Defendant Husband previously moved for, and was granted, an order confirming a special referee's report, which found bad faith under CPLR 3408(f) against Deutsche Bank. The court held a hearing to address the appropriate sanctions for the bank's lack of good faith during the 3408(f) conferences. The court found, in its June 2014 decision, the actions and inactions by the bank clearly indicated an absence of good faith as was contemplated by the statute. It noted there was nearly a 10-month delay regarding the bank's addressing Husband's modification process, and the referee found such delays to be dilatory . The court concluded that after six years of efforts to obtain a loan modification for Husband, some remediation was appropriate, finding the referee determined the bank did not negotiate in good faith in the 18 appearances before her in 2012. It ruled the appropriate sanction was to reduce the interest rate to two percent on the balance that accrued after Aug. 1, 2010, the date the bank should have approved Husband's HAMP application, instead of delaying until Dec. 11, 2011, and offering a modification designed to be rejected. The bank and its loan servicer were also barred from collecting attorney fees incurred after Aug. 1, 2010.
Friday, May 8, 2015
Plaintiffs moved for summary judgment to cancel and discharge the record mortgage. Westbury Properties obtained titled to a Westbury property from Prisco, who conveyed an Oceanside property to South Shore Farmer's Market. The owners of the Westbury and Oceanside properties gave a mortgage to Produce Distributors, and the parties to the mortgage agreed there was over $1.75 million due on the subject promissory note and loan associated with the mortgage. Both sides agreed there was never a payment made under the note, mortgage or extension agreement. The court found plaintiff demonstrated the statute of limitations to commence an action for foreclosure expired, therefore, made a prima facie showing of entitlement to relief, while defendant Produce Distributors failed to raise an issue of fact as to why such relief should not be granted. It noted defendant failed to submit evidence to support a contention that discovery would alter the result—that discovery may yield fact to provide a bona fide defense to the motion. Accordingly, the motion for summary judgment was granted, and the County Clerk was ordered to cancel the mortgage and extension of record. The court dismissed any counterclaims seeking to foreclose or enforce the mortgage.
at 10:44 AM
Friday, May 1, 2015
Teresa and Fred Tovar with their attorney, Ivan Young, at the Tovar home in Sound Beach, Long Island.
Years into a stressed housing market, some lenders who have filed foreclosure actions may be running out of time to get their money back.
Defense lawyers are paying increasing attention to the length of foreclosure proceedings on the theory that some cases have become time-barred by a six-year-statute of limitations.
There are no hard figures on how many of the state's approximately 92,000 pending foreclosures may be vulnerable to this tactic. But of cases that originated with the housing market collapse, at least one trial court in Long Island already has ruled that a foreclosure is time-barred, and other claims are being litigated.
Ivan Young, principal counsel at the Young Law Group in Bohemia, prevailed in December on a motion to dismiss with prejudice a foreclosure case against Fred and Theresa Tovar. The ruling in , 61092/2014, is being appealed.
Young is defending about 250 foreclosure cases in New York City and Long Island. He is awaiting a decision on another statute of limitations motion and has at least a dozen other cases where he is preparing timeliness motions.
Young swatted away the idea that the Tovars and others are trying to get a house for free. For one thing, there still is a lien on the Tovars' home, he noted.
"The defense of statute of limitations, that is a defense created by the state Legislature. This is the law. There is no flexibility, no ifs, ands or buts," he said.
Besides, Young added, "the banks did it to themselves by waiting too long. It's not the borrower's fault they are using defenses available to them. And if banks want to avoid these issues, then modify the loan."
He noted the Tovars "had applied for modification in the past, which never resulted in a modification being approved for them."
The statute of limitations clock for a mortgage foreclosure starts to run when the lender accelerates the mortgage balance, which in other words, declares the balance due in full.
The lender can accomplish acceleration by filing a foreclosure summons and complaint or a simple letter accelerating payment of the loan.
Even if the foreclosure action is dismissed, the acceleration survives. If has been accelerated more than six years ago, the statute of limitations has expired.
If acceleration occurs and six years pass, a subsequent partial payment or debt acknowledgment can start the clock again. Lenders also have the option of revoking an acceleration.
Peter Frank, a Kingston-based senior staff attorney in Legal Services of the Hudson Valley, said his colleagues have handled cases where timeliness was a possible issue, and there are a few current cases where the issue might dispose of the case.
"The real tragedy of the foreclosure crisis is the toll it takes on human beings. I have clients waiting since '07, '09, '11, not knowing whether or not, month to month, season to season, if they will stay in their home," said Frank. "This is the law. It's not something we conjured up in the middle of the night."
"We're paying increasing attention," to the statute-of-limitations defense, said Jacob Inwald, director of foreclosure prevention at Legal Services NYC, who says that banks are usually responsible for "time that got eaten up."
Elizabeth Lynch, supervising attorney for MFY Legal Services' foreclosure project, said it was rare to see cases where homeowners had not made some post-acceleration mortgage payments.
She said attorneys at the organization were always aware of the statute of limitation issues but had not found any cases with sufficient facts to advance the argument.
When they did see a statute of limitations problem with an aging case, Lynch said it was used as a "negotiating tactic" to press for better modification terms.
Besides, she said homeowners "want the security of paying a mortgage ...Most want to make payments and get on with their lives."
A 'More Prominent' Problem
Bruce Bergman, a partner at Berkman, Henoch, Peterson, Peddy & Fenchel in Garden City, and a New York Law Journal columnist who has primarily represented lenders in foreclosure litigation, said the law had been clear, at least since a 1994 Appellate Division, Second Department, ruling, , 208 AD2d 892, which said acceleration does not go away with a dismissed case.
"The problem, however, was not as prominent because five- and six-year durations of foreclosures were unusual so that the dismissal of the action after all those years, which would have allowed the statute of limitations to meanwhile expire, was seldom encountered," said Bergman, author of "Bergman on New York Mortgage Foreclosures."
But according to him, the current circumstances—"the volume of foreclosures, vociferous borrower defense and borrower friendly legislation—means that foreclosures are taking longer and many more cases will approach consuming four, five and six years, making far more prominent a problem of case dismissal coinciding with expiration of the statute of limitations."
Roberta Kotkin, general counsel and chief operating officer for the New York Bankers Association, said the statute of limitations was a "standard defense" and was something banks faced in many foreclosures. Still, the defense "seems to be getting more play," she said.
Kotkin said the association's concern was that now New York courts have become inundated with cases and foreclosures had "become a very long, difficult process for everybody."
In the Tovar case, the mortgage was accelerated Oct. 4, 2007, through the filing of a summons and complaint.
In September 2008, a judgment of foreclosure and sale was granted.
Theresa Tovar filed a Chapter 13 bankruptcy petition in 2009. It was dismissed months later and the automatic bankruptcy stay was terminated.
In January 2010, the defendants moved to dismiss the case because of improper service. The application was granted in May 2010.
Almost two years later, the bank moved to discontinue the 2007 action. It filed the second foreclosure action in February 2014.
In court papers, Young said the lender ran past the six-year deadline by more than four months.
The lender countered that Young's "simple arithmetic" was wrong as to when the clock started, stopped and resumed.
Though Young argued otherwise, the bank said it did revoke its decision to accelerate. Moreover, the service issues that scuttled the first action had to be factored into the current case, the bank said.
"No service of process in the prior action means no acceleration in this matter until the filing of the instant foreclosure case, which means no bar to this action by the statute of limitations," said the lender.
Then-Acting Suffolk County Supreme Court Justice Stephen Behar said the Tovars had sufficiently showed the action was time-barred and had to be dismissed.
Behar noted that the Second Department repeatedly said that "without an affirmative and unambiguous act by a lender to revoke a prior acceleration, the acceleration remains undisturbed and the limitations statute still runs."
Young, who is handling the appeal, noted that Behar's decision did not remove the lender's approximately $388,000 lien on the property.
Young said the Tovars would have to ask a judge to extinguish the lien through a quiet title proceeding under to the Real Property Actions and Proceedings Law.
He said he was discussing with the Tovars whether he would represent them in that matter as well.
Caliber Home Loans, the servicer on the mortgage, declined to comment on the litigation.
Robert Brown, an attorney with about 100 active foreclosure defense cases, said "there's no reason in the world banks shouldn't be able to bring an action in six years."
Though Brown said he was still waiting for the statute of limitations issue to ripen in a number of cases, that time would come—and not just for his cases, but for other defense cases too.
"There's going to be a giant wave of them," he said.
However, an attorney who represents mortgage servicers in foreclosure matters who declined to be identified, said he doubted that.
He acknowledged that cases presenting possible statute of limitations issues were "definitely out there, no doubt about it. But if it's 500, I would say it's a lot."
The attorney added that "while defense attorneys are now looking for them, so are the servicers," who would be revoking the acceleration.
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Citibank (South Dakota) N.A. v. Improta – Richmond County Judge Philip Straniere Continues to Look Out for the Little Guy.
Citibank (South Dakota) N.A. v. Improta – Richmond County Judge Philip Straniere Continues to Look Out for the Little Guy.
In similarity with his past decisions protecting the rights of consumers and homeowners, Judge Philip Straniere issued a decision and order dismissing Plaintiff-bank’s case against an alleged credit card debtor, due to the Bank’s failure to submit admissible proof to the Court of the alleged monies owed.
Judge Straniere also again raised the important question: “…[A]t what point does an interest rate set in another state in excess of New York’s usury law of 16 percent [3 NYCRR 4.1] become unenforceable as in violation of New York’s public policy.”
From NYLJ, April 7, 2015
“Citibank sued Improta claiming she failed to make payments on a credit card agreement. The court found the action timely as both South Dakota and New York's statute of limitations for contracts acts was six years. It noted, however, that but for a small amount of activity in October 2008, Citibank would not be able to establish that Improta was bound by the agreement as it could not prove mailing of the July 2008 agreement to Improta. Yet, same was rendered moot by billing statements which indicated Improta knew about and acknowledged the debt by negotiating a payment plan for a period of time. Also, under South Dakota law, use of the card, even without receipt of an agreement, apparently created a contract. However, the court noted the monthly statements submitted by Citibank were incomplete, and based on same, the court ruled they were inadmissible. Further, Citibank's failure to establish what the Prime Rate was each month, and provide a "fact sheet" was a failure of proof, and as Citibank included such calculations in the amount it claimed was due, it could not prove its damages. Thus, while Improta had a credit card agreement and owed Citibank money, Citibank failed to prove its prima facie case. The court granted Improta judgment, dismissing Citibank's claim.”
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