AURORA LOAN SERVICES, LLC, Plaintiff,
AMADOU DIAKITE, ET AL., Defendants.
The defendant was represented by Jordan T. Schiller, Esq. of Schiller P.C., 55 Broad Street, Suite 18B, NY, NY
GENINE D. EDWARDS, J.
This foreclosure action was referred to this Court for a bad faith and standing hearing after twenty-five foreclosure settlement conferences, over the course of more than three years, from January 2010 to April 2013, were held before Special Referee Deborah L. Goldstein. From June 2013 to August 2014, this Court held several additional settlement conferences to reach a mutually agreeable resolution. After repeated attempts to reach an agreement failed, this Court conducted the hearing on October 27, 2014.
CPLR § 3408 mandates “settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, including, but not limited to determining whether the parties can reach a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating the potential for a resolution in which payment schedules or amounts may be modified or other workout options may be agreed to….” CPLR § 3408(a). Plaintiff is to appear in person or by counsel fully authorized to dispose of the action and is to bring, among other documents, the mortgage and note. CPLR § 3408(c); CPLR § 3408(e). “If the plaintiff is not the owner of the mortgage and note, the plaintiff [is to] provide the name, address and telephone number of the legal owner of the mortgage and note.” CPLR § 3408(e). The statute requires all parties to “negotiate in good faith to reach a mutually agreeable resolution, including a loan modification….” CPLR §3408(f). Flagstar Bank v. Walker, 112 AD3d 885, 977 N.Y.S.2d 359 (2d Dept. 2013). Failure to act reasonably and cooperatively leads to a finding of bad faith. US Bank, N.A. v. Williams, 121 AD3d 1098, ___ N.Y.S.2d ___ (2d Dept. 2014); US Bank. N.A. v. Sarmiento, 121 AD3d 187, 991 N.Y.S.2d 68 (2d Dept. 2014) (“[T]he issue of whether a party failed to negotiate in good faith’ within the meaning of CPLR 3408 (f) is 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.”); Wells Fargo Bank v. Meyers, 108 AD3d 9, 966 N.Y.S.2d 108 (2d Dept. 2013).
The referee’s report indicated the following: defendant Amadou Diakite qualified for a HAMP modification trial and made three monthly payments of $2,637.00 on December 1, 2009, January 1, 2010, and February 1, 2010. Referee’s Report, dated April 9, 2013. Additional payments were rejected and returned to him. Id. Plaintiff Aurora Loan Services LLC (“Aurora”) kept the three trial payments, rejected the final modification, and insisted that defendant Diakite re-start the process because Aurora claimed to have not received the signed modification agreement from defendant Diakite, who denied receiving same. Id. Thereafter, defendant Diakite submitted multiple complete packages, but plaintiff repeatedly requested documents that defendant Diakite had already submitted, and appeared at settlement conferences by various attorneys, including per diem counsel, who lacked personal knowledge of defendant Diakite’s loan history. Id. In a letter, dated July 15, 2012, Nationstar Mortgage LLC (“Nationstar”) informed defendant Diakite that the servicing of his loan was being assigned, sold or transferred from plaintiff to Nationstar. Id. In another letter, with the same date, July 15, 2012, Nationstar informed defendant Diakite that the debt is owed to Wilmington Trust Company, Trustee, SASCO Series 2005-4XS, but is being serviced by Nationstar. Id. Subsequently, Nationstar denied defendant Diakite’s HAMP application on October 16, 2012 because Defendant Diakite did not provide Nationstar with the documents it requested. In another denial letter, dated November 16, 2012, Nationstar simply stated “[w]e are unable to create an affordable payment equal to 31% of your reported monthly gross income without changing the terms of your loan beyond the requirements of the program.” Id. The parties appeared at further settlement conferences but no agreement was reached. On April 9, 2013, the referee issued a directive and report that referred the action this Court. Neither party moved to confirm or reject all or part of the referee’s report.
Upon referral, at the initial Court appearance on July 3, 2013, the Court ordered the parties to appear for a bad faith and standing hearing to be held on October 11, 2013. That hearing was deferred as the parties were still interested in pursuing a mutually agreeable resolution. As of December 13, 2013, plaintiff indicated that the HAMP application was fully submitted and under review. It later requested additional documentation. Then, as of May 23, 2014, the HAMP application was once again in underwriting and awaiting a decision. The application was denied on or about May 30, 2014 and plaintiff was ordered to provide defendant Diakite with the HAMP inputs for review. On August 1, 2014, the Court ordered the parties to appear for a bad faith hearing on October 27, 2014. In a letter, dated September 4, 2014, plaintiff’s counsel advised defense counsel that defendant Diakite had been denied for HAMP Tier 1, HAMP Tier 2, and a Standard Modification. The letter listed the figures the plaintiff used to issue the May 30, 2014 denial.
In preparation for the hearing, this Court directed plaintiff to produce the mortgage and note with any assignments and proof of ownership of both instruments. Plaintiff failed to produce any documents.
At the hearing, defendant Diakite testified that he submitted modification packages over and over to the plaintiff. At the end of 2009, he was offered a trial modification, and he timely made the three trial payments. Defendant Diakite testified that he thought his mortgage would be modified, but he never heard from the plaintiff after the last payment. Sometime later he was required to continuously submit further documents to his counsel in an effort to modify his mortgage payments, all to no avail. He admitted that at some point he began receiving mail and document requests from a new bank, Nationstar, but denied receiving a denial letter dated May 30, 2014.
Milly Rhodes, a Nationstar default case specialist since March 2014, testified on behalf of the plaintiff. Ms. Rhodes had no knowledge of the history of this loan or why a permanent modification was not offered to defendant Diakite. In 2014, three modification reviews, HAMP Tier 1, HAMP Tier 2, and the in-house were performed, but modification was denied because defendant Diakite lacked sufficient income. Ms. Rhodes did not have the documents to substantiate what was actually done. She did not produce the note, mortgage, assignments, or any documents at all.
After due deliberation and consideration, this Court finds that the record supports the referee’s findings that the plaintiff failed to negotiate in good faith pursuant to CPLR § 3408. The referee’s report is confirmed. Accordingly, all interest, costs, and attorneys’ fees are stayed from March 1, 2010 to October 27, 2014.
This constitutes the decision and order of this Court.
 The referee directed plaintiff to appear with proof that a final HAMP agreement was mailed to Defendant Diakite via certified mail but no proof was provided. Referee’s Report, dated April 9, 2013; Referee’s Directive, dated December 10, 2012.