgage foreclosures, described a statute-of-limitations response to debt collectors as “deadly to lenders.”
In a November alert to potential clients, Bergman lamented the state of affairs: “How many ways can borrowers vanquish lenders with a statute-of-limitations defense?” he wrote. He declined to comment on Anderson’s suit.
Anderson said that while he’s won several cases for borrowers by arguing that the statute of limitations had expired, the lender and servicing firms usually succeed because borrowers don’t know about the statute of limitations.
“Nine times out of 10, no one’s going to say a thing,” he said. “One time out of 10, a person like me comes in and says this is beyond the statute of limitations.”
The attorney said his firm’s caseload largely consists of foreclosure and consumer-defense cases.
The class representatives for the suit are a Bronx couple, Alfred and Olivia Del Rio, ages 71 and 65, respectively. They bought their home in North Riverdale in 1997 and twice paid off mortgages before taking out a larger loan of $536,000 against their property. It was bundled into a pool of mortgage-backed securities sold or assigned to Countrywide Financial Corporation that was ultimately put into a trust with BNY Mellon as the trustee.
When the Del Rios defaulted on their payments in October 2008, BNY Mellon moved to foreclose on the property. The action was voluntarily dismissed in August 2015.
Four years later, last August, BNY Mellon commenced a new foreclosure action against the Del Rios, the complaint states. Anderson and his team sued in response, contending that the statute of limitations to collect on the Del Rios’ mortgage expired in 2015.
BNY Mellon declined to comment. Shellpoint, McCabe and Bank of America did not respond to requests for comment, but the law firm filed a motion to dismiss the suit last week.
Anderson said he has discussed settling with his counterparties, but he and his clients don’t plan on backing down.
“This is something that may end up going a long way just because we do think that there are a lot of people getting taken advantage of,” he said.
Write to Erin Hudson at ekh@therealdeal.com