Friday, December 19, 2014

Lender Liable for Fire Death at Mortgaged Premises

Since when does a mortgage foreclosure beget a negligence action? For mortgage lenders it is assuredly a Kafkaesque scenario, perilous and startlingly scary: people die in a fire at mortgaged premises and a court rules that the lender can be liable for damages to the estate of the deceased. It certainly doesn't sound like a creature of real estate law or practice—not in the traditional sense that most practitioners would perceive, but it is. A new ruling says so in Lezama v. Cedano, 119 A.D.3d 479, 991 N.Y.S.2d 32 (1st Dept. 2014).


CLICK HERE FOR THE NEW YORK LAW JOURNAL ARTICLE

Tuesday, December 2, 2014

Matter of Pinpoint Tech., LLC --- Kudos to Judge Straniere for sticking up for the little people.

Matter of Pinpoint Tech., LLC 
RICHMOND COUNTY - Civil Practice

Pinpoint Technologies applied to file with the clerk of the Civil Court over 80 "Notice of Assignment of Judgment" forms, indicating that, as of Aug. 11, 2014, these judgments have been sold to Libra Equities. The court rejected all of the Notice of Assignment forms, finding that Pinpoint only produced the notice of assignment of the judgment and no other documentation. The court noted that what Pinpoint submitted is not actually the "assignment" document and that there is no "bill of sale" or any other document identifying the original debt with sufficient information for the debtor to recognize the account, the assignment history to Pinpoint, and the transfer of the account to Libra. The court added that there is no evidence that the notice was actually sent to the debtor and there is no documentation establishing how Pinpoint became the holder of the debt. The court further determined that there is no proof that Libra, the alleged debt buyer, is licensed as a "debt collector" as it is, by its own statement, succeeding in Pinpoint's "right, title and interest" in the judgment. The court held that Pinpoint must resubmit the Notices disclosing the basis of Libra's authority to utilize the New York court system to enforce the judgment. 

Kudos to Judge Straniere for sticking  up for the little people.  As his official biography puts it: “Unable to fulfill his childhood dreams of playing center field for the New York Yankees (couldn’t hit the curve ball) or starring in a Broadway musical (couldn’t tap as fast as Ann Miller), he is attempting to achieve his parents’ expectations of him to make the world a better place when you leave it than when you found it, by serving the public as a judge.”


Tuesday, November 25, 2014

ANOTHER WIN FOR ROBERT E. BROWN, PC -- Wells Fargo v. Eisler

M183201
E/ct
RUTH C. BALKIN, J.P.
THOMAS A. DICKERSON
JOHN M. LEVENTHAL
SHERI S. ROMAN, JJ.

2013-05498
Wells Fargo Bank, N.A., etc., appellant,
v George Eisler, et al., respondents, et al.,
defendants.
(Index No. 132152/09)


DECISION & ORDER ON MOTION



Motion by the appellant for leave to reargue an appeal from an order of the Supreme Court, Richmond County, dated December 20, 2012, which was determined by decision and order of this Court dated June 25, 2014, or, in the alternative, for leave to appeal to the Court of Appeals from the decision and order of this Court.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is
ORDERED that the motion is denied, with $100 costs.

BALKIN, J.P., DICKERSON, LEVENTHAL and ROMAN, JJ., concur.

ENTER:

Aprilanne Agostino
Clerk of the Court

Thursday, November 6, 2014

Panel Approves Remedy for Lender's 'Bad Faith'

A Brooklyn appellate court honed in on appropriate remedies when lenders fail to act in good faith during foreclosure settlement conferences, upholding a lower court's cancellation of accruing interest and prohibition of collecting legal fees.


The Appellate Division, Second Department, in US Bank National Association v. Williams, 2014-00206, authorized the remedies in a ruling that observers said is the first of its kind for state foreclosure litigation since rules obliging good faith negotiations were enacted.

Nevertheless, the unsigned decision Wednesday modified the remedies in the case to correct remedies that were contingent on the entering of a loan modification. In doing so, the panel said it was erroneous to direct a lender to submit a proposed loan modification order because the lower court had no authority to force agreement.

SEE DECISION BELOW*

For more info visit: New York Law Journal.com
 _______________________________

Decided on October 29, 2014 

SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department 
PETER B. SKELOS, J.P. 
SHERI S. ROMAN 
SYLVIA O. HINDS-RADIX 
HECTOR D. LASALLE, JJ.


2014-00206 
(Index No. 3685/10)

[*1]US Bank National Association, etc., appellant, 

v

Fay Williams, respondent, et al., defendants.


Hogan Lovells US LLP, New York, N.Y. (David Dunn, Chava Brandriss, and Allison Funk of counsel), for appellant.
Jaime Lathrop, Brooklyn, N.Y. (David Lavery of counsel), for respondent.

DECISION & ORDER
In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Velasquez, J.), dated November 18, 2013, as denied that branch of its motion which was to reject the report of a referee dated May 8, 2012, made after settlement conferences pursuant to CPLR 3408, confirmed stated portions of the referee's report, and upon, in effect, denying the defendant Fay Williams's motion to hold it in civil contempt, directed it to review the defendant Fay Williams for an affordable mortgage loan modification pursuant to the Home Affordable Modification Program using payoff figures from June 2010 and to submit a proposed loan modification order to the defendant Fay Williams and the court, canceled all interest accrued on the subject mortgage loan between the date of the initial settlement conference in June 2010 and the date that the parties agree to a loan modification, barred it from charging the defendant Fay Williams any attorney's fees or costs incurred in this action, and directed it, within 60 days, to provide the defendant Fay Williams with a payoff statement which incorporates the cancellation of interest from June 2010 and which does not assess any attorney's fees or costs incurred in this action.

ORDERED that the order dated November 18, 2013, is modified, on the law, on the facts, and in the exercise of discretion, (1) by deleting the provision thereof directing the plaintiff to submit a proposed loan modification order to the defendant Fay Williams and the court, (2) by deleting the provision thereof canceling interest accrued between the date of the initial settlement conference in June 2010 and the date that the parties agree to a loan modification, and substituting therefor a provision canceling interest accrued between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence, (3) by deleting the provision thereof barring the plaintiff from charging the defendant Fay Williams any attorney's fees or costs incurred in this action, and substituting therefor a provision barring the plaintiff from charging the defendant Fay Williams any attorney's fees or costs incurred in this action between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence, (4) by deleting the provision thereof directing the plaintiff, within 60 days, to provide the defendant Fay Williams with a payoff statement which incorporates the cancellation of interest from June 2010 and which does not assess any attorney's fees or costs incurred in this action, and substituting therefor a provision directing the plaintiff, within 60 days from service upon it of a copy of this decision and order, to provide the defendant Fay Williams with a payoff statement which [*2]incorporates the cancellation of interest accrued between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence and which does not assess any attorney's fees or costs between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence, (5) by deleting the provision thereof denying that branch of the plaintiff's motion which was to reject the referee's report and substituting therefor a provision granting that branch of the plaintiff's motion to the extent indicated hereinabove, and (6) by deleting the provision thereof confirming stated portions of the referee's report and substituting therefor a provision confirming those stated portions to the extent indicated hereinabove; as so modified, the order dated November 18, 2013, is affirmed insofar as appealed from, with one bill of costs to the defendant Fay Williams, and the matter is remitted to the Supreme Court, Kings County, for further proceedings consistent herewith.

In June 2006, the defendant Fay Williams and nonparty Credit Suisse Financial Corporation (hereinafter Credit Suisse) agreed to an adjustable rate mortgage loan in the sum of $516,800 for property located in Brooklyn (hereinafter the property). The terms of the mortgage note provided that in the event of default, Williams would pay the mortgagee's attorney's fees and costs. The defendant Mortgage Electronic Registration Systems (hereinafter MERS) recorded the mortgage as nominee for Credit Suisse. In July 2009, Williams allegedly defaulted on the mortgage note. In February 2010, MERS purportedly assigned the mortgage note to the plaintiff, US Bank National Association, as Trustee for CSMC ARMT 2006-3 (hereinafter US Bank).

In February 2010, US Bank commenced this action to foreclose on the mortgage. US Bank never appeared for mandatory conferencing. Instead, nonparty servicer ASC/Wells retained nonparty Steven J. Baum, P.C. (hereinafter Baum, and hereinafter collectively with ASC/Wells and US Bank, the foreclosing parties), to prosecute the action and participate in foreclosure conferencing. Between June 2010 and July 2011, Baum and Williams participated in 10 settlement conferences, during which Baum represented that Williams might qualify for loan modification via the federal Home Affordable Modification Program (hereinafter HAMP) and repeatedly asked her to submit additional documentation regarding the HAMP application. In July 2011, the foreclosing parties advised the Supreme Court that, notwithstanding their prior representations, US Bank had denied review of Williams's HAMP application because it was contractually prohibited by a 2006 Pooling and Servicing Agreement (hereinafter PSA) from modifying the interest rate or term of the mortgage.

In a referee's report dated May 8, 2012, the referee found, inter alia, that the foreclosing parties failed to negotiate in good faith for more than a year, prolonged the workout process, and wasted judicial resources by causing Williams to submit multiple HAMP applications and to attend numerous settlement conferences, even though they knew the PSA prohibited US Bank from modifying the applicable interest rate or term. Accordingly, the referee recommended an order (1) directing ASC/Wells to review Williams for an affordable loan modification under HAMP using payoff figures from June 2010 and to submit a proposed modification offer to Williams and the court; (2) directing the parties to appear for a hearing to determine whether to impose sanctions against the foreclosing parties for failure to negotiate in good faith; (3) barring US Bank from recovering an attorney's fee and costs from Williams; and (4) tolling all interest accrued on the mortgage note between the initial conference date in June 2010 and the date on which the parties enter into a loan modification agreement.

By order dated July 2, 2012 (hereinafter the July 2012 order), the Supreme Court, on its own initiative, in effect, confirmed the relevant provisions of the referee's report. In September 2012, the Supreme Court directed the parties to make a further attempt at modification. The foreclosing parties subsequently refused to offer loan modification to Williams due to US Bank's refusal to allow reductions in the interest and term. On or about April 23, 2013, US Bank provided a payoff statement to Williams which included interest accrued since June 2010 and an attorney's fee incurred in the action.

On or about July 5, 2013, Williams moved to hold US Bank in civil contempt based on its failure to comply with the provisions of the July 2012 order directing it, in effect, to provide a payoff statement excluding accrued interest since the date of the initial settlement conference in [*3]June 2010 and charges for an attorney's fee and costs. US Bank opposed the motion and moved to vacate the July 2012 order and reject the referee's report. The Supreme Court accepted US Bank's contention that it had no notice of the referee's report or of the court's order confirming it, and thus, the court treated US Bank's motion as a timely motion to reject the referee's report.

In the order appealed from, the Supreme Court, in effect, denied Williams's motion to hold US Bank in civil contempt and denied that branch of US Bank's motion which was to reject the referee's report. The Supreme Court also, in effect, granted that branch of US Bank's motion which was to vacate the July 2012 order and, thereupon, confirmed the referee's report to the extent of directing US Bank to review Williams for an affordable mortgage loan modification pursuant to the HAMP using payoff figures from June 2010 and to submit a proposed loan modification order to Williams and the court, canceling all interest accrued on the subject mortgage loan between the date of the initial settlement conference in June 2010 and the date that the parties agree to a loan modification, barring US Bank from charging Williams any attorney's fees or costs incurred in this action, and directing US Bank, within 60 days, to provide Williams with a payoff statement which incorporates the cancellation of interest from June 2010 and which does not assess any attorney's fees or costs incurred in this action. US Bank appeals.

"A foreclosure action is equitable in nature and triggers the equitable powers of the court" (Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d 835, 836; see Notey v Darien Constr. Corp., 41 NY2d 1055, 1055-1056; Mortgage Elec. Registration Sys., Inc. v Horkan, 68 AD3d 948, 948). " Once equity is invoked, the court's power is as broad as equity and justice require'" (Mortgage Elec. Registration Sys., Inc. v Horkan, 68 AD3d at 948, quoting Norstar Bank v Morabito, 201 AD2d 545, 546).
The record supports the referee's finding that the foreclosing parties failed to negotiate in good faith. Thus, the Supreme Court properly directed US Bank to review Williams for HAMP modification, in light of the referee's findings, in effect, that it had thus far failed to fulfill its statutory obligation to do so (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 23).
However, the Supreme Court erred in directing US Bank to submit a proposed loan modification order to Williams and the court, as the court was without authority to force parties to reach an agreement (see Flagstar Bank, FSB v Walker, 112 AD3d 885, 886; Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 20, 22).

Contrary to US Bank's contention, the Supreme Court providently exercised its discretion canceling certain interest accrued on the mortgage note after June 2010. "In an action of an equitable nature, the recovery of interest is within the court's discretion. The exercise of that discretion will be governed by the particular facts in each case, including any wrongful conduct by either party" (Dayan v York, 51 AD3d 964, 965 [citations omitted]; see CPLR 5001[a]; Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 837; Danielowich v PBL Dev., 292 AD2d 414, 415). The record demonstrates that the foreclosing parties repeatedly represented to the referee and to Williams that they were considering Williams for HAMP loan modification and repeatedly demanded that Williams submit additional documentation in support of that application, notwithstanding the prohibition against such a modification in the PSA, which they did not disclose until approximately 13 months after negotiations began. Under these circumstances, the Supreme Court providently exercised its discretion in finding that US Bank was not entitled to collect interest accrued as a result of its wrongful conduct (see generally US Bank N.A. v Sarmiento, ____ AD3d ____, 2014 NY Slip Op 05533 [2d Dept 2014]; Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 836; Dayan v York, 51 AD3d at 965).

However, the Supreme Court improvidently exercised its discretion in canceling interest accrued between June 2010 and until such date as the parties agreed to loan modification, as the Supreme Court lacked authority to force US Bank to agree to modify the mortgage note (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 20; Flagstar Bank, FSB v Walker, 112 AD3d at 886). Rather, the court should have directed cancellation of interest accrued between June 2010 and the date on which settlement negotiations recommence (see Wells Fargo Bank, N.A. v Meyers, 108 [*4]AD3d at 20; Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 837; Dayan v York, 51 AD3d at 965-966; Preferred Group of Manhattan, Inc. v Fabius Maximus, Inc., 51 AD3d 889, 890; Danielowich v PLB Dev., 292 AD2d at 415).
Further, the Supreme Court erred in barring US Bank from charging Williams an attorney's fee and costs incurred as a result of the action, as that provision of the order constituted an improper attempt to rewrite the mortgage note. Instead, upon its finding that the Referee's report was supported by the record, that sanctions were appropriate, and, in effect, that US Bank still was obligated pursuant to CPLR 3408(f) to negotiate in good faith, the court should have barred US Bank from charging Williams an attorney's fee and costs incurred between the date of the initial settlement conference and the date on which settlement negotiations recommence (see Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 837; Dayan v York, 51 AD3d at 965-966; Preferred Group of Manhattan, Inc. v Fabius Maximus, Inc., 51 AD3d at 890; Danielowich v PLB Dev., 292 AD2d at 415).
US Bank's remaining contentions are without merit.

SKELOS, J.P., ROMAN, HINDS-RADIX and LASALLE, JJ., concur.
ENTER:
Aprilanne Agostino

Clerk of the Court

Thursday, October 9, 2014

AG Sues Firm for Its Role in Mortgage Rescue Scheme

New York Attorney General Eric Schneiderman has sued a Brooklyn law firm and its partner for allegedly participating in a fraudulent mortgage rescue scheme. The suit was filed Wednesday against Gennady Litvin and two firms where he is a principal partner, Litvin Law Firm in Brooklyn and Litvin, Torrens & Associates in Miami.


Schneiderman v. Litvin Law Firm, 452308/2014, filed in Manhattan Supreme Court (See Petition), alleged the two firms, directly and through third-party marketers, deceptively induced homeowners to pay a $595 or $750 monthly fee by representing the firm would provide a comprehensive legal plan so homeowners could avoid foreclosure or obtain a mortgage modification.

The vulnerable homeowners paid thousands of dollars for services they could have obtained free from qualified non-profit counselors or legal services attorneys, "only to find [the firms] routinely failed to prevent foreclosure or obtain a loan modification as promised," the suit claims. It said many homeowners never spoke to an attorney in their state.

Connecticut, Georgia, and North Carolina have issued cease and desist orders to Litvin Law Firm and Litvin, demanding they stop soliciting for services in those states. The firm and Litvin are banned from doing business in Rhode Island. The Maryland Attorney General's office has charged them with engaging in unfair and deceptive trade practices, according to the suit.

The New York suit, signed by assistant attorney general Mary Alestra, seeks to halt the firm's practices, provide restitution to consumers, and seeks penalties and costs.

Litvin said in a statement yesterday, "We deny all the allegations and will vigorously contest them in court."


Friday, October 3, 2014

The National Trial Lawyers Announces Robert E. Brown as One of Its Top 100 Trial Lawyers

The National Trial Lawyers is pleased to announce that Robert E. Brown of the Law Offices of Robert E. Brown, PC in New York, NY has been selected for inclusion into its Top 100 Trial Lawyers, an honor given to only a select group of lawyers.

NEW YORK, NY, October 03, 2014 /Law and Legal PR News/ -- The National Trial Lawyers is pleased to announce that Robert E. Brown of the Law Offices of Robert E. Brown, PC in New York, NY has been selected for inclusion into its Top 100 Trial Lawyers, an honor given to only a select group of lawyers for their superior skills and qualifications in the field. Membership in this exclusive organization is by invitation only, and is limited to the top 100 attorneys in each state or region who have demonstrated excellence and have achieved outstanding results in their careers in either civil plaintiff or criminal defense law.

The National Trial Lawyers is a professional organization comprised of the premier trial lawyers from across the country who has demonstrated exceptional qualifications in their area of the law, specifically criminal defense or civil plaintiff law. The National Trial Lawyers provides accreditation to these distinguished attorneys, and also aims to provide essential legal news, information, and continuing education to trial lawyers across the United States. 

With the selection of Robert E. Brown by The National Trial Lawyers: Top 100, Mr. Brown has shown that he exemplifies superior qualifications, leadership skills, and trial results as a trial lawyer. The selection process for this elite honor is based on a multi-phase process which includes peer nominations combined with third party research. As The National Trial Lawyers: Top 100 is an essential source of networking and information for trial attorneys throughout the nation, the final result of the selection process is a credible and comprehensive list of the most outstanding trial lawyers chosen to represent their state or region.

Robert E. Brown founded the Law Offices of Robert E. Brown, P.C. in 2006. Before opening his own firm, Mr. Brown worked as a lawyer for the international firm of Fried, Frank, Harris, Shriver & Jacobson, and the renowned firm of Slotnick, Shapiro & Crocker -- a leading criminal defense and matrimonial boutique. Prior to his law career, Mr. Brown was a member of the New York City Police Department. He retired as a Captain from the 5th Precinct, located in Chinatown, after a prestigious 16-year career.

Because of his extensive experience in both federal and state courts and as an expert in police procedures, Mr. Brown has appeared as a legal analyst on CNN and Tru TV and has been a guest lecturer at Cardozo Law School. Mr. Brown is also an Adjunct Professor at Boston University, where he teaches a course in Real Estate Law.

Contact: Andrew Findley
AFindley@TheNationalTrialLawyers.org
866-665-2852

To learn more about The National Trial Lawyers, please visit: http://thenationaltriallawyers.org/.

Wednesday, August 6, 2014

Panel Addresses 'Bad Faith' in Foreclosure Negotiations

Panel Addresses 'Bad Faith' in Foreclosure Negotiations
, New York Law Journal

A Brooklyn appellate court has ruled that judges must weigh a range of facts when deciding whether parties failed to negotiate in good faith during mandatory foreclosure settlement conferences.

"The issue of whether a party failed to negotiate in 'good faith' within the meaning of CPLR 3408(f) should be determined by considering whether the totality of the circumstances demonstrates that the party's conduct did not constitute a meaningful effort at reaching a resolution," Justice John Leventhal (See Profile) said, writing for the panel in US Bank N.A. v. Sarmiento, 2012-03513.

The ruling upheld a lower court decision that barred the collection of interest or fees that had been accumulating on a loan since December 2009. Justices Reinaldo Rivera (See Profile), Peter Skelos (See Profile) and Plummer Lott (See Profile) joined in the decision.

Bruce Bergman, a partner at Berkman, Henoch, Peterson, Peddy & Fenchel in Garden City and an expert on foreclosure law who is not involved in the case, said the ruling marked the first time the Second Department honed in on a definition of good faith. "Something substantial and reasonable did emerge here," Bergman said.

The case involves a $580,000 mortgage held by Jose Sarmiento on a Brooklyn property. In May 2008, Sarmiento lost much of his monthly income. He contacted the mortgage's servicer, a Wells Fargo subsidiary called America's Servicing Company, and was told he did not qualify for modification because of insufficient income. Though he defaulted soon after, Sarmiento later found an additional tenant and again asked for a modification. The servicer refused.

In September 2009, the foreclosure was referred to a court attorney referee.

CPLR 3408(a)(f) states that "both the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible."

From September 2009 to January 2011, the parties held 18 conferences. The servicer four times denied Sarmiento's attempts to alter his mortgage under the federal Home Affordable Mortgage Program (HAMP). It did propose two non-HAMP modifications, which Sarmiento turned down.

As the referee recounted in her report, the servicer made missteps such as misplacing documents and not offering more specific information when it concluded Sarmiento was ineligible. One denial was based on the erroneous grounds that no modification was needed because Sarmiento was current and not at risk of default.

Sarmiento moved to ban the collection of interest or fees from December 2009 onward.

Brooklyn Supreme Court Justice Leon Ruchelsman (See Profile) granted the motion in December 2011....

Here is a link to the subject DECISION

Thursday, July 31, 2014

FIRST ROBO-SIGNING NOW ROBO-STAMPING!?

First, it was robo-signing, now it's robo-stamping! When I appeared in court on a foreclosure matter today, the bank's attorney produced the original note. When I inspected the "original" Note, I realized that the Note had a rubber stamped signature on an indorsement! The bank didn’t waste time having a robo-signer sign it – or maybe Edgar Padilla -- the signor had writer’s cramp. The judge ordered a hearing on this matter.

See below for document.

Redacted Note by anna338

Thursday, July 17, 2014

TWO FORECLOSURE AUCTIONS STOPPED!

Two of our clients were scheduled to have their homes sold at foreclosure auctions today, July 17, 2014.  The first involved a recently, widowed woman who just lost her husband to cancer.  The second sale was a home owned by a retired New York City Fireman who suffers from multiple illnesses stemming from exposure during 9/11, including chronic asthma/Rads, Chronic bronchitis/sinusitis, Barrett’s Esophagus, sleep apnea and post-traumatic stress disorder. In addition, the second client’s wife also just had cancer-related surgery.  We were fortunately able to stop both sales! 

Tuesday, July 1, 2014

Second Circuit Rules Homeowners Lack Standing to Enforce Securitized Trust Agreements

For years lawyers have been taking clients’ money to argue that the trusts were void because the banks did not comply with the terms of the pooling and servicing agreement.  We have always told potential clients to save their money because this was a losing argument because homeowners do not have standing to enforce the pooling and servicing agreements.  The Second Circuit has now definitively  decided the issue against homeowners in Rajamin v. Deutsche Bank Nat'l Trust Co.  

SEE DECISION BELOW


Thursday, June 26, 2014

ANOTHER WIN FOR ROBERT E. BROWN, PC -- Wells Fargo v. Eisler

The Second Department published the attached decision yesterday entitled Wells Fargo v. Eisler.  I have attached the relevant point heading from Wells Fargo’s brief which set out  the then current state of the law.  The issue was whether the bank adequately proved that it sent the attached unsigned notice of default/acceleration letter.  It is undisputed  that the mailing of this letter is a condition precedent to starting a foreclosure action pursuant to the terms of the mortgage.  Banks across America are unable or unwilling to provide any information as to the identity of the purported sender.  The affidavit provided is quite typical of those routinely used by banks in foreclosure actions.  In essence, a bank employee swears that based on a review of the books and records of the bank (here Wells) the notice of default letter “was sent.”  In my experience, this key provision is always written in the passive voice.   

For years, banks have successfully argued if the default letter is contained in their business records, it must have been sent. 

This panel had two of the same Justices from the Bank of New York v. Silverberg panel.    Although I was hoping for a more strongly worded decision, the holding is clear: the bank didn’t prove it sent the notice of default/acceleration letter.

The Court wrote: “The unsubstantiated and conclusory statements in this affidavit, which indicated that the required notice of default was sent in accordance with the terms of the mortgage, combined with a copy of the notice of default, failed to show that the required notice was mailed by first class mail or actually delivered to the notice address.” 

The Court affirmed the order of Justice Aliotta of Richmond  County.


This case will have widespread ramifications on foreclosure actions.  The vast majority of foreclosures in New York State have mortgages with provisions which require a notice of default be sent.   In my opinion, lower courts can use this decision to clear their dockets and dismiss the majority of foreclosure actions.




Wednesday, May 7, 2014

STATEN ISLAND LEGAL SERVICES CELEBRATES TENTH ANNIVERSARY


Pictured above from the left: Attorney Richard Teemsma, Loss Mitagator John Brancato, an Attorney from MFY Legal Services and Attorney Robert Brown.

Thursday, February 27, 2014

The tide has turned against homeowners!

A judge went too far when he practically halved the amount of principal a bank sought to recover in a foreclosure action to penalize the bank's purported lack of good faith during conferences, a Brooklyn appellate court has ruled.

After required settlement conferences in a residential foreclosure proved ineffective, Acting Suffolk County Justice Jeffrey Spinner forever restrained Bank of America from "demanding, collecting or attempting to collect, directly or indirectly" any sums linked to a $493,219 mortgage that were considered "interest, attorney's fees, legal fees, costs, disbursements." The bank could only collect principal, and any advances on property taxes or insurance, he said.

Spinner then enforced $200,000 in exemplary damages against the bank, cutting the principal to $293,219.

Then, the Appellate Division, Second Department, on Feb. 13 unanimously overturned Spinner in Bank of America v. Lucido, 2012-05450., saying he didn't have the ability to impose the penalties he did….

The full article can be found here: http://www.newyorklawjournal.com

Monday, February 24, 2014

Panel Censures Lawyer and His Debt Collection Firm

The Second Department said David A. Cohen and the Cohen & Slamowitz firm had a "voluminous history" of complaints for trying to collect debts from people who had already paid their bills or were not the ones who owed money to the firm's client-creditors.

Read more: http://www.newyorklawjournal.com

What to Do When Your House Is About to Be Sold Due to Foreclosure

Loan Complaints by Homeowners Rise Once More

An interesting article from the New York Times about the growing power of mortgage servicers in deciding which get a mortgage modification and which  must hand over their home in a foreclosure.  The servicers are also forming  relationships with companies that can benefit from foreclosures.


These specialty servicers are buying the rights to collect mortgage payments at discounts. The quicker the servicer can make the loan current again, the sooner investors pay back the servicers’ advance in full. This may incentivize servicers to offer modifications that cause borrowers to default again.

For the full article click here: www.nytimes.com

Monday, January 27, 2014

Citimortgage, Inc. v Guarino | NYSC – The courts hold that perjury is intrinsic fraud and that therefore it is not ground for equitable relief against a judgment resulting from it

Decided on January 6, 2014 
Supreme Court, Suffolk County


Citimortgage, Inc., Plaintiff,

against

Joseph M. Guarino, TERESA GUARINO, E-LOAN, INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee for Premium Capital Funding, LLC, , Defendants.



38302-07 



ROSICKI, ROSICKI & ASSOC. 

Attys. For Plaintiff 

2 Summit Ct. 

Fishkill, NY 12524 

JOSEPH & TERESA GUARINO 

Defendants Pro Se 

358 Old Country Rd. 

Deer Park, NY 11729 

Thomas F. Whelan, J.

ORDERED that this motion (#003) by the plaintiff for an order vacating the judgment of foreclosure and sale dated December 14, 2009 is considered under CPLR 5015 and is denied.
This uncontested mortgage foreclosure action was commenced in December of 2007 and was concluded by the issuance and entry of a judgment in December of 2009. No answer was served by any of the named defendants and no non-answering appearances were interposed. The sale of the mortgaged property contemplated by the judgment was, however, not conducted.
By the instant motion (#003), the plaintiff seeks an order vacating the judgment it obtained by its successful prosecution of its claims for foreclosure and sale of the mortgaged premises. The motion is opposed by defendant, Joseph M. Guarino. However, the merits of the claims advanced in his opposing papers shall not be considered by the court since Mr. Guarino is a party in default in this action in which a judgment against him and his property has been entered and remains in full force and effect. Absent a vacatur of his default, which is not requested, Mr. Guarino is without authority to oppose otherwise participate on this motion (see CPLR 3215[f]; U.S. Bank Natl. Ass'n v Gonzalez, 99 AD3d 694, 952 NYS2d 59 [2d Dept 2012]; Deutsche Bank Trust Co., Am. v Stathakis, 90 AD3d 983, 935 NYS2d 651 [2d Dept 2011]; Holubar v Holubar, 89 AD3d 802, 934 NYS2d 710 [2d Dept 2011]; McGee v Dunn, 75 AD3d 624, 624, 906 NYS2d 74 [2d Dept 2010]; see also Unsettled Times Make Well-Settled Law: Recent Developments in New York State's Residential Mortgage Foreclosure Statutes and Case Law", 76 Albany Law Review 1085, 1114 [2012-2013]).
The reason advanced by the plaintiff as the basis for the relief requested is its purported inability to comply with affirmation requirements imposed upon its counsel under the terms of Administrative Orders 548-10 and 431-11. These highly unusual Administrative Orders were adopted and implemented following the dissemination of widely publicized national media accounts of misdeeds in the preparation of foreclosure papers by mortgagees in states other than New York. Concern on the part of court administrators over the veracity of alleged facts and the propriety of the procedures employed in the preparation of affidavits of merit submitted in residential New York foreclosure actions was the apparent basis for the issuance of the Administrative Orders numbered 548/10 and 436/11. These orders or rules, as they are sometimes referred to, impose vouching[*2]requirements upon counsel for foreclosing plaintiffs in all foreclosure cases in which a sale has not yet occurred. The plaintiff's counsel must independently verify the accuracy of the notarizations contained in the supporting documents filed with the foreclosure action upon application for the final judgment or, if all ready issued, prior to the sale. While counsel's compliance therewith has been held to be mandatory (see U.S. Bank Natl. Assoc. v Eaddy, 109 AD3d 908, 971 NYS2d 336 [2d Dept 2013]), the affirmation itself has also been held to be non-substantive in nature (see LaSalle Bank, NA v Pace, 100 AD3d 970, 955 NYS2d 161 [2d Dept 2012]).
In its moving papers, the plaintiff asserts that it is unable to satisfy the affirmation "vouching" requirements although all previously alleged facts regarding the obligor defendants' payment defaults "are unchanged". The plaintiff thus intends to have a new affidavit of merit executed by its agent to facilitate the preparation of the attorney's affirmation. For reasons not apparent from the moving papers, the plaintiff believes that a vacatur of the judgment previously awarded to it some four years ago is necessary.
The court, however, finds this application to be in conflict with well established legal maxims of finality and with fundamental principles governing the independent adjudication of cases and wasteful of the extremely limited judicial resources available to state trial courts.
"It is elementary that a final judgment or order represents a valid and conclusive adjudication of the parties' substantive rights..." (Da Silva v Masso, 76 NY2d 436, 440, 560 NYS2d 109 [1990]; see Matter of Huie, 20 NY2d 568, 285 NYS2d 610 [1967]). Legal maxims such as law of the case and collateral estoppel serve to protect the sanctity and finality of litigated judicial orders and judgments, while the doctrine of res judicata does the same for such orders and those issued upon default (see TD Bank, N.A. v Talia Prop., Inc., 110 AD3d 1057, 973 NYS2d 789 [2d Dept 2013]; Richter v Sportsman Prop., Inc., 82 AD3d 733, 918 NYS2d 511 [2d Dept 2011]; 83-17 Broadway Corp. v Debcon Fin. Serv., Inc., 39 AD3d 583, 835 NYS2d 602 [2d Dept 2007]; Rosendale v Citibank, 262 AD2d 628, 691 NYS2d 901 [2d Dept 1999]). These maxims are the root of the finality doctrine which has been characterized as: "[a] policy against relitigation of adjudicated disputes [that] is strong enough generally to bar a second action even where further investigation of the law or facts indicates that the controversy has been erroneously decided, whether due to oversight by the parties or error by the courts" (Reilly v Reid, 45 NY2d 24, 407 NYS2d 645 [1979] [emphasis added], citing Deposit Bank v Frankfort, 191 US 499, 510-511, 24 S.Ct.154 [1903]). "Considerations of judicial economy as well as fairness to the parties mandate, at some point, an end to litigation. Afterthoughts or after discoveries however understandable and morally forgivable are generally not enough to create a right to litigate anew" (Reilly v Reid, 45 NY2d 24, 28, supra). Vacatur of final adjudicatory documents, such as an order or judgment and a re-litiagtion of the causes determined therein, is generally precluded by the the finality doctrine.
In addition to determinations affected by errors, adjudications influenced by instances of perjury do not warrant a re-adjudication of the case upon the invocation of the court's inherent power to vacate a judgment on the grounds of fraud. In Jacobowitz v Herson (269 NY 130, 197 N.E. 169 [1935]), the Court of Appeals described the nature of this rule and the reasons underlying as follows: [*3]

The authorities are uniform in holding that an action in equity will not lie to set aside a judgment in an action for intrinsic fraud, that is, for perjury or false swearing on the trial. Pomeroy states in his Equity Jurisprudence (Vol. V, § 2077, p. 4683) the rule as follows: The courts hold that perjury is intrinsic fraud and that therefore it is not ground for equitable relief against a judgment resulting from it. We have seen that the fraud which warrants equity in interfering with such a solemn thing as a judgment must be fraud in obtaining the judgment, and must be such as prevents the losing party from having an adversary trial of the issue. Perjury is a fraud in obtaining the judgment, but it does not prevent an adversary trial. * * * However, public policy seems to demand that there be an end to litigation. If perjury were accepted as a ground for relief, litigation might be endless; the same issues would have to be tried repeatedly. 

This State is committed to the rule that the perjured testimony of the successful party or his witnesses at the trial, even where the false testimony was procured by a conspiracy, is not sufficient ground for vacating a domestic judgment or enjoining its enforcement. (Ross v. Wood, 70 NY 8; Gitler v. Russian Co., 124 App. Div. 273; Standard Fashion Co. v. Thompson, 137 App. Div. 588; Crouse v. McVickar, 207 NY 213.) As before stated, the weight of authority in this country is to the same effect. (Freeman on the Law of Judgments [Vols. 1 and 3, 5th ed.], §§ 235, 1241, 1242.) (See, also, Metcalf v. Gilmore, 59 N. H. 417; Mahoney v. State Ins. Co., 133 Iowa, 570; Riley v. Murray, 8 Ind. 354; El Capitan Land & Cattle Co. v. Lees, 13 N. M. 407).

Inherent powers of a court to vacate its own orders and judgments on grounds of fraud have thus been viewed as extending only to extrinsic fraud and not to intrinsic fraud, such as perjury at trial (see Lockett v Juviler, 65 NY2d 182, 490 NYS2d 764 [1985]; Jacobowitz v Herson, 268 NY 130, supraMatter of Holden, 271 NY 212, 218, 2 NE2d 631 [1935]). To justify a court in setting aside and vacating a judgment on the ground of fraud, the fraud complained of must have been "extrinsic", that is, practiced in the very act of obtaining the judgment in such a way that a party was prevented from fully and fairly litigating the matter (see Matter of Holden, 271 NY 212, supra; Citimortgage, Inc. v Brown, 111 AD3d 593, 974 NYS2d 272 [2d Dept 2013]; Augustin v Augustin, 79 AD3d 651, 913 NYS2d 207 [1st Dept 2010]; Shaw v Shaw, 97 AD2d 403, 467 NYS2d 231 [2d Dept 1983]).
The inherent power of the court to vacate its own judgments does, however, extend to cases in which the court finds that the interests of substantial justice so require (seeWoodson v Mendon Leasing Corp., 100 NY2d 62, 68, 760 NYS2d 727 [2002]; HSBC Mtge. Serv. v Talip, 111 AD3d 889, 975 NYS2d 887 [2d Dept 2013]; Mortgage Elec. Registration Sys., Inc. v Dort-Relus, 107 AD3d 861, 968 NYS2d 117 [2d Dept 2013]; U.S. Bank Natl. Ass'n v Slavinski, 78 AD3d 1167, 912 NYS2d 285 [2d Dept 2010];Katz v Marra, 74 AD3d 888, 905 NYS2d 204 [2d Dept 2010]). It is the movant's burden "to show that the prior order should be set aside by submission of sufficient evidence supporting the grant of such relief" (Mortgage Elec. Registration Sys., Inc. v Dort-Relus, 107 AD3d 861supra). Allegations of improper practices by a plaintiff's or its agents in unrelated matters do not suffice (see Citimortgage, Inc. v Bustamante, 107 AD3d 752, 968 NYS2d 513 [2d Dept 2013]; Wells Fargo, N.A. v Levin, 101 AD3d 1519, 958 NYS2d 227 [3d Dept 2012]; cf., GMAC Mtge., LLC v Bisceglie, 109 AD3d 874, 973 NYS2d 225 [2d Dept 2013]). [*4]
In contrast to its inherent powers, courts are statutorily authorized to vacate a judgment under CPLR 5015(a)(3) for fraud, misrepresentation or misconduct of an adverse party (see Beltway Capital, LLC v Soleil, 104 AD3d 628, 961 NYS2d 225 [2d Dept 2013]; Chase Home Fin., LLC v Quinn, 101 AD3d 793, 954 NYS2d 897 [2d Dept 2012];Katz v Marra, 74 AD3d 888, supra). The fraud contemplated by CPLR 50515(a)(3) has been held to include intrinsic fraud, which rests upon false claims or perjury, as well as extrinsic fraud, which rests upon an impairment of a party's right to litigate (see Wilson v Galicia Contr. & Restoration Corp., 10 NY3d 827, 830, 860 NYS2d 417 [2008];Oppenheimer v Westcott, 47 NY2d 595, 603, 419 NYS2d 908 [1979]; Bank of New York v Stradford, 55 AD3d 765, 869 NYS2d 554 [2d Dept 2008]). Underlying this more modern view is the notion that the "courts must protect the integrity of the judicial process and ensure that plaintiffs do not secure money judgments based on fraudulent claims" (Wilson v Galicia Contr. & Restoration Corp., 10 NY3d 827, 830, suprasee also Nash v Port Authority of New York and New Jersey, ___ NY3d ___, 2013 WL 6164436 [2013]). However, the objective of assuring the honesty and integrity of judicial processes has been held not to be "furthered when the Court goes outside applicable law to itself raise arguments" or does the "lawyering" for the parties to the action (Wilson v Galicia Contr. & Restoration Corp., 10 NY3d 827 at 830, supra).
Here, the judgment of foreclosure and sale that was entered in this action some four years ago, remains unchallenged by any party against whom it was rendered or by others with jural interests therein including the plaintiff. It thus constitutes a conclusive adjudication of all questions at issue between the parties and all matters of defense which were raised or could have been raised by any of the defendants (see Richter v Sportsman Prop., Inc., 82 AD3d 733, supra83-17 Broadway Corp. v Debcon Fin. Serv., Inc., 39 AD3d 583, supraRosendale v Citibank, 262 AD2d 628, supra). The judgment is thus immune from attack except in the most limited circumstances, such as an appeal or upon a timely application for its vacatur by a party against whom it was rendered or other person interested (see CPLR 5015[a][1]; Oppenheimer v Westcott, 47 NY2d 595, supraMatter of Huie, 20 NY2d 568, 285 NYS2d 610 [1967]; Rizzo v Ippolito, 137 AD2d 511, 524 NYS2d 255 [2d Dept 1988]; Greenwich Sav. Bank v JAJ Carpet Mart, Inc., 126 AD2d 451, 510 NYS2d 594 [1st Dept 1987]). Since no facts constituting any one of the grounds necessary to support the vacatur of the judgment under the inherent or statutory powers of the court were advanced here, the vacatur of the judgment of foreclosure and sale requested is not available to the plaintiff.
Nor do the post-action commencement, administratively imposed affirmation requirements, with which the plaintiff cannot comply, constitute a valid basis on which the court may premise a vacatur of the previously issued judgment of foreclosure and sale (cf., CPLR 3012-b; effective 9/1/13).
As indicated above, the affirmation itself has been held not to constitute "substantive evidence" nor a "new argument" or defense in favor of the defendant mortgagor (seeLaSalle Bank, NA v Pace, 100 AD3d 970, 971, supra). The affirmation requirement was the product of Administrative Order 548/10, which issued in response to the dissemination of media accounts of misdeeds and misconduct in foreclosure cases elsewhere. Promulgation of such order and its [*5]amendment (Administrative Order 430/11) can be traced solely to the concerns of court administrators who apparently believed that the misconduct of foreclosing parties elsewhere had or was about to infiltrate foreclosure actions in this state (see Affirmation Form-Preamble attached to AO 548/10 and 430/11). However, neither the anecdotal reports of misdeeds of foreclosing parties elsewhere nor the categorical concerns of court administrators that similar misdeeds and misconduct might be present in foreclosure actions pending in this state are relevant to an adjudication of the issues before this court in such actions. The Administrative Orders and the affirmation requirements therein imposed thus appear to be a mis-guided attempt on the part of court administrators to go outside the law and to raise issues not raised by the parties under the guise of protecting "the honesty and integrity of the judicial process" (see Wilson v Galicia Contr. & Restoration Corp., 10 NY3d 827, 830, supra).
In addition, it appears that the administratively imposed affirmation requirements are contrary to judicial conduct cannons and several of the fundamental principles upon which the judiciary is premised. These cannons and principles mandate a full, fair and independent judiciary by prohibiting the interjection of outside influences into adjudicatory processes thereby leaving the court with consideration of only the claims, pleadings and proofs put before it by the parties and the court's judicious application of all relevant controlling principles of law thereto (see 22 NYCRR 100.2 [A];[B];[C]; 100.3[B][1];[2];[3] and [4]). Although the affirmation requirements are aimed at precluding such outside events from permeating judicial foreclosure proceedings in this state, their effect is just the opposite, as the taint arising from the misdeeds and other nefarious acts engaged in elsewhere must be affirmatively disproved by submission of the mandated vouching affirmation of the plaintiff's counsel. The affirmation requirements thus constitute a prohibited intrusion of outside factors into the independent adjudicatory processes this court is bound to observe.
It is the view of this court that the Administrative Orders and their affirmation requirements are not in keeping with the well established principles of finality and those governing adjudicatory processes, particularly, where as here, it is the successful plaintiff who seeks to tear down its own judgment rather than any party interested who is adversely affected thereby. The court thus finds that no judgment of foreclosure and sale nor any precursor order of reference that remain unchallenged under common law and statutory provisions governing vacatur are not subject to vacatur due to an inability to comply with administrative "orders" of a non-substantive nature.
These unfortunate circumstances do not, however, leave the plaintiff or its counsel without a remedy. In a recent case authority emanating from the Appellate Division, Second Department, the court granted a foreclosing plaintiff who obtained a judgment of foreclosure and sale, leave to file a new affidavit of merit, "nunc pro tunc" so as to facilitate the preparation of the attorney's affirmation that is the subject of the above cited Administrative Orders (see U.S. Bank v Eaddy, 109 AD3d 908, 971 NYS2d 336 [2d Dept 2013],supra). Similar applications may be employed in cases in which only an order of reference has issued. In such cases, the application should be made in conjunction with the motion for a judgment and include a proposed new affidavit of merit for which [*6]leave to file same is sought as well as the attorney's affirmation. Whenever made, these applications should not include demands for "vacaturs", "ratifications" or "confirmations" of prior orders or judgments, as the aim thereof should be to move the action forward to its ultimate conclusion, i.e., a judgment of foreclosure and/or the sale of the mortgaged premises under an existing judgment by facilitating the filing of the attorney's affirmation.
Here, no new affidavit of merit is attached to the moving papers and no attorney's affirmation of the type contemplated by the above cited Administrative Orders was included as a submission. Instead, the plaintiff merely asks that the court vacate its unchallenged judgment of foreclosure and sale due to counsel's inability to formulate the attorney's affirmation. These omissions, coupled with the court's finding that judgments of foreclosure and sale which remain unchallenged under common law and statutory provisions should not be subject to vacatur due to an inability to comply with "orders" promulgated by court administrators, warrant a denial of this motion. The court thus denies this application without prejudice to a further application of the type contemplated by the appellate court in U.S. Bank v Eaddy, supra.
Counsel are reminded that motions such as the instant one are extremely taxing upon the resources of the judiciary which has, for too long and unnecessarily so, been spread too thin in so far as the funding and staffing of judicial parts charged with the responsibility of adjudicating cases. This court and others are literally swamped with applications such as the instant one, which is, essentially, a "do-over" of a prior application that was duly considered and adjudicated by this court in a manner consistent with the cannons of judicial ethics and the fundamental principles upon which the judiciary is premised. Colloquially known as "remediation" motions, no basis in law or fact has been presented nor found by the court to be supportive of demands for recall and/or vacatur of jurisdictionally valid orders and judgments that subsist without challenge for years in residential mortgage foreclosure actions. Counsel are thus urged to carefully tailor all future applications to the one granted in U.S. Bank v Eaddy, and to avoid the interposition of unnecessary and unduly burdensome applications like the one now before the court. 

Dated: _____________________________________________
THOMAS F. WHELAN, J.S.C.

Friday, January 17, 2014

Borrower Waived Right to Raise Affirmative Defenses Under Forbearance Agreement

The Kings County Supreme Court found that a borrower waived the right to raise affirmative defenses including that the mortgage was not properly accelerated when the Borrower signed a forbearance Agreement.  The agreement stated that the borrower and guarantor “reaffirms all obligations contained within the Note and Mortgage and hereby agrees that there are no offsets, defenses, claims (asserted or unasserted) or counterclaims against First Central arising out of any transaction with [] First Central concerning the Note and/or Mortgage, and hereby waives any and all offsets, defenses, claims (asserted or unasserted) or counterclaims against First Central.”  

For the decision & order click below: