One of the country's biggest lenders loses out after missing a crucial foreclosure deadline—here's what mortgage pros need to know
A June 11 ruling by the Appellate Division, Second Department, is serving as a cautionary tale for mortgage professionals about the consequences of missing court deadlines—even for large institutions.
The case, Federal National Mortgage Association v Bandhu, stems from a foreclosure action originally filed back in 2010 after a Brooklyn homeowner defaulted on a $600,000 loan. Although the borrower, Brijwattie Bandhu, never responded to the lawsuit, the lender’s delay in moving the case forward ultimately led to its dismissal—and courts have now refused to bring it back.
Fannie Mae filed the foreclosure action on August 6, 2010, and on August 26, 2010, requested a settlement conference under CPLR 3408. The borrower did not appear or answer the complaint, and her time to respond expired on September 9, 2010. On November 1, 2010, the Supreme Court released the case from the foreclosure settlement conference part and advised that the plaintiff could proceed.
By deed dated July 9, 2012, Bandhu transferred the property to Evurich Pitkin, LLC. It wasn’t until June 28, 2013—nearly three years after the default deadline—that Fannie Mae moved for an order of reference. The Supreme Court denied that motion as academic and dismissed the case on November 19, 2014, under CPLR 3215(c), which requires that lenders move for a default judgment within one year of a borrower’s failure to respond.
The lender tried again. On August 30, 2016, Fannie Mae brought a new foreclosure action. This time, the borrower responded and claimed the case was time-barred. After initially ruling in Fannie Mae’s favor in 2018, the court reversed itself in 2019 and dismissed the second case on time-bar grounds. That ruling was upheld on appeal in 2023.
In the meantime, U.S. Bank Trust, N.A.—the assignee of Fannie Mae—tried to reopen the original 2010 case. On or about November 30, 2021, the bank moved to restore the action and renew the original motion for an order of reference. The bank argued that a 2020 appellate decision, Citimortgage, Inc. v Zaibak, represented a change in the law that could impact the earlier dismissal.
But the Kings County court rejected that motion on November 17, 2022. On June 11, 2025, the Appellate Division affirmed, stating that U.S. Bank Trust failed to present any new facts or show that the law had changed in a way that would alter the earlier decision. The court noted that Fannie Mae filed for a settlement conference before the borrower defaulted, making Zaibak inapplicable.
The ruling reinforces the strict application of CPLR 3215(c): lenders must act within one year after a borrower's time to respond has expired. Waiting longer—even if a settlement conference was pending—risks losing the right to foreclose.
For mortgage professionals, the decision is a reminder of the importance of timing and diligence in foreclosure cases. Delays, especially in long-standing or reassigned loans, can have permanent consequences. Institutions handling defaulted loans must ensure they act promptly—regardless of borrower participation—or risk having their claims tossed for good.
