Warning to Homeowners in Foreclosure, “Comply or the Court will Deny”

By:       Kate Cavallaro and Nicholas Moccia, Esq.

            Law Offices of Robert E. Brown, P.C.

Recently, Judge Joseph J. Maltese of the Richmond County Supreme Court, denied a defendant homeowner’s motion to vacate a judgment of foreclosure and sale because of the Defendant’s failure to comply and facilitate the mediation process held by the Courts.  See Central Mtg. Co. v. Elfassy, 2010 NY Slip Op 31926 (U)(Sup. Ct. Richmond County 2010).  The homeowner began defaulting on her loan in late 2008 when the homeowner failed to make any payments.  Plaintiff subsequently accelerated the mortgage and brought an action to foreclose its mortgage by filing a summons and complaint in May of 2009.  The homeowner’s first mistake in dealing with this foreclosure action was her failure to file an answer to the banks’ summons and complaint.  It appears that the homeowner was also properly served with the summons and complaint and, therefore, the Court noted that the homeowner did not otherwise have a reasonable excuse for her failure to answer.  Despite the fact that the defendant homeowner failed to appear in the foreclosure action, discussions between the parties occurred thought the proceedings with regard to the potential for a loan modification.  The homeowner also made an application for hardship assistance, yet, failed to provide the plaintiff Bank with requisite documentation and proof of hardship.  Additionally, two separate conferences were held, in which the court acted as mediator.  Judge Maltese notes that “despite the court’s suggestion as to what documents to bring … [Defendant] failed to bring the documents to court for either of the conferences.” He further notes that the conferences and separate discussions between the parties never resulted in a loan modification.

            The Defendant homeowner argued, among other things, that Defendant was entitled to vacate the default judgment and that the Court should have granted the Defendant an extension of time to appear or enter a pleading in this case.  In its decision, the Court notes that “in order to vacate a default judgment …the defendant must establish both a reasonable excuse for default and a meritorious defense.”  Here, the Court observed that the homeowner failed to provide any excuse for her failure to appear in the action prior to the entry of default.  Since the homeowner “has failed to offer a reasonable excuse for her default, the Default Judgment of Foreclosure and Sale cannot be vacated.”   Furthermore, the Court does note that “there is a string public policy to resolve cases on the merits, rather than on default, [Defendant] fails to set forth a reasonable excuse for default and a meritorious defense.”  Judge Maltese clarifies that while the Court is not unsympathetic to the home homeowner’s situation, that sympathy does not justify setting aside a duly entered judgment absent some showing of a reasonable excuse for default and a meritorious defense. 

            This action is a prime example of how a homeowner cuts off potential avenues of relief and hopes of loan modifications by simply failing to take the appropriate measures to address an impending foreclosure.  Had the homeowner initially entered an answer in this action or at the very least complied with the document requests from the Court, the homeowner may have a much greater opportunity of mitigating her losses and/or securing a loan modification from the bank.  Unfortunately, this homeowner’s inattention and non-compliance has caused the Court, despite its sympathies to the homeowner, to deny Defendant homeowner’s motion in its entirety and affirm the Plaintiff bank’s default judgment of foreclosure and sale.