Wells Fargo faces challenge as court backs foreclosure timing defense

A New York appeals court says current property owners can challenge foreclosure if they believe the lender waited too long to act. 

In 2005, Vincent Manno executed a $452,000 note in favor of World Savings Bank, FSB, secured by a mortgage on Suffolk County property. Vincent and Barbara Manno signed the mortgage. The Mannos allegedly defaulted by missing the December 15, 2006, payment. World Savings Bank responded by starting a foreclosure action in May 2007, accelerating the mortgage and declaring the entire amount due. That foreclosure action was voluntarily discontinued in June 2015, and the notice of pendency was canceled. 

Meanwhile, the property was sold at a judicial sale in November 2009 to foreclose a lien. By April 2012, MCN Management Corp. had acquired the property by deed. On March 24, 2014, Wells Fargo Bank, N.A., as successor to World Savings Bank, commenced a new foreclosure action against the Mannos and MCN Management, among others. In its amended answer, MCN Management asserted several affirmative defenses, including that the action was barred by the statute of limitations under New York law. 

The case saw several procedural developments. In October 2019, the Supreme Court, Suffolk County, granted summary judgment for Wells Fargo against MCN Management, striking MCN’s amended answer and affirmative defenses, and issued an order of reference. After learning of Vincent Manno’s death in July 2019, the court vacated those orders in June 2020. 

In 2022, MCN Management moved to lift the automatic stay imposed due to Vincent’s death and sought summary judgment, arguing the foreclosure was time-barred. Wells Fargo opposed and cross-moved to reinstate the October 2019 orders or, alternatively, for summary judgment. In May 2024, the Supreme Court denied MCN’s motion, holding that MCN lacked standing to raise the statute of limitations defense, and granted Wells Fargo’s cross-motion, again striking MCN’s defenses and appointing a referee to compute the amount due. 

MCN Management appealed both orders. On September 10, 2025, the Appellate Division, Second Judicial Department, reversed the lower court’s orders as far as appealed from. The appellate court held that MCN Management, as the owner of the property when the foreclosure action was commenced, did have standing to assert a statute of limitations defense. The court cited several precedents confirming that a current property owner may raise such a defense in a foreclosure action, even if not the original borrower. 

The appellate court noted that MCN Management had argued the mortgage debt was accelerated in 2007 and that the new foreclosure action was started more than six years later, potentially making it untimely. However, because the Supreme Court had decided MCN lacked standing, it never addressed these arguments. The Appellate Division remitted the case to the Supreme Court, Suffolk County, for a new determination on whether the foreclosure action was timely and whether MCN’s statute of limitations defense should succeed. 

For mortgage professionals, this case highlights the importance of tracking the statute of limitations and understanding the rights of subsequent property owners in foreclosure actions. The decision means that entities who acquire property after a mortgage default can still raise timing defenses, which can affect the enforceability of older mortgage debts. The outcome also underscores the need for lenders and servicers to monitor foreclosure timelines closely, as missing statutory deadlines can mean losing the right to foreclose. 

The Wells Fargo v. Manno case is not yet final, as it has been sent back for further proceedings. Still, the September 2025 decision offers important guidance for anyone involved in mortgage foreclosure actions in New York and beyond.