- Court
- New York Supreme Court, Appellate Division, Second Department
- Case
- Deutsche Bank National Trust Co. v. Iadevaia
- Date
- June 3, 2026
- Slip Op. No.
- 2026 NY Slip Op 03422
Background
Defendant Joseph Iadevaia, Jr. executed a promissory note secured by a mortgage on real property. In October 2015, plaintiff Deutsche Bank commenced a foreclosure action. The court appointed a referee and entered a judgment of foreclosure and sale in May 2018. In April 2019, the mortgage servicer Select Portfolio Servicing, Inc. (SPS) entered into a repayment plan with defendant requiring 12 monthly payments and a final balloon payment. The repayment plan specified that failure to make timely payments would terminate the plan and that the plaintiff could proceed with foreclosure.
Defendant made several payments under the plan but ultimately breached it by failing to timely make the final monthly payment and the balloon payment. Plaintiff filed a request for a foreclosure auction date. Defendant moved for summary judgment dismissing the complaint, arguing the repayment plan constituted a settlement of the action, and also moved to toll or cancel accrual of postjudgment interest. Supreme Court, Nassau County (Randy Sue Marber, J.), denied both branches. Defendant appealed.
Holding
The Appellate Division, Second Department, affirmed the order insofar as appealed from, with costs. The Court held that the repayment plan was a forbearance agreement, not a settlement. Because defendant defaulted on the repayment plan’s terms, plaintiff was entitled to proceed with the foreclosure sale, citing Deutsche Bank National Trust Co. v. Williams, 62 AD3d 826, 827.
However, the Court directed that payments made under the repayment plan must be credited in the referee’s calculation of amounts owed as of the date of the foreclosure sale, under RPAPL 1355. The matter was remitted to Supreme Court for entry of an appropriate amended judgment of foreclosure and sale reflecting those credits. The Court also upheld the denial of the motion to toll postjudgment interest, finding defendant failed to establish any bad faith or undue delay by the plaintiff.
Takeaways
This decision clarifies the important distinction between a forbearance agreement and a settlement in the mortgage foreclosure context. A repayment plan that conditions continued forbearance on the borrower’s compliance does not constitute a settlement, and a borrower who defaults on its terms cannot claim the foreclosure action has been resolved. However, borrowers are entitled to credit for payments made under forbearance agreements, which must be reflected in the final foreclosure calculations.
Why It Matters
Mortgage servicers and borrowers should carefully characterize any post-judgment payment arrangements. This case makes clear that a forbearance-style repayment plan that preserves the lender’s right to proceed upon default does not settle the underlying foreclosure action. Borrowers considering repayment plans should understand they are not purchasing a dismissal of the action but rather an opportunity to cure, and any payments made will be credited but will not bar further enforcement upon default. The ruling on postjudgment interest also reminds borrowers that tolling requires a showing of lender bad faith or undue delay.