Make this go viral! Petty Officer Joseph Worrell needs our help.
The Burning Platform- By Mary Malone
Note: Petty Officer Joseph Worrell contacted me months ago – through the “Who’s Your Lender” thread posted on The Burning Platform. PO Worrell has very capable counsel and objected to each unlawful act committed by Emigrant Bank. Yet, Emigrant Bank was allowed to trample all over his rights and unlawfully seize his home.
PO Worrell and I came to the conclusion that the only strategy left – was to go national with the story. True to PO Worrell’s love of country and dedication to service, PO Worrell postponed the PR campaign until his return from deployment.
In his absence, while PO Worrell was serving his country, Emigrant Bank unlawfully evicted the Worrell’s from their home – violating a court ordered stay that was in place while the appeal was pending in federal court.
Emigrant Bank must be stopped. The madness must end. Please circulate this post and contact Eric Cantor and your members of congress and demand that they put an end to Emigrant Bank’s unlawful acts in violation of the SCRA.
Emigrant Bank Violates SCRA and unlawfully seizes active military home while he is deployed on missions in Afghanistan.
PALM BEACH GARDENS, Fla. — Memorial Day is a day when Americans pause to remember and honor those who have served their country.
However, a Navy reservist from Palm Beach Gardens says he doesn’t feel like he’s being honored because he’s being evicted.
Petty Officer Second Class Joseph Worrell, 49, spent Memorial Day with his wife carrying boxes, loading a U-Haul truck and moving out of their home near Palm Beach Gardens.
Worrell, a Navy reservist, feels he has no choice.
Wells Fargo Bank, N.A. D/B/A America’s Serving Company, Plaintiff,
against
Francis M. Ruggiero, Jr., Michael A. Ruggiero, et al., Defendants.
19322/07
Plaintiff Attorney:Roxanne Jones, Esq.
Frenkel Lambert
Defense Attorney:Michael Pontone, Esq.
Petroff Law
Yvonne Lewis, J.
This is a residential foreclosure action pertaining to 2798 Pitkin Avenue, Brooklyn, New York, which was referred to the mandatory Foreclosure Settlement Conference Part (hereinafter, “FSCP”) pursuant to the dictates of Civil Procedure Law and Rules (CPLR) R3408.
The defendants, Francis and Michael Ruggiero, have moved this court to, [1] confirm the Report and Recommendation of Special Referee Deborah L. Goldstein, including the referee’s recommendation for an order that the HAMP modification requested by the defendants be granted, and [2] grant dismissal of the underlying summons and complaint, or, in the alternative, permit the defendants leave to file a late answer. The Defendants concomitantly seek a finding of a lack of good faith on the part of the plaintiff and its counsel, as required by CPLR 3408(f), together with attorneys fees, costs and disbursements, and other relief as the court may [*2]deem proper.
The plaintiff, Wells Fargo Bank, N.A. d/b/a America’s Serving Company (hereinafter, “ACS/Wells”), opposes the defendants’ motion and seeks summary judgement to foreclose on the subject premises. ACS/ Wells argues that it has acted in good faith, that its action should not be dismissed, and that the defendants’ request to file a late answer must be denied as they have failed to show excusable delay, lack of prejudice to the plaintiff, and a meritorious defense.
Francis and Michael Ruggiero refinanced their family home at 2798 Pitkin Avenue, Brooklyn, New York in September, 2006. They obtained a $440,000.00 adjustable rate mortgage from Fremont Investment & Loan with an initial interest rate of 8.9%. In 2007, the defendants defaulted on their monthly payments after suffering financial hardship when their tenant stopped paying the rent. Wells Fargo commenced this action on May 30, 2007. Pursuant to CPLR §3408, the matter was referred for a “mandatory conference” to essentially determine whether the parties could reach a mutually agreeable resolution to help the defendants avoid losing their home through loan modification, including but not limited to interest rate reductions, prolongation of repayment terms, and etc.
According to the plaintiff, the first settlement conference was scheduled for November 12, 2009. Plaintiff’s counsel requested and was accorded an adjournment since there was a trial modification in place, apparently entailing November, 2009 and the two following months; the defendants made the first payment under the modification but failed to make the remaining two payments. The defendants did not appear on the adjourned date, January 28, 2010, whereupon the settlement conference was rescheduled for March 9, 2010. The defendants, appearing pro se, were present for the March 9, 2010 settlement conference as was the plaintiff, which appeared by its attorney Steven J. Baum, P.C.
At the March 9, 2010 conference, the parties indicated that the plaintiff had recently approved the defendants for a HAMP trial loan modification. The modification trial had payments due on March 1, April 1, and May 1 of 2010 in the amount of $2,061.50. The plaintiff indicated at the March 9th conference that “it required the following financial documentation to complete a final HAMP modification review: a.) signed and dated 4506-T (tax transcript release forms) for both Defendants, b.) current rental agreements with tenants [of] the mortgaged premises, with copies of checks or bank statements evidencing deposit of rental payments, c.) updated paystubs for both defendants, d.) 2008 and 2009 income tax returns for both Defendants, and e.) utility bill showing that the [*3]mortgaged premises is owner occupied.” (see Affirmation of Good Faith of Kevin C. Clor, Esq., ¶10, November 10, 2011). The plaintiff indicated that the defendants had not provided said documents prior to the March 9th conference, whereupon the conference was adjourned to June 21, 2010, a date beyond the trial period.
At the June 21st conference, the defendants indicated that they had made all of the trial payments; Frances Ruggiero testified that he had completed and submitted the documents requested at the previous conference. The plaintiff required an updated workout package.[FN1] The plaintiff specifically requested that the following documents be updated before it could finalize the defendants’ HAMP modification; to wit, updated bank statements, copies of leases, 2010 tax returns, together with another Form 4506T for tax year 2010. According to the referee’s report, plaintiff’s counsel suggested, at the June 21st conference, that the defendants be directed to continue to make monthly trial payments and the referee so directed. The plaintiff also noted that while the defendants had failed to appear on June 21, 2010 it had received the following items from them on June 24, 2010; namely, a hardship letter, credit report authorizations, financial worksheet, 2009 tax returns, a driver’s license and a T-Mobile bill. (see Affirmation of Good Faith of Kevin C. Clor, Esq., ¶ 11-12, November 10, 2011).
The court was given no basis whereby to determine whether these additional submissions were sufficient to enable the plaintiff to determine if the defendants met the guidelines for a loan modification. The parties’ representations and or explanations of what transpired at the July 23, 2010 settlement conference and during the period up to November 9, 2010 are ambiguous at best. What appears to be clear is that on November 9th and 10th, 2010 the defendants again gave the following documents to the plaintiff: “a.) Monthly budget form (signed & dated); b.) Proposed HAMP waterfall; c.) RMA (signed and dated); d.) Hardship letter (signed & dated); e.) Earnings report for Frank Ruggiero (Periods ending October 14, 2010 and October 28, 2010); f.) Earnings report for Michael Ruggiero (Periods ending September 30, 2010 and October 14, 2010); g.) 4056-T for Francis & [*4]Lisa Marie Ruggiero (Signed and dated); h.) 4506-T for Michael Ruggiero (Signed & dated); i.) 2009 Federal Income tax return of Frank and Lisa Marie Ruggiero (Signed); j.) 2009 Federal income tax return of Michael Ruggiero (Signed); k.) Lease agreement (Term April 1, 2010 through November 1, 2011); and l.) Chase banking statement for Michael Ruggiero (September 14, 2010 to October 2010; July 14, 2010 to August 11, 2010; and August 12, 2010 to September 13, 2010).
At a settlement conference on November 30, 2010 the plaintiff advised the Special Referee that it had all the required financial documentation from the defendants and that the file was actively in review. Plaintiff’s attorney indicated, however, that he was not then able to get in touch with the servicing representative from ASC/Wells regarding the status of the underwriting of the final modification. The referee noted that the plaintiff had a full workout package from the defendants as of November 12, 2010 but had failed to review it in a timely fashion and ASC/Wells was directed to escalate and complete its HAMP review on or before December 22, 2010. ASC/Wells was directed to present the trial or results of the review on January 4, 2011.
The plaintiff denied the defendants’ application for a HAMP modification on December 23, 2010 because the premises was not owner occupied. Irrespective of this denial, at the settlement conference held on January 4, 2011, ASC/Wells offered the defendants a modification in the amount of a total monthly payment of $2,672.70 at an interest rate of 6.5%. This monthly payment was $611.20 more than the monthly payment under the HAMP trial modification that had been offered and successfully executed for the period of March through May, 2010.
According to Kevin Clor, Esq there were additional settlement conferences on January 24, 2011, February 10, 2011, March 4, 2011, April 13th, May 25th, June 27th, July 6th, August 19th, October 12th and November 15, 2011. At the August 19, 2011 conference—-which according to the plaintiff was the fifteenth settlement conference—”the Plaintiff advised the Court that although the defendants completed a HAMP trial period in 2010 this was based on verbal income and the Defendants never provided verification….[and] that the Defendants would need to submit a complete updated financial package to be reviewed for a traditional modification.” (see Affirmation of Good Faith of Kevin C. Clor, Esq, ¶ 27, November 10, 2011). At the October 12th conference the plaintiff apparently requested release from the settlement conference part so that it might proceed to foreclose on the premises. Referee Goldstein adjourned the proceeding to provide an opportunity to the parties to submit a pre-report position statement and for the preparation of the her report and recommendation to this Court. The [*5]plaintiff submitted Kevin C. Clor’s Affirmation of Good Faith to support its position and the action was sent/returned to this part with the Report and Recommendation of Special Referee Goldstein on December 20, 2011.
Special Referee Deborah Goldstein recommended that the court issue “(1) an Order requiring Plaintiff to finalize Defendant’s trial HAMP modification in accordance with Q 1222-01 and applicable federal HAMP guidelines, (2) an Order requiring the parties and counsel to appear before the IAS Court on a date certain for a hearing to determine whether “lack of good faith” sanctions should be issued against the Foreclosing Parties and the Baum Law Firm pursuant to CPLR 3408, 22NYCRR 130-1m et seq., §§753 and 754 of the Judiciary Law, 22 N.Y.C.R.R. §202.12-a (C)(4), (3) an Order requiring the parties and counsel to appear before the IAS Court on a date certain for a hearing to determine whether the named Plaintiff has a vested ownership interest in the Mortgage and Note to modify and/or foreclose on the subject Premises, (4) an Order barring Plaintiff from charging Defendant attorney’s fees or other legal costs incurred as a result of this action, and (5) an Order tolling all interest accrued on the subject loan since March 2010, and barring further accrual of interest thereon until the parties enter into a loan modification agreement. (Citations omitted).”
In accordance with the Referee’s recommendations, a “good faith hearing” was scheduled to determine whether sanctions should be imposed because the settlement conferences had proceeded without the good faith of the plaintiff. The defendants appeared pro se; plaintiff requested and was granted an adjournment to allow new counsel to take over its representation from Steve Baum’s office. The Court signed an order adjourning the matter to February 8, 2012 and requiring the Ruggiero brothers to submit a complete financial package for review by 1/4/12 to the plaintiff, with a requirement that the Plaintiff must have a decision on the modification review on or before 2/8/12. There was no modification offer on February 8, 2012, although it appears that the plaintiff had the necessary information. Subsequently, there were several adjournments during which the plaintiff alleges that it considered a loss mitigation resolution for the defendants. The defendants obtained counsel and moved on May 30, 2012 for relief as noted at the onset of this writing. The good faith hearing commenced on October 15, 2012 and ended on February 20, 2013. On October 15, 2012, plaintiff’s counsel informed the Court that her client would not, as of that date, make any loss mitigation offer to the defendants. The plaintiff was, however, willing to accept it for review “should the borrower put together an entire financial package —” [T. October 15, 2012 p. 3, l. 8-17]
[*6]The testimony at the good faith hearing which ensued established the following: (1) settlement conferencing began in this action in November, 2009; (2) on March 9, 2010, the parties agree that the plaintiff had approved the defendants for a HAMP trial modification in which the defendants were to make payments of $2,061.50 monthly for March, April and May, 2010; (3) the matter was adjourned to see if the defendants could successfully complete the trial, which they did; (4) on June 21, 2010, rather than the offer of a permanent modification the plaintiff required an updated workout package; (5) on July 23, 2010, the parties and the referee concur that the defendants had submitted the updated documents required by the plaintiff to the plaintiff’s attorney. In addition, they had made a trial payment for June, 2010 and tendered the July, 2010 payment which ASC/Wells refused; (6) ASC/Wells’ refusal is undisputed and unexplained, particularly in light of the fact that both the referee and plaintiff s counsel urged the defendants to continue making payments, yet Kevin C. Clor Esq.’s Affirmation of Good Faith indicates at No.13 that the defendants failed to submit the required financial documentation as instructed, a statement that is contradicted by his preceding paragraph ( #12) and by the referee and the defendants’ affidavits. It is also to be noted that Mr. Clor neither attended any of the conferences nor indicated in his affirmation the source of his knowledge beyond the vague reference to the “firm’s [Steven J. Baum, P.C.] file and communication with the Plaintiff;” (7) on November 30,2010, the plaintiff’s counsel agreed that it had all of the necessary documents but was unable to inform the referee of the status of the modification. The referee issued a directive that the plaintiff escalate its determination and complete its review by December 22, 2010; (8) on December 23, 2010, the plaintiff denied the defendants HAMP relief for lack of proof of occupancy of the premises; (9) this denial was issued despite the fact that Courtney Williams, a senior loan adjuster at Wells Fargo, testified (see hearing transcript October 15, 2012 p. 49, l. 15-17]) that proof of occupancy had been received on or about June 1, 2010; (10) it is to be underscored that not only did the plaintiff make its written determination to deny the HAMP modification seven months after successful completion of the trial modification period by the defendants, it did so on a ground that was knowingly false and that it had known to be false for nearly six months; (11) hearing testimony reasonably established that in January and February, 2011 the defendants and the referee were on notice that the plaintiff had denied the final modification for lack of occupancy, yet the plaintiff nevertheless offered a final modification at $2,672.70 per month to the defendants; (12) despite the referee’s a request for an [*7]explanation of the additional $611.20 per month more than the trial modification amount, which the defendants had successfully completed eight or nine months previously, none was forthcoming from the plaintiff and no modification was ever put into place; (13) in August, 2011 the plaintiff s attorney indicated that ASC/Wells believed it could have properly denied the defendants’ 2010 HAMP application for lack of documentation or failure to verify income, but informed the referee that ASC/Wells required another trial period and the re-submission of a complete updated financial package to consider the defendants for a traditional modification; (14) following additional conferences and the solicitation of additional documents from the defendants, the plaintiff requested that the matter be transferred to an IAS part as there was no further progress being made in the mandatory FSCP.
The requirement for mandatory conferencing and good faith negotiation are set forth in CPLR §3408 which states inter alia: “a). . . In any residential foreclosure action . . .in which the defendant is a resident of the property subject to foreclosure, the court shall hold a mandatory conference . . .for the purpose of holding 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 . . . .(f) Both the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.” The parties to mandatory settlement conferencing are required to come to the Court in good faith, and they are required “to negotiate in good faith towards creation of a mutually satisfactory modification agreement” ( See Deutsche Bank Trust Company of America, as Trustee for Rali 2006OS10 v. Davis, 32 Misc 3d 1210(A) [Sup. Ct. Kings Co. 2011 Kramer, J.]). It is the obligation of the parties to negotiate with an effort that would prevent the defendant from losing his, her, or their home.
As articulated in HSBC Bank USA v. McKenna, 37 Misc.35 885 [Sup. Ct. Kings Co.2012 Battaglia, J]: “[g]enerally, “good faith” under New York law is a subjective concept, “necessitat[ing] examination of a state of mind.” (See Credit Suisse First Boston v Utrecht-America Fin. Co., 80 AD3d 485, 487 [1st Dept 2011], quoting Coan v Estate of Chapin, 156 AD2d 318, 319 [1st Dept 1989].) ” Good Faith’ is an intangible and abstract quality with no technical meaning or statutory definition.” (Adler v 720 Park Ave. Corp., 87 AD2d 514, 515 [1st Dept 1982], quoting Doyle v Gordon, 158 NYS2d 248, 259 [Sup Ct, NY County 1954].) “It [*8]encompasses, among other things, an honest belief, the absence of malice and the absence of a design to defraud or to seek an unconscionable advantage.” (Doyle v Gordon, 158 NYS2d at 259-260; see also UCC 1-201 [19] [” Good Faith’ means honesty in fact in the conduct or transaction concerned”].) “Good faith is . . . lacking when there is a failure to deal honestly, fairly, and openly.” (Matter of CIT Group/Commercial Servs., Inc. v 160-09 Jamaica Ave. Ltd. Partnership, 25 AD3d 301, 303 [1st Dept 2006] [internal quotation marks and citation omitted]; see also Southern Indus. v Jeremias, 66 AD2d 178, 183 [2d Dept 1978].) “In New York, as elsewhere, good faith’ connotes an actual state of mind—a state of mind motivated by proper motive.” (Polotti v Flemming, 277 F2d 864, 868 [2d Cir 1960]). In the context of negotiations, the absence of agreement does not itself establish the lack of good faith. (See Brookfield Indus. v Goldman, 87 AD2d 752, 753 [1st Dept 1982].) (HSBC v. McKenna, 905,906) “Conduct such as providing conflicting information, refusal to honor agreements, unexcused delay, unexplained charges, and misrepresentations have been held to constitute bad faith.’ ” (Flagstar Bank, FSB v Walker, 37 Misc 3d at 317 n 6; see also One W. Bank, FSB v Greenhut, 2012 NY Slip Op 51197[U] at 4-5.)
The Record before this Court, inclusive of affirmations by plaintiff counsel, the testimonies of Courtney Williams, and Francis and Michael Ruggiero, is replete with persuasive indicia of the plaintiff’s lack of good faith, evidenced by conflicting information, a refusal to honor agreements, unexcused delay, unexplained charges, and misrepresentations, and sets forth, in no small measure, a failure to deal honestly, fairly, and openly. More to the point, it is irrefutable on the proofs adduced that the defendants, despite being subjected to 10 to 12 arbitrary submissions, successfully established their occupancy of the subject premises, successfully completed the plaintiff’s trial HAMP period, and submitted all required documentation in order to accord themselves a modified loan agreement in the amount of $2,061.50 per month which the plaintiff, in turn, arbitrarily and capriciously increased by $611.20 under false pretenses, without any justifiable basis, and disingenuously denied.
“A foreclosure action is equitable in nature and triggers the equitable powers of the court (see Notey v. Darien Constr. Corp., 41 NY2d 1055 [1977]; Jamaica Sav. Bank v. M.S. Inv. Co., 274 NY 215 [1937]; Mortgage Elec. Registration Sys., Inc. v. Horkan, 68 AD3d 948 [2d Dept 2009] ). “Once equity is invoked, the court’s power is as broad as equity and justice require” (Mortgage Elec. Registration Sys., Inc. v. Horkan, at 948, quoting Norstar Bank v. Morabito, 201 AD2d 545 [2d Dept 1994] ). While it would seem that the just remedy herein [*9]would be to simply compel the plaintiff to abide by the terms of the successful trial period set by it and completed by the defendants, this Court, in the exercise of its broad equitable powers, is mindful of the fact, as enunciated in the Appellant Division’s recent decision in the matter of Wells Fargo Bank, N.A. v. Meyers, 2013 NY Slip Op 03085, App. Div., May 1, 2013, that a court cannot compel the parties to enter into a contract, much less rewrite or impose additional terms which the parties themselves have not mutually agreed upon.
Accordingly, the court finds that the imposition of an alternative remedy to address the plaintiff’s wanton and flagrant violation of the dictates of CPLR 3408 (f) is in order. While it is apparent that the court cannot compel a party’s good faith behavior, it can certainly impose sanctions for the deliberate disregard of legal mandates, particularly here where it is painfully obvious to the court that the plaintiff has acted wilfully and with express intent to subvert a statutory scheme established for the beneficial purpose of helping mortgagors avoid the loss of their homes. In that vein, to simply impose a monetary penalty on the foreclosing plaintiff mortgagee without ever requiring a sincere effort on its part to abide by the statutory scheme would be to merely let the plaintiff mortgagee pay to avoid compliance; i.e., treat the imposition of a primary sanction as simply the “cost of doing business.” This would be a disservice not only to the legislature that saw fit to enact this legislation, but also a disservice to the countless mortgagors who find themselves on the precipice of losing their homes under circumstances not entirely of their making. This court cannot in equity permit such a result without at least affording the defendants an authentic opportunity to avail themselves of the protective measures of CPLR R3408. The plaintiff, in turn, must know that if it continues its deliberate, convoluted acts of subversion that it may eventually face even more serious sanctions that would not be in their pecuniary interest.
It is therefore the order of the Court that the plaintiff be assessed as costs the forfeiture of all accrued attorney’s fees or other legal costs incurred plus all interest accrued on the subject loan since November 12, 2009 (the first FSCP conference date) to the date of this order. The plaintiff is directed to make the mentioned costs computation and to submit the detailed results thereof and methodology employed to arrive at the final sum to the court for its review on notice to the defendants by their attorney within 30 days of this order. The plaintiff is also ordered pursuant to 22 NYCRR 130.1 to include in its computations the reasonable fees incurred by the defendants, as indicated by their attorneys’ affirmation of legal services extending to March 5, 2013. The defendants’ counsel must submit an updated affirmation of legal services to the plaintiff and to [*10]the Court by July 9, 2013.
The matter is adjourned to July 16, 2013 at 10:00 a.m., on which date this court will entertain arguments from the parties to determine by supplemental order herein the precise sum to be assessed as costs against the plaintiff and whether the costs should be paid outright or credited to the defendants in diminution of their debt to the plaintiff.
The matter shall thereafter be adjourned to August 23, 2013 at 10:00 a.m. for compliance with the full dictates of CPLR 3408, particularly subdivision (f) thereof. To that end, the defendants shall submit a new application within 30 days of this order; the plaintiff shall make its demand for any missing documents within 10 days thereof; the defendants shall furnish those documents within the ensuing 10 days, whereupon the plaintiff shall conduct its review and decide if modification is in order in 30 days.
This constitutes the decision and order of this court.
ENTER FORTHWITH:
_____________________________
yvonne lewis, J.S.C.
Footnotes
Footnote 1: A workout package typically consists of the following: (1) a Request for Modification Application (“RMA”), detailing the homeowner’s income and expenses; (2) a Hardship Affidavit, which explains the reason for the homeowner’s default; (3) an executed tax Form 4506T for the last two tax years, which authorizes the mortgage servicer to obtain the homeowner’s tax transcripts fro the Internal Revenue Service (“IRS”); (4) signed and dated tax returns for the last two years; (5) proof of income for two consecutive months, which requires the submission of bank statements, pay stubs, pension statement, social security award letters, rental leases, profit and loss statement, contributions letter(s), etc…; and (6) a recent utility bill to serve as proof of residence.(Referee’s Report and Recommendation fn.1).
The bill aimed at speeding up Florida’s foreclosure process was submitted to Gov. Rick Scott’s office Tuesday, giving him 15 days to veto it, sign it, or let it pass into law without his signature.
Scott spokesman John Tupps said the governor has until June 12 to take action on the bill.
The legislation, HB 87, has strong opposition from foreclosure defense attorneys and homeowner advocacy groups who are lobbying for Scott to veto the plan. But community association groups and the powerful Real Property, Probate and Trust Law Section of the Florida Bar are supporting the plan.
Opponents say the bill violates the constitution and fundamental property rights of homeowners to regain the property if a foreclosure is later found to be fraudulent. The bill has a retroactive provision that would affect all previous foreclosures.
Allstate Corp. (ALL) and Citigroup Inc. (C) agreed to settle a lawsuit filed by the insurer in New York state court accusing the bank of fraudulently selling hundreds of millions of dollars of mortgage-backed securities.
Allstate, the largest publicly traded U.S. home and auto insurer, sued Citigroup in State Supreme Court in Manhattan in 2011, along with banks including Deutsche Bank AG, Bank of America Corp. and Morgan Stanley.
The Northbrook, Illinois-based insurer, which said in the suit that it bought more than $200 million of securities from New York-based Citigroup that were backed by residential mortgages, voluntarily discontinued the case, according to a court filing dated yesterday.
State of New York | Executive Chamber Andrew M. Cuomo | Governor
Press Contact: Matt Anderson, 212-709-1690
CUOMO ADMINISTRATION ‘FORCE-PLACED’ INSURANCE REFORMS TO COVER 100 PERCENT OF NEW YORK MARKET
.
DFS Reaches Agreements with Four Remaining New York Force-placed Insurers That Had Not Yet Agreed to Implement the Cuomo Administration’s Reforms
Cuomo Administration’s Reforms Lead National Reform Effort Protecting Homeowners; Eliminating Kickbacks, and Lowering Rates Going Forward
NEW YORK, NY – The Cuomo Administration announced that its nation-leading force-placed insurance reforms will now cover 100 percent of the New York market after the New York State Department of Financial Services (DFS) reached agreements with the four remaining New York force-placed insurers that had not yet agreed to implement those reforms: American Modern Insurance, Chubb, Fidelity and Deposit Company of Maryland, and FinSecure.
The Cuomo Administration’s force-placed insurance reforms – which the two largest force-placed insurers, Assurant and QBE, had previously agreed to implement through settlements with DFS – will help better protect homeowners from abuse; eliminate the kickbacks DFS uncovered in this industry; and save homeowners, taxpayers, and investors millions of dollars going forward through lower rates.
Benjamin M. Lawsky, Superintendent of Financial Services, said: “These reforms will now cover all of the New York market, but more can and should be done. Unless other regulators across the country move swiftly to crack down on the kickbacks and payoffs we found in the force-placed insurance industry, millions of Americans will remain at risk. We’re continuing to urge other regulators to implement the reforms New York helped pioneer so that every single homeowner is protected.”
DFS’ reform settlement with American Modern Insurance includes a $1 million penalty and restitution for homeowners who were harmed. Chubb, Fidelity and Deposit Company of Maryland, FinSecure – which had each written relatively smaller volumes of force-placed insurance and were not found to have engaged in the kickback arrangements uncovered at other companies – voluntary agreed to sign proactive codes of conduct implementing New York’s reforms.
DFS’s Investigation into Force-placed Insurance
In October 2011, DFS launched an investigation into the force-placed insurance industry. Force-placed insurance is insurance taken out by a bank, lender, or mortgage servicer when a borrower does not maintain the insurance required by the terms of the mortgage. This can occur if the homeowner allows their policy to lapse (often due to financial hardship), if the bank or mortgage servicer determines that the borrower does not have a sufficient amount of coverage, or if the homeowner is force-placed erroneously.
DFS’s investigation revealed that the premiums charged to homeowners for force-placed insurance can be two to ten times higher than premiums for voluntary insurance — despite the fact that force-placed insurance provides far less protection for homeowners than voluntary insurance. Indeed, even though banks and servicers are the ones who choose which force-placed insurance policy to purchase, the high premiums are ultimately charged to homeowners, and, in the event of foreclosure, the costs are passed onto investors. And when the mortgage is owned or backed by a government-sponsored enterprise, such as Fannie Mae or Freddie Mac, those costs are ultimately borne by taxpayers.
DFS’s investigation revealed that certain force-placed insurers competed for business from the banks and mortgage servicers through what is known as “reverse competition.” That is, rather than competing by offering lower prices, the insurers competed by offering what is effectively a share in the profits. This profit sharing pushed up the price of force-placed insurance by creating incentives for banks and mortgage servicers to buy force-placed insurance with high premiums. That’s because the higher the premiums, the more that the insurers paid to the banks. This troubling web of kick-backs and payoffs at certain force-placed insurers helped push premiums sky-high for many homeowners.
Agreements with American Modern Insurance, Chubb, Fidelity and Deposit Company of Maryland, and FinSecure
The settlement DFS reached today with American Modern Insurance includes restitution for homeowners, a $1 million penalty paid to the State of New York, and a requirement that the company implement the Cuomo Administration’s nation-leading force-placed insurance reforms. American Modern will also be required to lower its premium rates going forward, providing significant savings to homeowners, taxpayers, and investors.
Chubb, Fidelity and Deposit Company of Maryland, FinSecure – which had each written relatively smaller volumes of force-placed insurance and were not found to have engaged in the kickback arrangements uncovered at other companies – agreed to sign proactive codes of conduct implementing New York’s reforms.
Superintendent Lawsky said: “I’d like to particularly commend Chubb, Fidelity & Deposit, and FinSecure for stepping up to the plate and moving swiftly to adopt these important reforms.”
New York’s nation-leading reforms include the following prohibitions:
Force-placed insurers shall not issue force-placed insurance on mortgaged property serviced by a bank or servicer affiliated with the insurers.
Force-placed insurers shall not pay commissions to a bank or servicer or a person or entity affiliated with a bank or servicer on force-placed insurance policies obtained by the servicer.
Force-placed insurers shall not reinsure force-placed insurance policies with a person or entity affiliated with the banks or servicer that obtained the policies.
Force-placed insurers shall not pay contingent commissions based on underwriting profitability or loss ratios.
Force-placed insurers shall not provide free or below-cost, outsourced services to banks, servicers or their affiliates.
Force-placed insurers shall not make any payments, including but not limited to the payment of expenses, to servicers, lenders, or their affiliates in connection with securing business.
DFS will soon issue regulations that include the Cuomo Administration’s force-placed insurance reforms, which would cover any company – present or future – that decides to offer force-placed insurance in New York.
In April, Superintendent Lawsky sent a letter to other state insurance commissioners urging them to implement New York’s force-placed insurance reforms nationwide. The letter is available here.
Copies of the agreements reached today with American Modern Insurance, Chubb, Fidelity and Deposit Company of Maryland, and FinSecure are available at the following links:
An N.C. Business Court judge on Wednesday dismissed a lawsuit filed by Guilford County against some of the nation’s largest banks for “robo-signing” mortgages and loan documents.
In the suit filed last year, Register of Deeds Jeff Thigpen said robo-signing let mortgage industry employees sign assumed names to financial documents.
That makes it hard to trace land titles, he said. Banks failed to keep proper paperwork on loans as they were traded and bundled as securities, Thigpen said.
“The public records are very clear that the homeowners still own the property,” Blomquist says. “The issue … is that they are unaware they still own the property, and they are then held responsible for expenses related to that property.”
FOX-
What happens to a house when the beleaguered owner moves out, and the lender never finishes the foreclosure paperwork?
It becomes a zombie house.
The term “zombie house” applies because the absent homeowner is still legally responsible for the foreclosed property and can be haunted by:
Property taxes. Homeowners association fees. Fines for building code violations. Other expenses.
A zombie house can be plagued by other problems as well, such as:
Squatters. Mosquito-infested swimming pools. Natural gas leaks.
Sound familiar? Geez…as I recall, it has been in the US since 1989!
Karma is a B*tch!
CBS-
The World Health Organization warns that the deadly SARS-like virus first seen in the Middle East is a global threat.
Dr. Margaret Chan, WHO’s director-general, said in a speech in Geneva Monday that the new respiratory coronavirus MERS “is a threat to the entire world.”
“Looking at the overall global situation, my greatest concern right now is the novel coronavirus. We understand too little about this virus when viewed against the magnitude of its potential threat. Any new disease that is emerging faster than our understanding is never under control,” Chan said during the 66th World Health Assembly.
Bills Before State Senate Will Ensure New Yorkers Are Protected From Irresponsible, Or Even Criminal, Behavior
Schneiderman: Legislation Will Keep Homeowners Out Of The Legal Limbo & Ensure Their Rights Are Honored
MINEOLA — Attorney General Eric T. Schneiderman and New York State Senate Majority Coalition Leader Jeff Klein today highlighted the “Certificate of Merit” bill (A. 5582) and the Foreclosure Fraud Prevention Act (A.7395), two important pieces of legislation to protect New York homeowners facing foreclosure. Both bills passed the New York State Assembly last week, and will be soon be decided on by the New York State Senate. Many homeowners in New York are still fighting to stay in their homes, and these bills would ensure that families are protected from careless, or irresponsible, or even criminal behavior.
The “Certificate of Merit” bill would ensure homeowners have a chance to participate in court-supervised mediation sessions that could help them keep their homes. The Foreclosure Fraud Prevention Act would impose criminal penalties on residential mortgage lenders, servicers and their agents who intentionally engage in fraudulent or deceptive conduct in the preparation, execution or filing of false foreclosure documents. This legislation was proposed by Attorney General Schneiderman and are being sponsored in the Senate by Senator Klein.
“On Long Island and all across New York State, wrongful foreclosure and the growing ‘shadow docket’ are preventing thousands of families from even getting a chance to keep their homes,” said Attorney General Schneiderman. “Both the ‘Certificate of Merit’ bill and the Foreclosure Fraud Prevention Act address these critical problems by proposing common-sense reforms to keep homeowners out of the legal limbo and ensure their rights are honored. The Assembly has already acted to empower hardworking New Yorkers fighting against foreclosure. It is now time for the Senate to do the same.”
Senate Majority Coalition Leader Jeff Kleinsaid, “Any family that is facing the loss of their home deserves a fair day in court. But right now, unnecessary delays and incomplete paperwork are denying thousands of families this opportunity every day. These reforms can help change all of that, by ending the stalemate and bringing these homeowners the peace of mind that they deserve. That’s why I’m proud to support these measures and look forward to ushering them through the Senate.”
“With these new laws, we will hold criminals accountable for their abusive foreclosure practices and deter them from unlawfully removing New Yorkers from their homes, and eliminate the “shadow docket” in the courts”, said Assemblywoman Helene Weinstein, Chair of the Assembly Judiciary Committee. “Attorney General Eric Schneiderman and Chief Judge Jonathan Lippman have recognized the problems in foreclosure and have put forward corrective legislation, to protect New York’s homeowners. I look forward to the Senate passing this much needed legislation.”
Village of Hempstead Mayor Wayne Hallsaid, “The law gives homeowners in foreclosure the right to a settlement conference with their bank to try to save their home, and the sooner they can schedule a conference, the more likely they are to be successful. Attorney General Schneiderman’s legislation will ensure that homeowners can exercise their rights, and give them a fighting chance to keep their home.”
Long Beach City Council President Scott J. Mandelsaid, “Abusive foreclosure practices and the needless ‘shadow docket’ place huge burdens on homeowners already struggling to keep their homes and avoid displacement. But these bills will assist ongoing efforts to bring relief to New Yorkers and stop the foreclosure crisis threatening so many Long Island communities. Thank you to Attorney General Schneiderman for introducing this legislation, and to Senator Klein for sponsoring it in the Senate.”
“Too many older New Yorkers are at risk of losing their homes to foreclosure because some banks and their lawyers are exploiting administrative loopholes which are denying homeowners a chance at affordable settlements – all the while continuing to charge interest and fees. This needs to change,” said Beth Finkel, State Director for AARP in New York. “AARP applauds Attorney General Schneiderman and Senator Klein for proposing a common sense solution to stop banks’ delay tactics and help homeowners get the resolution they deserve – and the chance to keep their homes.”
Elie Hecht, Director of Labor and Industry for Education (LIFE),said, “In working with underserved communities on Long Island, we’ve seen numerous cases of homeowners left waiting for lenders to adhere to legal requirements, struggling while their loan interest and legal fees pile up. Such injustices should simply not be allowed to happen. This legislation will put an end to the harmful delays that prevent New York homeowners from finally moving past the foreclosure crisis.”
Josh Zinner, Co-Director of the Neighborhood Economic Development Agency (NEDAP),said, “Abuse by lenders in the foreclosure process has caused great harm to communities throughout the state. The proposed legislation would be an important step toward reforming the process – it would ensure that lenders don’t file foreclosures based on invalid information, and it would speed up the time it takes homeowners to get to court-supervised mediation. These reforms would enable more homeowners to get loan modifications and save their homes.”
Kristen Brown Lilley, Director of Policy Advoacy at the Empire Justice Center,said, “This bill addresses a real problem for homeowners who are stuck in legal limbo because lenders aren’t filing the required paperwork. If enacted, foreclosure cases will move more swiftly through the foreclosure process, giving homeowners a better chance of saving their homes, and returning vacant properties to the housing market more quickly.”
Homeowners’ foreclosure cases regularly languish for months, or even years, when financial institutions delay in filing critical paperwork that affirms the basis for the foreclosing bank’s right to foreclose on the property and ultimately triggers a settlement conference – the mandatory process under New York law that provides borrowers an opportunity to negotiate alternatives to foreclosure, such as loan modifications or short sales.
The delays and subsequent backlogs, often referred to as the “shadow docket,” have become a major burden on both homeowners and the judicial system. This legislative fix will require banks to file the necessary paperwork, which ultimately triggers the settlement conference, simultaneously with the filing of any foreclosure action, thus avoiding future delays. The Office of Court Administration issued a report in July of 2012 which found that 25,000 families are trapped in this legal foreclosure limbo.
In 2009, Senator Klein authored landmark foreclosure legislation aimed at protecting homeowners and preserving property values in communities stricken with high rates of foreclosure. Senator Klein’s legislation, which was signed into law by Governor Paterson, requires banks to maintain foreclosed properties, creates new ways for homeowners to stay in their homes after foreclosure proceedings, and guarantees every homeowner the right to a settlement conference prior to any court proceeding.
The Foreclosure Fraud Prevention Act would impose both misdemeanor and felony-level penalties for lenders and servicers who knowingly engage in fraudulent residential mortgage foreclosure practices. These fraudulent activities include falsifying mortgage foreclosure documents–a practice that came to be known as “robo-signing,” which was rampant in New York and across the country during the early part of the foreclosure crisis.
An investigation of robo-signing conducted by the Office of the Attorney General with 48 State Attorneys General, the Department of Justice and the U.S. Department of Housing and Urban Development, led to the signing of the National Mortgage Settlement, a $25 billion agreement with the nation’s five largest mortgage servicers and provides for billions in mandated consumer relief including mortgage refinancing and principal reductions.
The bill will create a legal definition for residential mortgage foreclosure fraud, which will apply to mortgage lenders and servicers, and extend both to their lower level employees and “high managerial agents.” This aspect of the bill is particularly significant because it carries the potential to bring criminal charges against law firms and servicers that specialize in high-volume residential foreclosure cases and knowingly engage in fraud.
Attorney General Schneiderman has made protecting homeowners struggling to avoid foreclosure a top priority. In June 2012, he announced the Homeowner Protection Program (HOPP), a three-year, $60 million initiative to fund housing counselors and legal services across New York State. The program strives to ensure that every family facing foreclosure has access to a knowledgeable and qualified professional advocate.
Throughout New York State, 34 legal services organizations and 59 housing counseling agencies will receive over $16.1 million this year to provide free foreclosure prevention services. An additional $3.9 million has been allocated for training, technical assistance, and other support services to assist homeowners in foreclosure. In part because of the advocacy of HOPP funded housing counselors and legal services providers, over 4,300 New York homeowners have completed, or have active trial modifications for approximately $540 million worth of first mortgage principal reduction.
For more information on Attorney General Schneiderman’s efforts to support New York families caught in the foreclosure crisis, visitwww.AGHomeHelp.com.
Wish someone would come forward as to what all went on with the Foreclosure Mills. Some more than others.
LA TIMES-
Before dawn one hazy March day in L.A., Armando Granillo pulled his SUV into a Starbucks near MacArthur Park, where he planned to pick up an envelope full of cash from an Arizona real estate broker, federal investigators say.
Granillo, a foreclosure specialist at mortgage giant Fannie Mae, expected to drive off with $11,200 — an illegal kickback for steering foreclosure listings to brokers, authorities allege in court records.
Granillo would leave in handcuffs. And investigators are now looking into assertions by Granillo and another former Fannie Mae foreclosure specialist that such kickbacks were “a natural part of business” at the government-sponsored housing finance company, as Granillo allegedly told the broker in a wiretapped conversation.
Just breaking and more as this develops…Terms are confidential. First big domino to fall
REUTERS- H/T Alison Frankel
Citigroup Inc (C.N) has reached a settlement with a federal agency that had accused the bank of misleading Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) into buying $3.5 billion of mortgage-backed securities.
The settlement with the Federal Housing Finance Agency was disclosed in a filing on Tuesday in U.S. District Court in Manhattan, where a series of related cases by the agency against Wall Street banks are pending.
The filing did not disclose the terms of the deal. FHFA spokeswoman Stefanie Johnson said the settlement was “satisfactory” but declined to say how much Citi would pay.
Because underneath our clothes we are the same and building a family in a home takes universal love.
All living things should have equal rights.
Lansing City Pulse-
Later today, Lansing City Clerk Chris Swope and his husband will file an affidavit with the Ingham County Register of Deed’s Office securing their property rights as a married couple. But they’ll be using their Canadian marriage license as a backing document — a first in the state of Michigan, where same sex marriage is not legally recognized.
“This is going to be a big deal,” said Emily Dievendorf, managing director of Equality Michigan, an LGBT advocacy group. “This is something that may set some type of precedent or at the very least start a discussion and will hopefully give our local governments a way to provide some stability to the same-sex couples in our communities.”
To Dievendorf’s knowledge, nothing like this has been attempted in Michigan.
How many scandals does this make involving Obama, DOJ?
Did he robo-sign this search warrant? NOT!
Hill-
The House Judiciary Committee is investigating whether Attorney General Eric Holder lied under oath during his May 15 testimony on the Justice Department’s (DOJ) surveillance of reporters, an aide close to the matter told The Hill.
The panel is looking at a statement Holder made during a back and forth with Rep. Hank Johnson (D-Ga.) about whether the DOJ could prosecute reporters under the Espionage Act of 1917.
“In regard to potential prosecution of the press for the disclosure of material – this is not something I’ve ever been involved in, heard of, or would think would be wise policy,” Holder said during the hearing.
Fidelity National Financial officially announced that it will acquire Lender Processing Services, following a HousingWire report on Thursday stating buyout talks were in the works.
FNF will buy the outstanding common stock of LPS for $33.25 per common share for a total equity value of approximately $2.9 billion, LPS said.
In addition, LPS announced FNF will combine its ServiceLink business with LPS in a new consolidated holding company.
Note the WSJ article Page B-4 today 5/28/13 and only through a paid subscription online—-“Mortgage Jobs Sent to India By U.S. Banks” –indeed while this is not exactly new—– If you caught my post trying to get information on Countrywide/Bank of America’s, I explained that “NO PAPER IS BEING SHUFFLED“, and that they could not keep up with the work load of incoming orders.(from my source in 2010). Pay close attention to this picture because this is exactly as it was with the modifications!
from an emailed tip–
The outsourced services include assembly of all the loan documents needed to foreclose——also all the decision-making documents and analysis to recommend “modifications” –or not to modify.
anybody that ever ran into a credit card issue with Vicram Pandits Citbank unit should be very familiar with how this will work out……….the largest advantage to banks I see is that they will not risk some gumshoe tracking down a Korell Harp at DOCX and getting him to describe how they operate
I do not see how anybody at a bank could testify on the process either—–that the documents were verified etc—–is your original note going to fly to India–that is part of the file that is of critical importance—-how can someone in India assert that the ban in fact has possession of a document thousands of miles away—–so much for DUE PROCESS
what took so long? And why aren’t other states following?
Reuters-
The New York State Assembly this week approved a bill designed to expedite residential foreclosure cases by requiring lenders to file mandatory paperwork earlier in the process.
The proposed law would create a new section, 3012-b, of the Civil Practice Law and Rules that would require lenders to file “a certificate of merit,” a sworn statement they have standing to foreclose on a home, at the start of an action, along with a summons and complaint.
The bill also would amend CPRL Rule 3408 to require lenders to attach copies of mortgage documents to the complaint, and file proof of service within 20 days.
Currently, lenders who bring residential foreclosure actions have 120 days to file a proof of service. They must simultaneously file a request for judicial intervention and the certificate of merit. Courts can then schedule a settlement conference.
The Supreme Court of Florida has decided that non-judge magistrates will be hearing foreclosure cases in addition to retired senior judges. The new Amended Rule 1.490 would expand the use of general magistrates as an alternative to the use of senior judges to assist in processing foreclosure cases. This could mercifully spell the end of senior judges in Florida, which could help restore some confidence in our judicial system.
Don’t get me wrong. I doubt the magistrates will provide any greater level due process than the microscopic levels afforded to homeowners in the bizarro world of retired senior judges overseeing Foreclosure Court. However, if a homeowner does not want his foreclosure case being decided by a non-judge, the homeowner may object, and there need be no legal basis for an objection.
IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JANUARY TERM 2013
NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED
LEWIS LYTTLE AND GLADYS LYTTLE, Appellant,
v. Case No. 5D10-3790
BANKUNITED, ASSIGNEE OF THE FDIC, AS RECEIVER, ETC., Appellee. ________________________________/
Opinion filed May 24, 2013 Appeal from the Circuit Court for Lake County,
Mark J. Hill, Judge.
George M. Gingo and James E. Orth, Mims, for Appellant.
Katherine J. Walke, Thomas M. Moon and Reena Patel, of Van Ness Law Firm, P.A., Deerfield Beach, for Appellee.
PER CURIAM.
This is an appeal of a summary judgment entered in a mortgage foreclosure case where the name of the payee on the note was not the name of the plaintiff in the foreclosure action. Appellee was the plaintiff in the trial proceedings. In Richards v. HSBC Bank USA, 91 So. 3d 233 (Fla. 5th DCA 2012), this court held:
A plaintiff must tender the original promissory note to the trial court or seek to reestablish the note under section 673.3091, Florida Statutes (2010). If the note does not name the plaintiff as the payee, the note must bear an endorsement in favor of the plaintiff or a blank endorsement. [Gee v. U.S. Bank Nat’l Ass’n, 72 So. 3d 211, 213 (Fla. 5th DCA 2011)].
Alternatively, the plaintiff may submit evidence of an assignment from the payee to the plaintiff or an affidavit of ownership to prove its status as a holder of the note.
Id. at 234 (citation omitted). Because the original promissory note was not payable to Appellee or endorsed in blank and because Appellee did not comply with the alternative requirements as stated in Richards, issues of fact remain to be resolved precluding entry of summary judgment in Appellee’s favor.
Accordingly, we reverse the summary judgment of foreclosure under review and remand this case for further proceedings.
New York Attorney General Eric Schneiderman said there is mounting evidence that Bank of America Corp, Wells Fargo and Co and other banks violated the terms of a settlement designed to end mortgage servicing abuses.
Schneiderman – who has said he plans to sue Bank of America and Wells Fargo for failing to live up to their obligations under the deal – said other states had found similar problems.
“Several other states have identified similar recurring deficiencies by the participating servicers,” Schneiderman said in a letter dated May 23 to the monitor for the settlement, former North Carolina Banking Commissioner Joseph Smith. The letter was obtained by Reuters on Friday.
Jon Stewart tonight used President Obama’s big national security speech to go after the president and the Department of Justice for going after whistleblowers, journalists, hackers, potheads, et cetera, but not sending even one person involved in the financial crisis to prison. Stewart mocked the administration for targeting Fox News’ James Rosen and giving people “unusually harsh punishments” disproportionate to their crimes.
Stewart went down the list of everything Obama has said is important in a democratic society: freedom of the press, government accountability, transparency, and the rule of law. But the Obama administration has prosecuted more whistleblowers than any other in history, leading Stewart to remark, “They believe in freedom of the press, just not freedom of speech for people who might talk to the press”
Bank lobbyists are not leaving it to lawmakers to draft legislation that softens financial regulations. Instead, the lobbyists are helping to write it themselves.
One bill that sailed through the House Financial Services Committee this month — over the objections of the Treasury Department — was essentially Citigroup’s, according to e-mails reviewed by The New York Times. The bill would exempt broad swathes of trades from new regulation.
In a sign of Wall Street’s resurgent influence in Washington, Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)
The lobbying campaign shows how, three years after Congress passed the most comprehensive overhaul of regulation since the Depression, Wall Street is finding Washington a friendlier place.
The cordial relations now include a growing number of Democrats in both the House and the Senate, whose support the banks need if they want to roll back parts of the 2010 financial overhaul, known as Dodd-Frank.
This legislative push is a second front, with Wall Street’s other battle being waged against regulators who are drafting detailed rules allowing them to enforce the law.
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