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Is Second Notice of Default and Intent to Accelerate Required after a Three-Year Delay?
By Shelley B. Fowler

If you send a borrower a notice of default and intent to accelerate and then wait years before instituting foreclosure, do you have to send another notice? Not according to one court in a recent case, but failing to send a second notice is dangerous and probably not worth the risk.

Bradley Heckler obtained a mortgage loan from JP Morgan Chase Bank, N.A. to buy a home. His wife, Belinda, was not a party to the note, but she signed the mortgage. When Bradley defaulted in 2009, JP Morgan sent him a notice of default and intent to accelerate the loan. In 2010, Bradley passed away. In 2012, JP Morgan filed a foreclosure action against Belinda. One day later, Belinda received a notice of default and intent to accelerate from JP Morgan that JP Morgan had mailed before it filed the foreclosure complaint. Belinda answered the complaint, claiming that JP Morgan failed to give her adequate notice of default and intent to accelerate. JP Morgan responded that the notice of default and intent to accelerate that it sent to Bradley three years earlier was sufficient to satisfy the mortgage’s notice requirements. JP Morgan moved for summary judgment, and the trial court granted the motion. The Court of Appeals of Ohio affirmed.

Belinda argued that, under the terms of the mortgage, JP Morgan was required to send a notice informing her of its intent to accelerate the debt prior to filing the foreclosure action. The acceleration and remedies clause of the mortgage provided:

Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument[.] The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclose this Security Instrument by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, costs of title evidence.

The appellate court disagreed with Belinda, noting that mortgage did not require JP Morgan to issue a new notice every time it initiates a foreclosure proceeding, but instead only requires that it give proper notice prior to the initial acceleration of the debt. Because there was no dispute that the notice provided to Bradley complied with the acceleration requirements of the mortgage, the appellate court found that Belinda was on notice for three years of JP Morgan’s intent to accelerate the debt and did not attempt to cure the default or modify the terms of the loan. Therefore, the appellate court concluded that because the parties were in the same position at the initiation of the foreclosure action against Belinda as they were when JP Morgan sent its acceleration notice to Bradley three years earlier, JP Morgan met its notice obligations under the mortgage.

So, in this case, the court found that the lender’s 3-year-old notice was sufficient. Even so, under the theory that it’s better to be safe rather than sorry, it would probably be a good idea to send a second notice if foreclosure is delayed by a significant period of time, give the property owner another 30 days to cure the default, and then foreclose if the default is not cured. That suggestion would be especially prudent where, as in this case, the original notice was sent to one party but the foreclosure complaint is being filed against a different party.

JP Morgan Chase Bank, N.A. v. Heckler, 2013 Ohio App. LEXIS 2334 (Ohio App. June 10, 2013).

Shelley B. Fowler is a Managing Editor of CARLAW, HouseLaw, PrivacyLaw, and Spot Delivery. Shelley can be reached at 410-865-5406 or by e-mail at rfowler@hudco.com.

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