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91 Special Legal Report servicer or investor and there is no applicable moratorium or documented loss mitigation request, there could be enforcement issues down the line. is is especially true in jurisdictions where a loan may have already been accelerated. Statute of Limitation Updates While reviewing loans for potential SOL issues, especially in light of COVID-19 and the related holds, it's important to stay updated on jurisdictional case law. e following recent cases out of Colorado and Texas discuss the topic of decelerating loans, something that we could see more of if foreclosure actions end up being cancelled or rescinded as a result of the pandemic. Colorado e Colorado Supreme Court granted certiorari to consider whether a servicer may abandon the acceleration of a loan, thereby reinstating the original maturity date for purposes of applying the SOL to Colorado non-judicial foreclosures. Parker v. Bank of New York Mellon, et al, 2019 SC 84 (Colo. 2019). In Parker, the defendants contested the validity of a completed foreclosure sale and the holder's right to possession, saying the six-year statute of limitation expired prior to the foreclosure sale. e servicer initiated a foreclosure in 2008. ereafter, the owner executed an option to purchase and power of attorney in favor of his father. Both the borrower and his father were in possession of the property. e 2008 foreclosure was withdrawn after the servicer approved the borrower's request for a loan modification. e borrower made the first payment, but after that no further payments on the loan were made. In 2010, the servicer sent a new acceleration warning letter, giving the borrower a new opportunity to cure. e servicer initiated foreclosure approximately five years later in 2015. e district court authorized the foreclosure sale. e borrower and his father asserted counterclaims in the resulting unlawful detainer case, stating they had superior title to the property due to expiration of the SOL prior to completion of the foreclosure. e trial court disagreed dismissing the counterclaims and the Court of Appeals affirmed. Bank of N.Y. Mellon v. Peterson, 2018 COA 174 (Colo. App. 2018). Following Boren v. U.S. Bank Nat's Ass'n, 807 F.3d 99, 104 (5th Cir. 2015) and other federal court decisions, the Court of Appeals ruled the withdrawal of the 2008 foreclosure and subsequent communication to the borrower was an abandonment of the prior acceleration. In reaching its conclusion, the Court of Appeals referenced Goodwin v. Dist. Court, 7798 P.2d 837, 843-44 (Colo. 1989) wherein the Colorado Supreme Court recognized the doctrine of waiver applies to accelerations. Even though the maturity date of a note may be reinstated by waiving an acceleration of the loan, the SOL may nonetheless limit a servicer's ability to recover past due installments that are more than six years from the last payment date. See Castle Rock v. Team Transit, 2012 Colo. App. 125 (Oct. 3, 2012) which held that the SOL begins to run separately as to each past‐due installment on the due date of that installment. Texas Another recent ruling dealing with the same issue came from the 162nd Judicial District Court of Dallas County, where the court set the ground to receive further appellate guidance on what actions constitute abandonment of acceleration as a matter of law. Texas law is clear that a servicer or lender can abandon a prior acceleration of maturity through its conduct, thereby stopping the SOL from running. One way to abandon acceleration that certain courts have recognized is sending a demand letter (or monthly payment statement) which articulates that the servicer will accept some amount less than a full payoff. In Florey v. U.S. Bank Nat'l Assn, et al, Dallas Co. No. DC-19-05797 (162nd Dist. Ct., Feb. 27, 2020), the issue was whether enforcement of a loan, which was accelerated in 2013, was barred by Texas' four-year SOL, or if the servicer's actions abandoned acceleration prior to the SOL expiration. Between 2014 and 2017 nearly 60 statements and notices were mailed to the borrowers that indicated a willingness to accept the past due amount, informed the borrowers of the due date for the next payment, and that the failure to cure the default "may result in fees, possibly even foreclosure and the loss of your home"—all actions inconsistent with an accelerated loan. e borrower argued that because the statements did not state "will result in fees ..." combined with the fact that statements in late 2017 resumed using language indicating that the loan was accelerated (while providing the reinstatement amount at the same time) showed that acceleration was not abandoned. However, ultimately the court granted summary judgment establishing as a matter of law that the actions taken by the servicer constituted abandonment of acceleration. e case has since been appealed to the 5th Court of Appeals of Texas. Statute of Limitation Analyses To avoid potential legal, regulatory, and reputational issues, mortgage servicers and investors should have state-specific portfolio reporting in place to track delinquencies and continue to work closely with local counsel to stay apprised of jurisdictional impacts. is is especially true as new programs and processes are rolled out to deal with the lasting impacts that COVID-19 will have on the mortgage default industry. Andrew Boylan is a Partner with McCarthy & Holthus, LLP, overseeing risk management and compliance for the firm. After graduating from the University of San Diego, where he earned his Bachelor of Arts degree in Political Science and Spanish, he received his Juris Doctorate degree from the University of San Diego School of Law and his MBA from the University of San Diego Graduate School of Business Administration. Holly R. Shilliday joined the firm in 2014 as the Managing Attorney for the Colorado office of McCarthy & Holthus, LLP, and is now a Partner of the firm. She received a B.A. from the University of Denver and earned a J.D. from Pepperdine University School of Law. After law school, she clerked for the Honorable Samuel L. Bufford, a bankruptcy judge in the Central District of California. Shilliday is a frequent lecturer and author of articles on creditors' rights issues. Brandon Hakari joined McCarthy & Holthus, LLP in the firm's Portland, Oregon, office in 2012. In 2018, he moved to the firm's Plano, Texas, office where he practices as the office's Senior Litigation Associate. He received his Bachelor of Arts in Chemistry from Texas A&M University in 2008 and his Juris Doctorate from Michigan State University in 2011.

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