A bank's law firm has been sanctioned for failing to mention it
was negotiating a mortgage modification with a borrower while pressing a
foreclosure action against the borrower in the courts.Bronx Supreme Court Justice Norma Ruiz, acting sua sponte, hit Fein, Such &
Crane of Rochester with a $1,000 fine, saying the "omission of the fact
that the parties were actively negotiating a loan modification during the time
this [order of reference] motion was on the court's motion calendar is a
material misrepresentation that constitutes frivolous conduct."
Wells Fargo Bank began a foreclosure against Kwaku Boffour in September 2011. When the bank initiated the action, however, no Request for Judicial Intervention was filed.
As a result, the case joined what court administrators call the "shadow inventory" of residential foreclosure cases where a summons and complaint had been filed, but no referee or judge could be assigned.
According to an Office of Court Administration report, New York City courts, beginning in 2012, identified more than 7,500 cases in such a posture.
Almost two years after the foreclosure action against Boffour was filed, it was conferenced in a court part established for the "shadow inventory"; there, the sides can discuss modifications or other loss mitigation options.
The borough's foreclosure settlement part was overseen at the time by Bronx Supreme Court Justice Robert Torres, though court-attorney referees and judicial hearing officers manage the day-to-day court appearances.
Between appearances from September 2013 to December 2013, Torres stayed all proceedings while the sides worked on the documentation and preparations needed for a modification.
Meanwhile, before the foreclosure action was filed, Boffour changed his name to Ernest Abrokwa, according to his attorney, Vincent Cuocci of Sayville, who said the name change may have complicated the matter.
In any event, Abrokwa was told to provide all outstanding documentation by Dec. 31, 2013.Ruiz said because there was "something inherently wrong with negotiating a loan modification while simultaneously trying to foreclose on the subject property, the court equitably stays all further proceeding until the settlement conferences have concluded." In addition, Ruiz said it was "an unsupportable waste of the court's time and resources" to review motions and documents and then be notified by a plaintiff about a discontinuance.
On Dec. 24, 2013—"in clear contradiction of the stay," Ruiz said—the bank moved for an order of reference, and the motion was randomly assigned to Ruiz.
The motion was also served on Abrokwa's home address instead of on Cuocci, who already had made three court appearances by the time of the motion.
When Ruiz reviewed the record in Wells Fargo Bank, N.A. v. Boffour, 381155-2011, to determine the case's status, something she did routinely before granting an order of reference, she said she learned the parties were trying to negotiate a loan modification.
An affirmation from Miranda Sharlette, an associate at Fein, Such & Crane, said Abrokwa did not live on the premises. Cuocci said his client did live on the premises.
Sharlette's affirmation did not mention the modification negotiations. "By omitting this fact, plaintiff misrepresented the actual status of this case to the court," Ruiz said.
The judge ordered a hearing to determine if the conduct was sanctionable. Cuocci said he did not attend the hearing and had submitted a letter saying his client was not seeking sanctions.
Ruiz said she asked Sharlette how it was possible for the motion to be filed under the circumstances. She said Sharlette told her it was her understanding that the matter was in the shadow inventory conferences, which she contended were different from mandatory settlement conferences.
Ruiz said the "plaintiff thought it could nevertheless circumvent the stay" imposed under administrative rules for residential foreclosure actions and settlement conferences and seek an order of reference because the stay "only applies to mandatory conferences for defendants that reside in the subject property.
"This flawed rationale ignores the fact that Justice Torres expressly stayed all proceedings in this action," she continued.
Ruiz ordered the sanction be made payable to the Lawyers' Fund for Client Protection. Sharlette could not be reached for comment.
Cuocci, who achieved a modification for Abrokwa in the summer of 2014, said he viewed the sanction as a message, set at a "nominal enough amount," to tell lenders they could not engage in negotiations and motion practice simultaneously.
"I do see this happen from time to time," he said.
Foreclosure is a bitter truth about the housing sector in the US. There are a several factors contributing to a massive increase in the number of applicants who are applying for foreclosures, the key factors amongst them are falling income and home prices, slowing economy and massive job losses.see more at: foreclosure fraud
ReplyDelete