Monday, July 19, 2010

Financial Freedom SFC v. Slinkosky, Supreme Court Suffolk County

By Kate Cavallaro

The plaintiff commenced this action on March 26, 2009 to recover loan proceeds allegedly given pursuant to an agreement to obtain a Home Equity Conversion Mortgage loan [i.e. a reverse mortgage] on the Defendant’s home. The plaintiff alleges that it advanced monthly funds to William Slinkosky totaling $297,344.08 and that upon his death, his estate failed to pay the note that came due as required under the terms of the note and mortgage. The defendants answered asserting a defense of unconscionability and unclean hands; alleging that the Plaintiff engaged in predatory lending practices and schemes, both by unreasonably inducing the homeowner to enter into the mortgage and because the loan origination fee exceeded the maximum allowable fee. 

The plaintiff now moved for summary judgment. “A plaintiff seeking foreclosure must establish that it was the owner or holder of the note and mortgage at the time that it commenced the foreclosure action.  See, Mortgage Elec. Registration Sys. v. Coakley, 41 AD3d 674 (2nd Dept., 2007); Federal Natl. Mtge. Assn. v. Youkelsone, 303 AD2d 546 (2nd Dept., 2003); see also, Wells Fargo Bank, N.A. v. Marchione, 69 AD3d 204 (2nd Dept., 2009)).

Here, the plaintiff sought to foreclose the first mortgage but failed to submit a copy of the first note.  The estate that now represents the homeowners also moved for summary judgment. 

“According to the plaintiff's attorney, the Slinkosky house was appraised at $375,000.00, two percent of which would be $7,500.00. He points out that the loan origination fee of $7,255.80 is less than the maximum permitted fee of $7,500.00. However, the plaintiff's attorney does not clearly indicate what "the maximum mortgage amount for a one-family residence that HUD will insure in an area under Section 203 (b)(2) of the National Housing Act" would have been…”  Without certain documents to prove the truth of certain allegations the Court is unable to render proper decisions and for that reason the initial motions were denied, without prejudice and allowed for renewal. If seeking to renew, the plaintiff “shall submit complete copies of all loan and mortgage documents relating to the subject transaction including the first note in favor of Somerset, the Home Equity Conversion Loan Agreement and any attached payment plan for repairs and the Repair Rider” and “a statement in affidavit form from someone with personal knowledge explaining: how the plaintiff is related to Somerset, whether Somerset was an FHA approved lender; why two notes and two mortgages were executed on the same date on the subject property and which has priority; which entity actually provided the loan proceeds and which entity received the loan origination fee; whether the Slinkoskys received information pursuant to 12 USC §1715z-20 (former [d][2][B], [d][2][C] and [f]); and whether the plaintiff is seeking to foreclose a term or tenure reverse mortgage loan (see, Real Property Law §280-a [1]).”
Based on the foregoing, explanation the Court ordered that the default judgment against the homeowners; estate be vacated, and a referee is to be appointed.  Additionally, the Defendant’s motion for summary judgment dismissing the complaint is similarly denied but without prejudice for leave to renew.  

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