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Bank of Am. v Lucido | NYSC Judge Spinner Slams BOA et al & are forever barred, foreclosed and prohibited from demanding, collecting or attempting to collect

Bank of Am. v Lucido | NYSC Judge Spinner Slams BOA et al & are forever barred, foreclosed and prohibited from demanding, collecting or attempting to collect

Decided on April 16, 2012

Supreme Court, Suffolk County

Bank of America N.A., Plaintiff


G. Lucido also known as GALINA LUCIDO, JOHN A. LUCIDO et. al., Defendants


Davidson Fink L.L.P.

Attorneys for Plaintiff

28 East Main Street

Rochester, New York 14614

John Lucido

Defendant Pro Se

46 Merrits Path

Rocky Point, New York 11778

Jeffrey Arlen Spinner, J.

Plaintiff commenced this action claiming foreclosure of a mortgage by filing its Notice of Pendency and Summons and Complaint with the Clerk of Suffolk County. The mortgage at issue was given by Defendants to MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC. As Nominee For FIRST FRANKLIN FINANCIAL CORP. on March 23, 2007 in the original principal amount of $ 494,000.00 and was recorded with the Clerk of Suffolk County in Liber 21524 of Mortgages at Page 751. It was given as collateral security for a simultaneously executed Note in the same amount, the same constituting a first lien encumbering premises known as 46 Merrits Path, Rocky Point, New York.

Sometime thereafter and through no fault of their own, Defendants defaulted upon their monthly installment payments due under the Note. It is undisputed that the principal balance owed to Plaintiff, as of the date of default, was and remains at $ 493,219.75. Following the [*2]commencement of this action, an initial settlement conference, as mandated by CPLR § 3408 was convened on June 2, 2009. Thereafter, seventeen additional or adjourned settlement conferences were held, each one a component part of a continuing albeit fruitless effort to resolve this matter. It was only upon the express directive of the Court that one of Plaintiff’s representatives travelled from Fort Worth, Texas to appear with a view toward some amicable resolution of this action. However, in derogation of the mandatory provisions of CPLR § 3408(c), no person ever appeared on Plaintiff’s behalf who was vested with any authority to settle or otherwise compromise the matter. Further delays were occasioned by serious illness having afflicted both of the Defendants as well as the unfortunate passing of Mrs. Lucido (Mr. Lucido requested that the matter be temporarily removed from the conference calendar because he was unable to move forward while attending to the care of his wife). In addition, Plaintiff’s former counsel, Steven J. Baum P.C., was discharged and the firm was thereafter disbanded.

Defendant JOHN LUCIDO has, in the past, been employed as a commercial mortgage broker. Though he was not involved professionally in the procurement of the loan at issue herein, he apparently enjoys a considerable degree expertise in the area of mortgage financing, which knowledge has been displayed to this Court on multiple occasions. Throughout the settlement conference process, Defendants had, on not less than three occasions in the presence of the Court, submitted the rather voluminous financial documentation demanded by Plaintiff, to be used in considering the initial request for a customary modification. At one point in time, Defendants were offered a so-called “trial modification” with no terms disclosed other than a monthly payment amount to be remitted. However, that offer was never accepted by Defendants because of Plaintiff’s steadfast and continued refusal to disclose any of its terms to them, including the interest rate as well as the manner in which their payments would be applied to the debt, a tactic that was strenuously defended by Plaintiff’s successor counsel as “general industry practice.”

At one of the early settlement conferences, Mr. Lucido informed the Court that the servicing of his loan had been transferred to one of Plaintiff’s wholly-owned subsidiaries and that they had embarked upon a print and internet advertising campaign wherein they were offering principal reductions in an apparent effort to help homeowners bring their delinquent loans current. They advertised basic requirements of a delinquency of over 60 days duration coupled with a principal balance in excess of 120% of the value of the property (as just one example of these blandishments by Plaintiff, see ). Based in large part upon this inducement, Mr. Lucido repeatedly raised the possibility of a principal reduction and when he was advised, in open court, that it would be “considered” by the bank, he obtained a third party evaluation of the Property, reflecting the fair market value to be $ 250,000.00. He thereupon prepared and submitted a written proposal requesting a principal reduction to $ 250,000.00, coupled with the immediate deposit with Plaintiff of $ 23,588.52, a sum equal to twelve months of principal, interest, taxes and insurance for it to hold in escrow to ensure his performance, a reduction in the interest rate to 4.50% (at that time, HAMP modifications were being offered with interest at 2%) and the immediate commencement of payments upon the new principal amount at the new interest rate. This written proposal was sent to Plaintiff prior to January 26, 2011 and by February 9, 2011 it had advised Defendant, by letter, that it had received his proposal and that the same was under consideration. [*3]

The conference was adjourned several more times until June 9, 2011. At that conference, prior counsel advised Defendant and the Court that Plaintiff was “unwilling” to reduce the principal and actually misrepresented to the Court that there had been “…thirteen conferences and Defendant has never submitted financials.” Prior counsel further misrepresented to the Court that Plaintiff did not offer any loan modification programs that included a principal reduction as a component. At that juncture, the Court warned counsel that if there was found to be a lack of good faith in the settlement conference proceedings, the Court would consider the imposition of financial sanctions upon Plaintiff. The Court adjourned the conference to July 13, 2011 with the directive that a representative appear on Plaintiff’s behalf to provide an explanation to the Court.

On July 13, 2011, the matter again appeared for conference with prior counsel present. Plaintiff’s representative informed the Court that the total debt owed by Defendants and secured by the Property (principal, interest, advances, etc.) now stood at $ 673,959.23 and further, affirmatively stated under oath that “This loan is part of a pooling of loans that entrust mortgage—in fact, securities and their pooling and servicing agreement does not allow us to reduce the principal balance.” When the Court called for production of the pooling and servicing agreement (the “PSA”), counsel stated that their office was just informed “today” of this claimed restriction and, in furtherance of Plaintiff’s position, stated that “We can’t consider a principal reduction. It’s prohibited by the PSA.” The bank representative did concede, however, that Defendants had been assiduously trying to work the matter out and that they had, in fact, been submitting financial documentation as requested by Plaintiff. The bank representative also asserted that she had an appraisal showing the property value to be $ 356,000.00 but when pressed for a copy, she stated that it was “tentative.” No such appraisal was ever provided to the Court (indeed Plaintiff never produced any written indicia of the value of the Property), thusleaving the Court to accept the market value of $ 250,000.00 as advanced by Defendants.

The matter was again adjourned while the Court waited patiently for production of a copy of the PSA. Despite the Court’s order, it was not produced on September 14, 2011 nor was it provided on October 19, 2011. However, upon some intense prodding by the Court, prior counsel generously offered to provide the Court only with what Plaintiff considered to be the “salient portions” of the PSA, despite the Court’s clear and unambiguous order that the entire agreement be provided. Once again, the PSA was not provided for the December 7, 2011 conference, necessitating yet another adjournment, this time to December 21, 2011. A document purporting to be a complete copy of the PSA, consisting of 258 pages in PDF form, was finally e-mailed by prior counsel to the Court late in the day on December 15, 2011 (some 155 days after the Court ordered its production), forcing the Court to continue the matter yet again, from December 21, 2011 to January 4, 2012, and advising the parties that there would be a hearing on that date to consider the entire matter, including the possible imposition of sanctions for a lack of good faith.

At the January 12, 2012 hearing, the office of Steven J. Baum P.C. (Plaintiff’s counsel of record) failed to appear. Instead, a gentleman appeared, stating that he was per diem counsel to Pulvers Pulvers & Thompson who, in turn, was of counsel to Davidson Cook who were now attorneys for Plaintiff, though no substitution of attorney had been filed. Counsel indicated his [*4]readiness to proceed with the matter. The same bank representative who had appeared the prior year was present for the hearing as was Defendant Mr. Lucido. At the hearing, it was quickly established that the “complete” PSA as provided to the Court excluded the schedules to which it referred as an integral part, which included a description of the mortgage loans which were to be part of the pool. Although Plaintiff’s representative claimed that she was in possession of the schedules, like the phantom appraisal, they were never provided to the Court. During questioning by the Court, Plaintiff’s representative conceded that Bank of America “…always had…” the PSA in their possession. This failure to disclose, coming upon the heels of Plaintiff’s 155 day delay in providing the PSA coupled with what appears to be the intent, by Plaintiff and its prior counsel, to deceive this Court by deciding to only provide what it deemed to be the “salient” portions of the PSA, leads this Court toward the conclusion that Plaintiff was not acting in good faith throughout the pendency of this matter.

Further examination of documents revealed that Plaintiff claimed standing by virtue of an Assignment from LaSalle Bank National Association acting as Trustee under the PSA that is at issue herein. That Assignment, clearly prepared by the law firm of Steven J. Baum P.C., was acknowledged on December 22, 2008 but expressly stated that it was “…effective as of March 30, 2007. The PSA deals with an entity denominated as “Merrill Lynch First Franklin Mortgage Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-3.” Examination of the PSA reveals that it was consummated on May 1, 2007 (a fact that is reflected in the Assignment), which was the date on which it came into legal existence. The Assignment however expressly states that it became effective some 32 days prior to the existence of the PSA. Though questions were raised by the Court, this issue was not resolved, either by counsel or by Plaintiff.

The hearing went forward with Plaintiff vigorously asserting that the PSA absolutely prohibited any reduction of the principal. Upon pointed inquiry by the Court, the following colloquy transpired:

THE COURT: Where is it in that agreement that it states that principal reductions are absolutely prohibited?

BANK: Okay. I read through that here, and I don’t know something stating completely prohibited. It doesn’t come right out and say that portion.

THE COURT: That’s what was represented to the Court. Where does it say that? Give me a page.

BANK: I highlighted it.

BANK COUNSEL: I will read it for you.

BANK: Page 86 is what I had highlighted, and then on Page 90.

BANK COUNSEL: There are provisions in the PSA permitting—

THE COURT: You said Page 86?

BANK COUNSEL: 86, it is section 301, servicer to service mortgage loans. The sentence starting with “notwithstanding” approximately fifteen lines down.

THE COURT: All right. This refers to servicer not engaging in any conduct which would essentially cause the REMIC, the Real Estate Mortgage Investment Conduit, to fail to qualify as a REMIC or to result in the imposition of certain taxes under the Internal Revenue Code.


THE COURT: Where does it say that a principal reduction is prohibited?

BANK COUNSEL: What this PSA document does state is that there are provisions that can [*5]prohibit the forgiveness of principal or the reduction of principal, but there are other provisions, specifically Page 90, that put it within the discretion of the servicer to recommend a principal reduction which must be signed off on by the investor.

MR. LUCIDO: Where?

BANK COUNSEL: It begins with “notwithstanding Clause 2 above, in the event that mortgage loan is in default.”

MR. LUCIDO: Where is this? Can you highlight that? Page 90? Okay, I see it. This actually allows for it.

THE COURT: This seems to permit—

BANK COUNSEL: Correct, and that’s what we are trying to tell the Court here. There are provisions that prohibit but there are provisions that do allow the servicer to recommend the reduction of principal. But it must be accepted by the investor. It must be in the best interest of the—

THE COURT: But that’s not what has been represented to this Court by the bank and their prior counsel. In fact, prior counsel explicitly represented to this Court on more than one occasion that it is absolutely prohibited under these documents, under this PSA. That is what has been represented to this Court.

BANK COUNSEL: We do submit that it might have been due to some of the provisions prohibiting principal reduction. They would have thought that those provisions may have been triggered. It might have been the opinion of the Court that they have not been.

THE COURT: Where are the express prohibitions, the ones that the bank relies on that they used here in telling this Court that they will not consider a principal reduction because it is absolutely prohibited under the terms of the PSA?

BANK COUNSEL: Under the initial clause, which is 13 lines down from Section 3.01, servicer of service mortgage loan.

THE COURT: Show me where else that it absolutely prohibits a principal reduction? Is there anywhere else in there that you can find?

BANK COUNSEL: We have not found an absolute bar, a prohibition of forgiving or reducing. It is our position, and we submit to this Court, that there are circumstances that if occurring, which is also the signing off of the client, that a principal reduction could occur under certain circumstances.

Subsequent to the foregoing colloquy and without any further concession to the Court’s line of inquiry, counsel advised the Court that an offer was now being made to Defendant, stating that “We are going above and beyond what—we are bending the rules of our underwriting. We are attempting to put together a product here that is not generally offered to the rest of the populace, the rest of the clientele, a 43.5 year product at 2% without the financials.” When the Court inquired as to the reason for Plaintiff’s abrupt about-face, counsel attempted to deflect attention from Plaintiff, instead intimating that the Court was, in effect, coercing a resolution by having “…held the bank’s feet to the fire…” and further mis-stating the facts by incorrectly asserting that “…This Court was not willing to hear it after learning that there was not a principal reduction.” It must be pointed out that in this matter as in all other foreclosure matters assigned to this Part, the Court has only attempted to fulfill its statutory responsibilities and has not, in any manner forced, coerced nor compelled any particular resolution. It is also important to note here that counsel advised the Court that Plaintiff had a new BPO showing a value of $ 346,000.00 and although requested by the Court, this BPO, like the phantom appraisal referred to on July 13, 2011, was never produced.

Based upon the foregoing factual scenario, the Court has serious and substantial questions as to whether or not Plaintiff and its prior counsel of record have acted in good faith in this [*6]matter. By reason of the lengthy delays herein, interest has been accumulating on the debt along with sums that may be due for advances for property taxes and insurance, to say nothing of Plaintiff’s claimed counsel fees (which are, of course, subject to review by the Court). While it is important to note that the Court has grave reservations related to the actions in this matter of Steven J. Baum P.C., Plaintiff’s former counsel of record, the Court hastens to add that it has absolutely no such issues with either Henry P. DiStefano Esq. or Alicia Menechino Esq. (in fact, the appearances covered by these two most excellent attorneys were the only ones upon which the Court was able to obtain a straight answer about anything on the Plaintiff’s case herein).

In 2008, New York’s Assembly and Senate enacted Chapter 472 of the Laws of 2008 which constituted a sweeping reform of the laws governing sub-prime, high cost and non-traditional home loans. Included as part and parcel of that legislation was the newly enacted CPLR § 3408 which required a mandatory settlement conference in an action to foreclose such a mortgage. Since that enactment, this Court, sitting first as Suffolk County’s Residential Mortgage Foreclosure Conference Part and thereafter as an I.A.S. Part, has mandated that the parties to such an action act and negotiate in good faith. Indeed, in December of 2009, both the Assembly and the Senate amended CPLR § 3408 by way of Chapter 507 of the Laws of 2009, which, among other things, added a requirement that the parties act and negotiate in good faith (see CPLR § 3408(f) which states that “Both the plaintiff and the defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.”). This statutory scheme is further buttressed and implemented by the provisions of The Uniform Rules For The Trial Courts, 22 NYCRR § 202.12-a. Indeed, that Rule vests the Court with broad powers to assist the parties in reaching a settlement of their differences, stating, in pertinent part, that “…The court may also use the conference for whatever other purposes the court deems appropriate,” 22 NYCRR § 202.12-a(c)(2). That Rule further imposes upon the Court the duty to be certain that all parties act in compliance therewith, stating that “…The court shall ensure that each party fulfills its obligation to negotiate in good faith…” 22 NYCRR § 202.12-a(c)(4). For this Court to do anything less would be a serious derogation of its statutory responsibilities and would do a great dis-service to the public that it is obligated to serve..

Since an action to foreclose a mortgage is clearly a suit in equity, Jamaica Savings Bank v. M.S. Investing Co. 274 NY 215 (1937), all of the rules and tenets of equity are fully applicable to the proceeding, including the rules governing punitive or exemplary damages, I.H.P. Corp. v. 210 Central Park South Corp. 12 NY2d 329 (1963). In the timeless words of Judge Benjamin Cardozo “The whole body of principles, whether of law or of equity, bearing on the case, becomes the reservoir drawn upon by the court in enlightening its judgment” Susquehannah Steamship Co. Inc. v. A.O. Andersen & Co. Inc. 239 NY 289 at 294 (1925). In a suit in equity, the Court is vested with jurisdiction to do that which ought to be done. While the formal distinctions between an action at law and a suit in equity have long since been abolished in New York (see CPLR 103, David Dudley Field Code of 1848 §§ 2, 3, 4, 69), the Supreme Court, as New York’s trial court of general jurisdiction, is nevertheless vested with equity jurisdiction and the distinct rules governing the application of the principles of equity are still very much applicable, Carroll v. Bullock 207 NY 567 (1913).

While the Court understands that the instruments upon which a mortgage foreclosure [*7]action is based are contractual in nature and, understanding that “[s]tability of contract obligations must not be undermined by judicial sympathy” Graf v. Hope Building Corp. 254 NY 1 at 4 (1930), it is equally true, as decreed in Noyes v. Anderson 124 NY 175 at 179 (1891) that “a party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression.” Thus, equity will not intervene on behalf of one who acts in an unjust, unconscionable or egregious manner, York v. Searles 97 AD 331 (2nd Dept. 1904), aff’d 189 NY 573 (1907). This Court cannot, and will not, countenance a lack of good faith in the proceedings that are brought before it, especially where blatant and repeated misrepresentations of fact are advanced, neither will it permit equitable relief to lie in favor of one who so flagrantly demonstrates such obvious bad faith.

In those very rare instances where the conduct of a party is unconscionable, shocking or egregious, a Court of equity is vested with the power to award exemplary damages. Exemplary damages may lie in a situation where it is necessary to both effectuate some punishment and to deter the offending party from engaging in such reprehensible conduct in the future. Such an award may also be made to address, as so clearly and succinctly enunciated by our Court of Appeals in Home Insurance Co. v. American Home Products Corp. 75 NY2d 196, 550 NE 2d 930, 551 NYS 2d 481 (1989) “…gross misbehavior for the good of the public…on the ground of public policy”. Indeed, exemplary damages are intended to have a deterrent effect upon conduct which is unconscionable, egregious, deliberate and inequitable, I.H.P. Corp. v. 210 Central Park South Corp. 12 NY2d 329, 189 NE 2d 812, 239 NYS 2d 547 (1963).

In the matter that is sub judice, the record unequivocally demonstrates that Plaintiff, through its deliberate and contumacious conduct, has failed to act in good faith, although required by statute to do so. This Court is driven to the inescapable conclusion that Plaintiff has deliberately acted in bad faith over the preceding thirty four months. Through its repeated and persistent failure and refusal to comply with the lawful orders of the Court including those which directed production of documentation that was essential to address critical issues in the present matter, it has repeatedly caused to be put forth material mis-statements of fact which appear to have been calculated to deceive the Court and has delayed these proceedings without good cause, thereby needlessly increasing the amount owed upon the mortgage debt, to say nothing of the needless waste of the Court’s time and resources, as well as those of Defendant. In short, the conduct of Plaintiff in this matter has been over-reaching, willful and unconscionable, is wholly devoid of even so much as a scintilla of good faith and cannot be countenanced by this Court.

Under the unique circumstances of this matter, the Court determines that it is fair and equitable that Plaintiff be forever barred, precluded, prohibited and foreclosed of and from collecting any of the claimed interest accrued on the loan between the date of default and the date of this Order; that Plaintiff be barred and prohibited from recovering any claimed legal fees and expenses; and further, that the amount due Plaintiff under the Note and Mortgage herein be determined at this time to be no more than the principal balance of $ 493,219.75, exclusive of advances for property taxes and property insurance. The Court also determines that under the circumstances herein, the imposition of exemplary damages upon Plaintiff is equitable, necessary and appropriate, both in light of Plaintiff’s shocking and deliberate bad faith conduct as well as to serve as an appropriate deterrent to any future outrageous, improper and wrongful conduct. The Court hereby fixes and determines [*8]the amount of exemplary damages in the sum of $ 200,000.00, recoverable by Defendants from Plaintiff in the nature of a principal reduction upon the mortgage sought to be foreclosed by Plaintiff.

For all of the foregoing reasons, it is, therefore

ORDERED , ADJUDGED and DECREED that Plaintiff, its successors, assigns and others are forever barred, foreclosed and prohibited from demanding, collecting or attempting to collect, directly or indirectly, any and all of the sums secured by the mortgage under foreclosure herein designated or denominated as interest, attorney’s fees, legal fees, costs, disbursements or any sums other than the principal balance as well as advances for property taxes and property insurance if any, that may have accrued from the date of default up to the date of this Order; and it is further

ORDERED, ADJUDGED and DECREED that the debt due Plaintiff under the Note and Mortgage under foreclosure in this action be fixed at $ 493,219.75, exclusive of any sums advanced for property taxes or property insurance; and it is further

ORDERED, ADJUDGED and DECREED that Defendant JOHN LUCIDO be and is hereby awarded exemplary damages as against Plaintiff in the amount of $ 200,000.00 to abide the event; and it is further

ORDERED, ADJUDGED and DECREED that the foregoing award of $ 200,000.00 in exemplary damages shall be and is hereby applied as a credit against the principal balance of the mortgage under foreclosure herein, amending and reducing the same to $ 293,219.75.

This shall constitute the Decision, Judgment and Order of the Court.

Dated: April 16, 2012

Riverhead, New York

E N T E R:


Jeffrey Arlen Spinner, J.S.C.

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NY Judge Spinner Denies 86 Applications for JUDGMENT OF FORECLOSURE AND SALE Due to No Affirmation by Plaintiff Counsel

NY Judge Spinner Denies 86 Applications for JUDGMENT OF FORECLOSURE AND SALE Due to No Affirmation by Plaintiff Counsel


Plaintiff has applied to this Court for the granting of a Judgment of Foreclosure & Sale pursuant to RPAPL § 1351. The express provisions of the Administrative Order of the Chief Administrative Judge of the Courts, no. A0548/10 require the filing of an Affirmation by Plaintiff’s counsel. No such Affirmation has been filed in this proceeding, in derogation of the aforesaid mandate. Accordingly, this application must be denied.

It is, therefore,

ORDERED that the within application by the Plaintiff shall be and the same is hereby denied without prejudice.

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Case No. BK-S-07-16226-LBR ) Chapter 7 )


In Hawkins the motion was brought by MERS “solely as nominee for Fremont Investment
& Loan, its successors and/or assigns.
” However, in his affidavit at ¶ 6, Victor Parisi states 45 46
that the beneficial ownership interest in the Hawkins note was sold by Fremont Investment &
Loan and ownership was transferred by endorsement and delivery. While the affidavit goes on to
the say that MERS was a holder at the time the motion was filed, it is obvious that MERS has no
rights to bring the motion as nominee of Fremont given that Fremont no longer had any interest
in the note.

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JPMORGAN CHASE as Trustee of Equity One




the affidavit of its Vice President, Victor Parisi, who alleges that Premium, its
signor. paid valuable consideration for the mortgage. Mr. Parisi points to a copy of the HUD
Settlement Statement from the Premium closing, which indicates that
out of the $315,000.00 loan
proceeds~ $222.S62.63 was paid to Washington Mutual to satisfy a prior mortgage, $237.00 was paid to
satisfy an obligation to CBUSASears, and $71,228.07 was disbursed to Munoz. Additionally, Mr. Parisi
asserts that Premium did not know or have reason to know about O’Connor’s claim. He argues that at
the time of the mortgage, O’Connor’s judgment had not yet been docketed and there was nothing in the
property records that disclosed Zambrano’s liability to O’Connor. Thus, alleges Mr. Parisi, having
paid valuable consideration and having taken without knowledge or notice of O’Connor’s claims,
Premium and Chase are bona fide mortgagees ofthe premises and are entitled to protection under Real
Property Law 266 and Debtor and Creditor Law $278(1).
In addition, Mr. Parisi alleges that even if
O’Connor was able to show that Premium was on notice of Zambrano’s liability or alleged fraudulent
conveyance. pursuant to Debtor and Creditor Law $278(2), Chase would be entitled to retain and enforce


Chase has failed to make such a prima facie showing. The affidavit of Victor Parisi is not in
admissible form because it was signed and notarized in the State of New Jersey, and is not accompanied by the required certificate of conformity with the laws of the State of New Jersey.
For an out-of-state affidavit to be admissible, it must comply with CPLR 2309 [c] which requires that an out-of-state
affidavit accompanied by a certificate of Conformity (see Real Property Law $ 299-a [l]; PRA ZU,
b , L ( ’ 1 4 CoitialeZ. 54 AD3d 917, 864 NYS2d 140 [2008]). In the absence ofa certificate of conformity,
the affidavit, is, effect, unsworn (see Worldwide Asset Purchasing, LLC v Simpson, 17 MiscSd
’ ISA. 851 YYS2d 75 [ 20071). Consequently, Mr. Parisi’s affidavit cannot be considered by the Court.

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At an I AS Term, Part 2 1 of the Supreme
Court of the State of New York, held in and
for the County of Kings, at the Courthouse,
at the Oivic Center, Brooklyn, New York on
the 4th (Lay of December, 2006
1 —-X Index No.: 16705/2006



to JOHN DOE 25”, said names being fictitiouh, the
persons or parties, corporations or entities, if any,
having or claiming an interest in or lien upon the
mortgaged premises described in the complaint,


The Affidavit of Merit submitted by the plaintiff appears to have been prepared by one Victor F. Parisi. The signor or the assignment of the mortgage, on behalf of MERS, Inc. as nominee for Fremont Investment & Loan, is also named Victor F. Parisi. Are these two signators the same people? If so, movant must submit an affidavit/affirmation advising the Court as to whether the assignment is a valid transfer or simply a paper one.

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NY JUDGE SPINNER DENIES Deutsche & MERS for NOT Recording Mortgage, Make up Affidavit and Assignment!

NY JUDGE SPINNER DENIES Deutsche & MERS for NOT Recording Mortgage, Make up Affidavit and Assignment!



INDEX NO. 09-3 1067


MERS alleges that the mortgage was never recorded, and upon information and belief, has been lost or inadvertantly destroyed. MERS commenced this action on August 1 1, 2009, with the filing of the summons, verified complaint, and notice of pendency.

Also, in support of its cross motion, MERS submits, inter alia, copies of the alleged note and mortgage, and the affidavit of John Burnett ( “Burnett”), a Vice President of Deutsche Bank National Trust Company as Trustee for the MLMI Trust Series 2007-MLNI (“Deutsche Bank”) who alleges that Deutsche Bank is the current owner and holder of the mortgage that is the subject of this action. Burnett claims that MERS’ mortgage has been assigned to Deutsche Bank by an unrecorded assignment of the mortgage acknowledged on September 4,2009, a copy of which has been submitted to the court. Burnett states that the assignment will be recorded once the mortgage has been established of record. Further, Burnett alleges that out of the loan proceeds that were secured by the mortgage, $641,441.54 was paid to Downey Savings and Loan to satisfy a prior mortgage Torr had given on the property, and the amount of $34,833.22 was paid directly to Torr. Burnett submits a copy of the alleged HUD- 1 A Settlement Statement from Torr’s closing.

Additionally, Burnett asserts that it has been discovered that the original mortgage was never recorded, cannot be located, and is presumed to be lost or inadvertantly destroyed. He claims that the original mortgage is not in Deutsche Bank’s files, and only a copy has been located. Burnett states that Interactive Abstract (“Interactive”) a title abstract company, presided over the November 17, 2006 closing of the mortgage and took the executed original for the purpose of recording it in the Suffolk County Clerk’s Office. He states that, upon information and belief, the mortgage was lost, misplace or destroyed while in Interactive‘s possession or after it had been submitted to the Clerk’s Office for recording. Burnett alleges that he has been advised that Interactive has ceased operating as a title abstract company and is out of business.

MERS alleges that by submitting the affidavit of Burnett, and copies of the affidavits of service, together with the relevant documentary evidence, it has satisfied the proof required by CPLR 321 5 setting forth the facts constituting the claim against Torr and establishing his default. Moreover, MERS alleges that the relief sought herein, a declaratory judgment, is necessary to enable it to realize the security interest in the property that was bargained for when MLN made its $695,000.00 loan to Torr and Torr gave the mortgage to secure the loan. MERS requests that the court render a judgment declaring that the plaintiff is the holder of a mortgage encumbering the premises under the terms and conditions set forth in the unrecorded plaintiffs mortgage, and directing the Suffolk County Clerk’s Office to record such a declaratory judgment, together with a copy of the plaintiffs mortgage.

As to Torr’s motion to dismiss the complaint for failure to state a cause of action, MERS has established that such motion is untimely. Torr was served by two different methods of service. One of the affidavits of service submitted indicates that Torr was served pursuant to CPLR 308(2) on September 2, 2009, by leaving the summons and verified complaint with a person of suitable age and discretion; mailing them to Torr’s residence on September 8,2009; and then filing proof of service with the Suffolk County Clerk’s Office on September 18, 2009. Therefore, under this method of service, Torr would have had to have served an answer or a notice of appearance by October 28,2009 (see CPLR 308[2]; CPLR 320; and CPLR 3012). The other affidavit of service submitted indicates that Torr was served pursuant to CPLR 308( 1) on September 2,2009, by personal delivery of the summons and verified complaint, and then fiIing proof of service with the Suffolk County Clerk’s Office on September 10, 2009. Thus, under this method of service, Torr would have had to have served an answer or a notice of appearance by September 22, 2009 (see CPLR 320 and CPLR 30 12). Furthermore, this motion to dismiss the complaint was made by Torr on December 2 1,2009, the date upon which it was served (see CPLR 221 1). Inasmuch as this motion was not interposed within the time required for service of responsive pleadings (see CPLR 32 1 1 [e]), no matter which of the two afl’ldavits of service submitted herein is used, the motion is untimely. Therefore, Torr’s motion to dismiss is denied.

As to MERS’ cross motion, it is well settledl that when applying for a default judgment, a plaintiff must submit evidence sufficient to demonstrate a prima facie case (see CPLR 32 lS[fl; Silberstein v Presbyterinn Hosp. in the City of New York, 96 AD2d 1096,463 NYS2d 254 [1983]). Thus, if a court finds that the allegations in a complaint or affidavit of facts fail to establish a prima facie case, a movant is not entitled to the requested relief; even on default (Dyno v Rose, 260 AD2d 694,687 NYS2d 497 [1999]; Green v Dolplzy Construction Co., Inc., 187 AD2d 635, 590 NYS2d 238 [1992]). Consistent with the foregoing, and upon review of t.he papers submitted, the court finds MERS’ application for a default judgment to be deficient.

An action to compel the determination of a claim to real property may be maintained where a plaintiff claims an estate or interest in real property (RPAPL § 150 I [ 11). Although the interest had by a mortgagee of real property or its successor in interest is an “interest in real property”(RPAPL tj 150 1 [ 5 ] ) , here MERS has failed to meet its burden by demonstrating that it has standing to maintain this action to quiet title (see Soscin v Soscin, 35 AD3d 841, 829 NYS2d 543 [2006]). MERS has failed to make a prima facie showing that it was the owner or holder of the note and the mortgage at the time this action was commenced (cc Mortgnge Elec. Registration Sys., Inc. v Conkley, 41 AD3d 674, 838 NYS2d 622 [2007]). In addition, the purported mortgage describes MERS as the nominee of MLN, and that for purposes of recording the mortgage, MERS is the mortgagee of record. Thus, MERS as nominee, is the agent of MLN, for limited purposes, “and has only those powers which are conferred to it and authorized by” MLN (Bank of New York v Aldernzi, 201 0 NE’ Slip Op. 20 167,900 NYS2d 82 1, 823 [Sup Ct, Kings County, 20101). There is no evidence that MLN, who is not a party herein, authorized MERS to bring this action’.

Moreover, the effectiveness of the assignment dated September 4, 2009, is unclear as there is no evidence that MLN ever directly assigned the note to MERS or expressly gave MERS the authority to act as MLN’s authorized agent to assign the subject note to Deutsche Bank (see In re Stralern, 303 AD2d 120, 758 NYS2d 345 [2003]; Teitz v Goettler, 191 AD 924, 181 NYS 956 [1920]).Without an effective transfer of MLN’s interest in the note to MERS or express authorization from MLN for MERS to assign the note on its behalf, the assignment of the mortgage is a nullity (see Kluge v Fugazy, 145 AD2d 537, 536 NYS2d 92 [1988]). Thus, it is also iinclear whether Deutche Bank’s Vice President had the authority to act in terms of satisfying the proof of facts constituting this claim (see CPLR 3215[fl; Wells Fargo Barzk, NA v Davilmar, 16 Misc3d 1 13 3A, 847 NYS2d 906 [2007]).

[ipaper docId=37138728 access_key=key-1brfunk8ho62g6uhl4j0 height=600 width=600 /]

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Posted in chain in title, conflict of interest, conspiracy, deutsche bank, dismissed, foreclosure, foreclosure fraud, foreclosures, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, quiet title, rmbs, servicers,, trustee, Trusts, Wall StreetComments (0)

Don’t mess with Judge Spinner…he will read you like a book! Emigrant Mtge. Co., Inc. v Fitzpatrick

Don’t mess with Judge Spinner…he will read you like a book! Emigrant Mtge. Co., Inc. v Fitzpatrick


2010 NY Slip Op 20317



Linda FITZPATRICK a/k/a Linda J. Fitzpatrick, “John Doe 1-10”, said names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the complaint, Defendants.

No. 09-10577.

— August 11, 2010

Deutsch & Schneider, LLP Glendale, for Plaintiff.Nassau/Suffolk Law Services Islandia, for Defendant Fitzpatrick.

It is ORDERED that this motion by the plaintiff for an order pursuant to CPLR 3212 granting summary judgment in its favor and striking the answer of the defendant Linda Fitzpatrick a/k/a Linda J. Fitzpatrick (Fitzpatrick); appointing a referee to ascertain and compute the amount due; amending the caption of this action by substituting Haley Lanzafame for John Doe # 1 and striking out John Doe # 2-# 10; and striking the notice for discovery and inspection of the defendant Fitzpatrick pursuant to CPLR 3124(b) is denied.

This is an action to foreclose a mortgage on property known as 1 Forest Drive, East Northport, New York. The defendant Fitzpatrick obtained a loan in the amount of $210,000.00 at a yearly fixed rate of interest of 11.125 percent from the plaintiff and executed a note and said mortgage, both dated April 9, 2008, in favor of the plaintiff. The note indicated monthly mortgage payments to be $2019 .74. The defendant Fitzpatrick defaulted on the monthly loan payment due on September 1, 2008 and those due thereafter. Subsequently, the plaintiff declared the entire amount due.

The plaintiff commenced the instant mortgage foreclosure action on March 25, 2009 alleging that upon information and belief the subject loan is a “sub-prime/high cost” loan and that the plaintiff is the holder and owner of the subject mortgage and note and has complied with Banking Law §§ 595-a and 6-l or 6-m, if applicable, and RPAPL § 1304.

The defendant Fitzpatrick answered asserting a first affirmative defense that the loan was substantively unconscionable because the monthly mortgage payments of principal, interest and taxes of $2,753 .88 were in excess of the defendant’s fixed monthly income of $2,671.00; the plaintiff knew or should have known at the time that the loan agreement was made that the defendant Fitzpatrick’s income was insufficient to cover the monthly payments due under the note; and the plaintiff failed to verify or to even inquire into the defendant Fitzpatrick’s income, which is fixed and easily verifiable, and disregarded income in determining the loan terms to extend to her. In addition, the first affirmative defense alleged that the loan was procedurally unconscionable due to the unequal bargaining power and imbalance of the knowledge and understanding of the parties.

As a second affirmative defense, the defendant Fitzpatrick asserted that the plaintiff engaged in unfair and deceptive practices in the extension of said loan in violation of General Business Law § 349. The second affirmative defense alleged in effect that the conduct of the plaintiff of extending the subject loan to the defendant Fitzpatrick without determining her ability to repay when a reasonable person would expect such an established bank as the plaintiff to offer a loan that he or she could afford was materially misleading. In addition, the defense alleged that said conduct had the potential to affect similarly-situated financially vulnerable consumers and alleged damages in the form of the loss of the defendant Fitzpatrick’s home of 22 years to foreclosure. The defendant Fitzpatrick pointed out in her answer that the mortgage payments she made for June, July and August 2008 prior to her default were paid out of the loan proceeds.

The plaintiff now moves for summary judgment on the complaint on the grounds that the defendant Fitzpatrick defaulted on her loan payments, the plaintiff served the defendant Fitzpatrick with the required notices of default, and the defendant Fitzpatrick failed to cure her default resulting in the acceleration of her loan. In support of the motion, the plaintiff submits a copy of the note and mortgage; the affidavit of facts of the plaintiff’s assistant treasurer; the 90-day notice pursuant to RPAPL § 1304 dated October 29, 2008 and addressed to the defendant Fitzpatrick; the default notice pursuant to paragraph 22 of the mortgage; the “Help for Homeowners in Foreclosure” notice pursuant to RPAPL § 1303; the Fair Debt Collections Practices Act notice; the summons with the “You Are In Danger of Losing Your Home” notice of RPAPL § 1320; the complaint; the answer of the defendant Fitzpatrick; and the affidavits of service. The plaintiff also submits an affirmation regarding “sub-prime” status stating that upon information and belief this is an action to foreclose a residential mortgage loan which is a “subprime home loan” as defined in RPAPL § 1304 or a “high cost” home loan as defined in Banking Law § 6-l (see, CPLR 3408).

In opposition to the motion, the defendant Fitzpatrick contends that the plaintiff’s act of extending said loan was unconscionable as evidenced by the parties’ unequal appreciation of the undertaking and the clearly ascertainable inability of the defendant Fitzpatrick to repay the loan according to its terms such that the plaintiff knew or should have known prior to closing that it would be impossible for the defendant Fitzpatrick to make loan payments. The defendant Fitzpatrick’s attorney states in her affirmation that upon information and belief, the subject loan is the first mortgage that the defendant Fitzpatrick has ever had and that compared to the plaintiff, a large lending institution with extensive knowledge of loans, mortgages and extension of credit, the defendant Fitzpatrick is a homeowner with very limited knowledge of loan terms and the lending process. The defendant Fitzpatrick’s attorney contends in effect that a review of her client’s easily verifiable income would have immediately alerted the plaintiff that the defendant Fitzpatrick could not afford the loan that was extended to her. She further contends that the extension of the subject loan implies an intent by the plaintiff to seize the defendant Fitzpatrick’s home upon her almost inevitable default.

It is well settled that the proponent of a summary judgment motion bears the initial burden of making a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient proof to demonstrate the absence of any material issues of fact (Norwest Bank Minnesota, N.A. v. Sabloff, 297 A.D.2d 722, 747 N.Y.S.2d 559 [2d Dept 2002] ). Failure to make such a prima facie showing requires a denial of the motion regardless of the sufficiency of the opposition papers (De Santis v. Romeo, 177 A.D.2d 616, 576 N.Y.S.2d 323 [2d Dept 1991] ).

In order to establish prima facie entitlement to summary judgment in a foreclosure action, a plaintiff must submit the mortgage and unpaid note, along with evidence of default (see, Capstone Business Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d 882, 883, 895 N.Y.S.2d 199, 201 [2d Dept 2010]; U.S. Bank Natl. Assn. TR U/S 6/01/98 [Home Equity Loan Trust 1998-2] v. Alvarez, 49 AD3d 711, 711, 854 N.Y.S.2d 171 [2d Dept 2008]; Hoffman v. Kraus, 260 A.D.2d 435, 436, 688 N.Y.S.2d 575 [2d Dept 1999] ). The plaintiff’s motion for summary judgment should prove the allegations of the complaint (2-21 Bergman, New York Mortgage Foreclosures § 21.05). Chapter 472 of the Laws of 2008 (known as the Subprime Residential Loan and Foreclosure Law) provides additional protections, including protections against predatory lending practices, to homeowners facing foreclosure whose home loans meet certain standards. The plaintiff seeking to foreclose a home loan that meets said standards must also submit evidence of compliance with the statutes pertaining to that specific type of home loan in order to demonstrate entitlement to summary judgment. If the loan is a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m, the plaintiff seeking to meet its initial burden on a summary judgment motion must establish that it is the owner and holder of the subject mortgage and note or has been delegated the authority to commence a mortgage foreclosure action by the owner and holder and has complied with all of the provisions of Banking Law § 595-a and any rules and regulations promulgated thereunder as well as Banking Law § 6-l or § 6-m and RPAPL § 1304 (see, RPAPL § 1302).

The burden then shifts to the defendant to demonstrate “the existence of a triable issue of fact as to a bona fide defense to the action, such as waiver, estoppel, bad faith, fraud, or oppressive or unconscionable conduct on the part of the plaintiff” (Capstone Bus. Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d at 883 quoting Mahopac Natl. Bank v. Baisley, 244 A.D.2d 466, 467, 664 N.Y.S.2d 345 [2d Dept 1997]; see, Nassau Trust Co. v. Montrose Concrete Prods. Corp., 56 N.Y.2d 175, 183, 451 N.Y.S.2d 663 [1982] ). If the loan is a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m, it is a defense in a mortgage foreclosure action that the terms of the home loan or the actions of the lender violate any provision of Banking Law § 6-l or § 6-m or RPAPL § 1304 (see, RPAPL § 1302).

Here, the plaintiff has failed to demonstrate through the submission of proof from someone with personal knowledge that the subject loan is either a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m and RPAPL § 1304(5)(c) and that the plaintiff has complied with all of the provisions of Banking Law § 595-a, and any rules and regulations promulgated thereunder, as well as Banking Law § 6-l or § 6-m and RPAPL § 1304, as alleged in the complaint. Nowhere in the attorney’s affirmation of regularity or the affidavit of the plaintiff’s assistant treasurer is there any mention or specification or explanation of the subject loan’s exact loan type as either a high cost home loan or a subprime home loan. The Court notes that the plaintiff has submitted a 90-day default notice which is required for a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m (see, RPAPL § 1304). If the subject loan is a high cost home loan, then the plaintiff has failed to submit proof that it complied with Banking Law § 6-l (2-a)(a) inasmuch as the subject mortgage lacks a legend on top in twelve-point type stating that the mortgage is a high-cost home loan subject to Banking Law § 6-l (see, Banking Law § 6-l [2-a][a] ). Therefore, the plaintiff’s motion for summary judgment on the complaint is denied inasmuch as the plaintiff failed to meet its initial burden of establishing its prima facie entitlement to judgment as a matter of law (see, Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923 [1986]; Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316 [1985]; Tyson v. Tower Ins. Co. of New York, 68 AD3d 977, 891 N.Y.S.2d 143[2d Dept 2009] ).

In any event, when a plaintiff moves for summary judgment, it is proper for the court to look beyond the defendant’s answer and deny summary judgment if facts are alleged in opposition to the motion which, if true, constitute a meritorious defense (see, Nassau Trust Co. v. Montrose Concrete Prods. Corp., 56 N.Y.2d at 182). Here, the defendant Fitzpatrick’s opposition to the motion also raises allegations of a violation of Banking Law § 6-l (2)(k) if the subject loan is actually a high cost home loan in that it was made without “due regard to repayment ability ? as verified by detailed documentation of all sources of income and corroborated by independent verification” and a violation of Banking Law § 6-m (4) if the subject loan is actually a subprime home loan (see, Banking Law §§ 6-l [2][k], 6-m [4] ). Consistent with the rule referred to above, the Court considers not only the defenses pleaded but also alleged violations of Banking Law § 6-l (2)(k) and § 6-m (4) (see, id. at 183).

The plaintiff also moves for dismissal of the affirmative defenses of the defendant Fitzpatrick on the grounds that the loan documents that were signed and presumably read and assented to by the defendant Fitzpatrick fully disclosed the amount of monthly loan payments and income required to meet the obligations of the subject asset based loan, that the plaintiff expressly relied on her sworn representations of her ability to repay the loan, and that there was no predatory lending involved inasmuch as it was the defendant Fitzpatrick who approached the plaintiff for a loan so as to avoid tax foreclosure.

When moving to dismiss an affirmative defense, the plaintiff bears the burden of demonstrating that the affirmative defense is “without merit as a matter of law” (see, CPLR 3211[b]; Vita v. New York Waste Services, LLC, 34 AD3d 559, 559, 824 N.Y.S.2d 177 [2d Dept 2006] ). In reviewing a motion to dismiss an affirmative defense, this court must liberally construe the pleadings in favor of the party asserting the defense and give that party the benefit of every reasonable inference (see, Fireman’s Fund Ins. Co. v. Farrell, 57 AD3d 721, 723, 869 N.Y.S.2d 597 [2d Dept 2008] ). Moreover, if there is any doubt as to the availability of a defense, it should not be dismissed (see, id.).

A party is under an obligation to read a document before he or she signs it, and a party cannot generally avoid the effect of a document on the ground that he or she did not read it or know its contents (Cash v. Titan Fin. Services, Inc., 58 AD3d 785, 788, 873 N.Y.S.2d 642 [2d Dept 2009][internal quotations and citations omitted] ). There are situations where an instrument will be deemed void because the signer was unaware of the nature of the instrument he or she was signing, such as where the signer is illiterate, or blind, or ignorant of the alien language of the writing, and the contents thereof are misread or misrepresented to him by the other party, or even by a stranger (Id. at 788 [internal quotations and citations omitted] ).

Whether a contract or clause is unconscionable is to be decided by the court against the background of the contract’s commercial setting, purpose and effect (see, Wilson Trading Corp. v. David Ferguson, Ltd., 23 N.Y.2d 398, 403, 297 N.Y.S.2d 108 [1968] ). An unconscionable contract is one which is so grossly unreasonable or unconscionable in the light of the mores and business practices of the time and place as to be unenforceable according to its literal terms (Gillman v. Chase Manhattan Bank, 73 N.Y.2d 1, 10, 537 N.Y.S.2d 787 [1988][internal quotations and citations omitted] ). A determination of unconscionability generally requires a showing that the contract was both procedurally and substantively unconscionable when made, for example, some showing of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party (Id. [internal quotations and citations omitted] ). The procedural element of unconscionability requires an examination of the contract formation process and the alleged lack of meaningful choice with a focus on such matters as the size and commercial setting of the transaction, whether deceptive or high-pressured tactics were employed, the use of fine print in the contract, the experience and education of the party claiming unconscionability, and whether there was disparity in bargaining power (Id. at 10-11). The substantive element of unconscionability entails an analysis of the substance of the bargain to determine whether the terms were unreasonably favorable to the party against whom unconscionability is urged (Id.).

With respect to the first affirmative defense that the loan was unconscionable, the plaintiff’s attorney points out in his affirmation that the defendant Fitzpatrick signed a “Resource Letter” on April 9, 2008, which is submitted with the motion papers, indicating that she understood and confirmed her ability to make the initial monthly mortgage payments of approximately $2,754.00 on a timely basis; that she had regular and dependable income from which to make her scheduled monthly payments; that under the standard loan program her annual regular and dependable income would need to be $100,163.00 and that if it was projected to be lower than said sum, she must have additional resources available to fund her monthly payments. In addition, the plaintiff’s attorney points out that the defendant Fitzpatrick received a similar copy of this letter at the time that her loan was approved prior to closing and that she acknowledged that the loan was being made in reliance on said confirmation of her ability to repay. The plaintiff’s attorney also indicates that since the loan was an asset based loan, in which the plaintiff considered the value of the home, and not an income/net worth based loan, the plaintiff was not required to verify the defendant Fitzpatrick’s statements as to income. He further indicates that the defendant Fitzpatrick was therefore required to sign a High Equity Loan Certificate, also submitted with the motion papers, acknowledging that the plaintiff may not have made any independent determination of her ability to repay the loan other than as represented by the defendant Fitzpatrick in the loan application and that the plaintiff may be relying on her said representations.

Here, the plaintiff has failed to demonstrate that the first affirmative defense lacks merit. The High Equity Loan Certificate explains that the subject loan is a High Equity Plus Loan which is a “no income-documentation mortgage loan” and the Resource Letter indicates that it is a loan program that does not enable the bank to independently verify the borrower’s ability to make their scheduled loan payments to repay the loan. Said submissions raise an issue of fact as to whether the mere extension of an asset based secured loan, a type of loan used almost exclusively in commercial business lending to provide working capital, to the defendant Fitzpatrick as a residential home loan was grossly unreasonable or unconscionable (see e.g., Gartenberg v. Wells Fargo Bus. Credit, 1985 U.S. Dist LEXIS 20133 [SDNY 1985]; see also, 2-11 N.Y. Practice Guide: Business and Commercial § 11.03). In addition, the defendant Fitzpatrick’s allegation that the loan agreement was unreasonably favorable to the plaintiff because the plaintiff knew or should have known that she could not afford the terms of the agreement sufficiently states a claim for substantive unconscionability (see, Williams v. Aries Fin., LLC, 2009 WL 3851675 [EDNY 2009] ). Moreover, if the subject loan is actually a high cost home loan, the plaintiff has clearly failed through its submissions to demonstrate compliance with Banking Law § 6-l (2)(k), that the loan was made with “due regard to repayment ability, based upon consideration of the resident borrower or borrowers’ current and expected income, current obligations, employment status, and other financial resources (other than the borrower’s equity in the dwelling which secures repayment of the loan), as verified by detailed documentation of all sources of income and corroborated by independent verification” (see, Banking Law § 6-l [2][k] ). Likewise, if said loan is actually a subprime home loan, the plaintiff has failed to establish compliance with Banking Law § 6-m (4) (see, Banking Law § 6-m [4] ). Therefore, the request for dismissal of the first affirmative defense is denied.

Regarding the defense of unfair and deceptive practices in violation of General Business Law § 349, the plaintiff asserts that the subject loan transaction did not involve any deceptive practice of fraudulent inducement inasmuch as the defendant Fitzpatrick had significant tax arrears when she approached the plaintiff and sought a mortgage to prevent a tax foreclosure. The plaintiff points to the U.S. Department of Housing and Urban Development (HUD) settlement statement in support of the assertion that the defendant Fitzpatrick obtained in excess of $123,000.00 cash at the closing of which approximately $44,058.12 was used to pay the defendant’s real estate tax arrears.

An affirmative defense or a cause of action under General Business Law § 349(a) must allege that (1) the challenged conduct was consumer-oriented, (2) the conduct or statement was materially misleading, and (3) damages (see, Stutman v. Chemical Bank, 95 N.Y.2d 24, 29, 709 N.Y.S.2d 892 [2000]; Lum v. New Century Mtge. Corp., 19 AD3d 558, 559, 800 N.Y.S.2d 408 [2d Dept 2005], lv denied 6 NY3d 706, 812 N.Y.S.2d 35 [2006] ).

Here, the plaintiff has also failed to demonstrate that the second affirmative defense lacks merit. The plaintiff’s proffered proof raises an issue of fact as to whether the act of offering an asset based loan under the plaintiff’s High Equity Plus Program to the defendant Fitzpatrick and other homeowners in similarly financially vulnerable or desperate situations who approached the plaintiff for a loan was materially misleading in violation of General Business Law § 349 (see generally, Aurora Loan Services, LLC v. Thomas, 53 AD3d 561, 862 N.Y.S.2d 89 [2d Dept 2008]; Popular Fin. Services, LLC v. Williams, 50 AD3d 660, 855 N.Y.S.2d 581 [2d Dept 2008] ). Therefore, the request for dismissal of the second affirmative defense is denied.

The plaintiff’s remaining requests for relief are denied.

Dated:___August 11, 2010__________/s/ JEFFREY ARLEN SPINNER____


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Posted in conspiracy, foreclosure, foreclosures, mortgage, non disclosure, note, sub-primeComments (2)

FINED! NY Judge Spinner Orders Lender To Pay Long Island Couple $100K

FINED! NY Judge Spinner Orders Lender To Pay Long Island Couple $100K

Originally published: April 21, 2010 8:09 AM

Quick Summary

A state judge accused a mortgage company of premeditated attempts to destroy an East Northport couple’s chances of keeping their home.

Jane and Anthony Corcione appear

Photo credit: Kevin P. Coughlin | Jane and Anthony Corcione appear outside their East Northport home. A state judge has ordered their lender to pay the borrowers $100,000 in damages and scrapped as much as $119,330 in questionable late charges. (April 20, 2010)

A state judge accused Emigrant Mortgage Co. of premeditated attempts to destroy an East Northport couple’s chances of keeping their home, ordering the lender to pay the borrowers $100,000 in damages and scrapping as much as $119,330 in questionable late charges.

Borrower Jane Corcione could scarcely believe what she heard when a reporter broke the news by phone late Tuesday afternoon on the decision from State Supreme Court Justice Jeffrey Arlen Spinner.

“Shut up. Shut up,” she said jokingly. She said she and her husband, Anthony, were ecstatic. “We have been fighting for this for almost two years.”

After a job loss, the Corciones defaulted May 1, 2008, on a $302,500 loan they got the preceding year. The mortgage had an 11.625 percent interest rate that would reset at least 6.375 percentage points higher every August from 2012 to its maturity in 2037, said Spinner’s decision on Friday on Emigrant’s request to move ahead on foreclosure.

But Emigrant waited 14 months before starting a foreclosure case, apparently to rack up penalty fees, the judge concluded. Then, two months ago, on Feb. 23, the lender offered a loan modification plan and 10 days to accept or reject a proposal whose “deplorable particulars” insulated Emigrant from any liability by violating Corciones’ state and federal rights, Spinner wrote.

“This court is driven to the inescapable conclusion that plaintiff has, by way of calculation and premeditation . . . created a scenario whereby it is a virtual certainty that defendants will ultimately be irreparably damaged,” he wrote. “In short, the conduct of plaintiff in this matter has been overreaching, shocking, willful and unconscionable.”

A spokesman for the New York-based lender said the decision was based on inaccuracies and that the lender has made many modifications: “Emigrant believes that the court’s decision in this matter is based upon an incomplete understanding of the underlying facts and certain factual inaccuracies, which Emigrant intends to address with the court as part of a motion to renew and reargue and, if necessary, through an appeal of the court’s decision.”

Spinner is the same judge who gave Greg Horoski and wife,Diana Yano-Horoski, of East Patchogue a Thanksgiving surprise last year by voiding their $292,500 mortgage. He had accused IndyMac Mortgage Services of failing to negotiate a loan modification in good faith. The lender’s appeal is pending.

This time, the judge set the Corciones’ debt at $301,721.58, the remaining principal, and “forever barred” Emigrant from “demanding, collecting or attempting to collect” any interest, default interest, legal fees, advances and other charges that may have accrued from May 1, 2008 to the date of his ruling.

That’s because Spinner did not believe the lender on several fronts, especially its list of charges. That included the lender’s claim of advancing $10,000 to pay the couple’s property taxes, despite contradictory records from Huntington Town and evidence from Emigrant’s own assistant treasurer cited in the decision.

Under Emigrant’s modification proposal, the Corciones would pay about $84,000 of the $119,000-plus arrears at 6 percent interest and have $30,000 forgiven after a year, the decision said.

But what the judge ripped into were the parts that called for the Corciones to “unconditionally” agree not to raise any challenges to Emigrant’s foreclosure actions, including filing for bankruptcy, if the couple defaults again. The agreement also seems to release Emigrant from federal truth in lending laws, the judge said.

“This court has never been presented with such a waiver, especially when accompanied by absurd representations [drafted by the lender] that amount to what could best be described as an express warranty that defendants presently are and will forever be insolvent,” the ruling read.

In the past year, almost 62,000 borrowers in the New York metro area, which includes Long Island, have gotten trial or loan modifications under the federal homeowner rescue program.

Corciones’ attorney, Sean C. Serpe of Manhattan, said any modification of their existing loan has yet to be agreed upon. But for more than a year, Serpe said, his clients had asked for a lower, fixed rate, and when Emigrant did propose a modification, it came with a threat: “If we didn’t respond, we lost any chance of a modification.”

Thank you to: b.daviesmd6605 for the doc below

[ipaper docId=30277188 access_key=key-zln3zjpf6926erdtk4d height=600 width=600 /]

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Posted in concealment, corruption, dinsfla, foreclosure fraud, forensic mortgage investigation auditComments (0)

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