4th Circuit: Delebreau v. Bayview Loan Servicing- Acceleration Date of Mortgage

Summary: Following foreclosure and bankruptcy, the Debtors raised claims against Bayview under the West Virginia Consumer Credit and Protection Act. The statute of limitations provides that: With respect to violations arising from other consumer credit sales or consumer loans, no action pursuant to this subsection may be brought more than one year after the due date of the last scheduled payment of the agreement. W. Va. Code § 46A-5-101(1) (emphasis added). The sole issue in this case was whether the “the due date of the last scheduled payment of the agreement” was the loan acceleration date or the loan maturity date. The 4th Circuit held that the language of this statute was unambiguous and “the due date of the last scheduled payment of the agreement,” plainly referred to the last date under the parties’ agreement providing for payment of a specified loan amount. Because no additional payments were scheduled after the acceleration date, that date became “the due date of the last scheduled payment of the agreement” from which the statute of limitations ran. Commentary: While this case may appear to be of interest only in West Virginia, I would argue that it actually may have a much farther reach. The phrase interpreted by the 4th Circuit, “the due date of the last scheduled payment of the agreement”, is very similar to 11 U.S.C. § 1322(c)(2), which provides: Notwithstanding subsection (b)(2) and applicable nonbankruptcy law ...in a case in which the last payment on the original payment schedule for a claim secured only by a security interest in real property that is the debtor’s principal residence is due before the date on which the final payment under the plan is due, the plan may provide for the payment of the claim as modified pursuant to section 1325(a)(5) of this title. (Emphasis added.) Typically, §1322(c)(2) allows for the modification of balloon notes, as it carves out an exception to the anti-modification protections for mortgage under § 1322(b)(2). If § 1322(c)(2) is interpreted the same as W. Va. Code § 46A-5-101(1), then the acceleration of a mortgage, which is requirement to commence foreclosure and after which no additional payments are scheduled, would remove the anti-modification protections from that mortgage, thereby allowing modification of the mortgage claim. For a copy of the opinion, please see: Delebreau v. Bayview Loan Servicing- Acceleration Date of Mortgage.pdf