Mortg. Elec. Registration Sys., Inc. v. Lopez

Full title: Mortgage Electronic Registration Systems, Inc., Plaintiff, v. Cesar Lopez…

Court: Supreme Court, Queens County

Date published: Mar 12, 2012

2012 N.Y. Slip Op. 50458 (N.Y. Sup. Ct. 2012)

Opinion

7439/09

03-12-2012

Mortgage Electronic Registration Systems, Inc., Plaintiff, v. Cesar Lopez; MARIA LOPEZ; CHRISTIAN LOPEZ; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee for WALL STREET MORTGAGE BANKERS LTD. d/b/a POWER EXPRESS; NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE; CRIMINAL COURT OF THE CITY OF NEW YORK; UNITED STATES OF AMERICA; CITY OF NEW YORK BY TRANSIT ADJUDICATION BUREAU; CITY OF NEW YORK BY ENVIRONMENTAL CONTROL BOARD; CITY OF NEW YORK BY PARKING VIOLATIONS BUREAU; EMPIRE INSURANCE GROUP A/S/O CLAUDE HAKIM; JAMAICA SEVEN LLC; THE BIG M CORPORATION d/b/a MANDEE; EMPIRE PORTFOLIOS, INC.; PRA III LCC; AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY INC.; STATE FARM MUTUAL AUTOMOBILE INSURANCE, as sub. of ALBERT SPENCER; NY FINANCIAL SERVICES, LLC; PORTFOLIO RECOVERY ASSOCIATES LLC, WORKERS' COMPENSATION BOARD OF NEW YORK; LIBERTY POINT CORP.; STUYVESANT FUEL SERVICE CORP.; PEOPLE OF THE STATE OF NEW YORK; METRO PORTFOLIOS INC.; ASTRID LOPEZ; KATERA JOHNSON; ARNOLD RIVERS, Defendants.

Robert J. McDonald

, J.

In this foreclosure action commenced on March 25, 2009, plaintiff previously obtained an order dated July 28, 2009, appointing a referee to ascertain and compute the amount due plaintiff and to examine and report whether the mortgaged premises known as 168 Marvin Street, Far Rockaway, New York can be sold in parcels. The Referee appointed pursuant to such order executed his oath and rendered his report dated September 1, 2009, indicating the sum of $486,471.41 was due plaintiff as of August 13, 2009, and that the mortgaged premises should be sold in one parcel.

Plaintiff previously sought to obtain a judgment of foreclosure and sale, but by order dated April 22, 2010, the application was denied with leave to renew following the holding of a conference, or evidence that the mortgagors failed to appear for a conference. The court determined that a settlement conference had yet to be held in the Residential Foreclosure Settlement Part, plaintiff had failed to provide certain documents, and the proposed judgment lacked a certain provision. After defendants Lopez failed to attend the settlement conference held on August 6, 2010, plaintiff renewed its application, but by order dated November 19, 2010, that application also was denied with leave to renew upon proper papers, including an affirmation by plaintiff's counsel pursuant to the administrative order of the Chief Administrative Judge of the Court dated October 20, 2010 then in effect (see AO/548/10). Plaintiff asserts that by assignment dated April 4, 2011, it, as nominee for Wall Street Mortgage Bankers Ltd., d/b/ Power Express (Wall Street Mortgage), the mortgagee, assigned the subject mortgage to Vanderbilt.

That branch of the motion by plaintiff for leave to amend the caption as proposed is denied (CPLR 1018). Although substitution is appropriate where the mortgage and note have been assigned to a new party after commencement of a foreclosure action (see Saxon Mortg. Services, Inc. v Coakley, 83 AD3d 1038 [2011], lv to appeal denied 17 NY3d 708 [2011]), plaintiff has failed to establish that Vanderbilt presently holds the note, which was endorsed by Christine Holman, assistant vice-president of Wall Street Mortgage, in blank and without recourse on behalf of Wall Street Mortgage (see Bank of New York v Silverberg, 86 AD3d 274, 280 [2011]). Thus, plaintiff has failed to show that Vanderbilt rightfully may pursue, or be awarded, a judgment of foreclosure and sale (see id.).

With respect to the cross motion,

"[a] defendant who has failed to timely appear or answer the complaint must provide a reasonable excuse for the default and demonstrate a meritorious defense to the action, when opposing a motion for leave to enter judgment upon its failure to appear or answer and moving to extend the time to answer or to compel the acceptance of an untimely answer (see Juseinoski v Board of Educ. of City of NY, 15 AD3d 353, 356 [2005]; Ennis v Lema, 305 AD2d 632, 633 [2003])" (see Lipp v Port Auth. of NY & N.J., 34 AD3d 649 [2006]).

The determination of what constitutes a reasonable excuse for a default in answering lies within the sound discretion of the court (see Adolph H. Schreiber Hebrew Academy of Rockland, Inc. v Needleman, 90 AD3d 791 [2011]; Maspeth Fed. Sav. & Loan Assn. v McGown, 77 AD3d 889 [2010]; Grutman v Southgate At Bar Harbor Home Owners' Assn., 207 AD2d 526, 527 [1994]).

Defendants Lopez, appearing by Queens Legal Services, assert that they were victims of predatory lending practices committed by the lender regarding the financing of the purchase of their home from Autumn Equities, LLC (Autumn Equities). They claim that a real estate agent employed by Autumn Equities/United Homes induced them to purchase a two-family house, which was then still under construction, for $579,000.00, without a down payment, advising them, in effect, they could live with defendant Christian Lopez, their adult-aged son, in one of the units, and rent out the other unit, to make the house affordable. They also claim that the agent advised them they would need two mortgage loans to finance the entire $579,000.00 purchase price, and that his office could arrange for them to get two fixed-rate mortgages with a combined monthly payment of approximately $3500.00 per month from Wall Street Mortgage. They further claim that the agent failed to tell them they had the right to hire an independent real estate appraiser or home inspector, or shop for financing from a lender of their own choosing. Defendants Lopez additionally claim that at the suggestion of Wall Street Mortgage, they added defendant Christian Lopez as an applicant to the mortgage application to insure approval of the loans. They assert Wall Street Mortgage failed to disclose to them when they applied for the loans that the primary mortgage loan would have an adjustable interest rate, the initial payments would be sufficient only to pay the interest accruing on the loan, and the monthly mortgage payment would increase significantly once the loan became fully amoritizing. Defendants Lopez also claim that they were represented at the closing by an attorney provided to them by Autumn Equities or United Homes, but still no one disclosed to them the actual loan terms. They further claim that the "Truth in Lending" disclosure form provided to them at the closing fails to disclose, clearly and conspicuously the proper payment schedule reflecting the terms stated in the note. According to defendants Lopez, they never would have entered into the transaction if they knew the truth about the repayment terms of the primary mortgage loan. They assert they struggled to pay their mortgage payments for two years, but because of illness and financial setbacks, they were no longer able to maintain their payments, and the property fell into foreclosure.

Defendants Lopez state that shortly after they received the summons and complaint, they sought help from the Legal Aid Society at a foreclosure prevention clinic held at the Queens Civil Courthouse. Sumani Lanka, a staff attorney with Legal Aid Society, states she informed defendants Lopez that the Society would not be able to represent them in this case because of the Society's own limited resources. Defendants Lopez assert they were unaware of the availability of any other free or low-cost legal services, and believed that without legal representation, they could not defend themselves in this action. They state the servicing agent for the lender denied their application for a loan modification, and the servicing agent and Vanderbilt denied their requests to consent to proposed short sales. Defendants Lopez also state that Vanderbilt then contacted them asking them to reapply for a loan modification, which they did. They additionally state that on or about August 11, 2011, they attended a foreclosure clinic at the Queens Civil Courthouse, and met with Franklin Romeo, of counsel to Jennifer Ching, Esq., Queens Legal Services, who informed them that in the event his office was not able to represent them, they had the right to represent themselves in the case, but would need to make a motion since their time to respond to the complaint had expired. Defendants Lopez state that prior to this conversation, they did not realize they could have filed an answer to the complaint without the assistance of an attorney. They state that Mr. Romeo informed them a few weeks later that plaintiff had filed the instant motion. Defendants Lopez assert that Vanderbilt then denied their loan modification application by letter dated August 31, 2011.

The copy of the summons on file in the clerk's records in this action provided notice of commencement of this suit, but also called upon defendants Lopez to answer the complaint and to serve a copy on plaintiff's attorney. It warned, in bold type, that failure to respond to the summons and complaint by "serving the answer on the plaintiff for the mortgage company who filed this foreclosure proceeding against you and filing the answer with the court, a default judgment may be entered and you can lose your home." Furthermore, it advised (again in bold type) defendants Lopez to "[s]peak to an attorney or go to the court where your case is pending for further information on how to answer the summons and protect your property." It, thus, clearly provided notice that if defendants Lopez did not have an attorney or were unable to obtain legal representation, they could proceed to the court and get help in answering the complaint. In addition, it reiterated, in larger, bold type, "[Y]OU MUST RESPOND BY SERVING A COPY OF THE ANSWER ON THE ATTORNEY FOR THE PLAINTIFF (MORTGAGE COMPANY)." Defendants Lopez make no claim that they were not personally served with a copy of the summons and complaint, or the additional notice provided pursuant to CPLR 3215(g)(3) by service of a copy of the summons by first-class mail (see affidavit of Erin E. DiFrancesca dated May 27, 2009 annexed as Plaintiff's Exhibit B in opposition). Therefore, defendants Lopez have failed to show that they reasonably believed they could not defend themselves in the case without an attorney. Defendants Lopez, moreover, make no claim that they were lulled into inaction as a consequence of any negotiations with the servicing agent or Vanderbilt. Under such circumstances, defendants Lopez have failed to demonstrate a reasonable excuse for their failure to timely serve an answer. The cross motion by defendants Lopez to vacate their default in answering and for leave to serve a late answer is denied (see C & H Import & Export, Inc. v MNA Global, Inc., 79 AD3d 784 [2010]; 599 Ralph Ave. Dev., LLC v 799 Sterling Inc., 34 AD3d 726 [2006]; Elite Limousine Plus, Inc. v Allcity Ins. Co., 266 AD2d 259 [1999]).

That branch of the motion by plaintiff for leave to amend the complaint nunc pro tunc to the time of the commencement of the action to reflect that amount of the claimed monthly installment payment was $2389.24 and the date of the claimed default was December 1, 2008 is granted.

That branch of the motion by plaintiff to confirm the Referee's report of computation is granted.

To the extent defendants Lopez oppose that branch of the motion by plaintiff for leave to enter a judgment of foreclosure and sale on the ground plaintiff failed to serve them with a copy of the notice of the motion for a judgment of foreclosure and sale, they were not entitled to such notice, because they failed to answer the complaint, or appear and demand such personal service (see Polish Nat. Alliance of Brooklyn, U.S.A. v White Eagle Hall Co., 98 AD2d 400, 404 [1983]).

Defendants Lopez also oppose that branch of the motion by plaintiff for leave to enter a judgment of foreclosure and sale on the ground plaintiff has failed to demonstrate it served them with a notice pursuant to RPAPL 1304. Plaintiff's counsel previously submitted a statement dated September 10, 2009 to the court indicating that the subject mortgage is neither a subprime home loan nor a high-cost home loan, and that the annual percentage rate at consummation did not exceed three percentage points over the yield on treasury securities as of the fifteenth day of the month in which the loan was consummated. In addition, the subject mortgage is not a "non-traditional home loan" as that phrase was defined in the version of RPAPL 1304 in effect at the time of the commencement of this action (see L 2008, c 472, § 2, eff. Sept. 1, 2008). A nontraditional home loan was defined as "a payment option adjustable rate mortgage or an interest only loan consummated between January first, two thousand three and September first, two thousand eight" (see former RPAPL 1304[5][e]). The subject mortgage is not a "payment option adjustable rate mortgage" because it does not grant the mortgagor an option to make a payment of less than the actual payment of interest and principal necessary to amortize the loan. Nor is it an "interest only" loan insofar as the note calls for interest only for the first ten years of the loan, but principal and interest for the next 20 years. Under such circumstances, plaintiff was under no obligation to serve defendants Lopez with a notice pursuant to RPAPL 1304 as a condition precedent to suit (cf. Aurora Loan Services, LLC v Weisblum, 85 AD3d 95 [2011]).

Plaintiff's counsel submits her affirmation dated August 11, 2011, pursuant to the administrative order the Chief Administrative Judge of the Court dated March 11, 2011 (AO 431/11), indicating that she communicated with one "Jackie Mash," "Legal Affairs Representative," of plaintiff on June 21, 2011. According to the affirmation, Jackie Mash informed plaintiff's counsel that she "personally reviewed plaintiff's documents and records relating to this case for factual accuracy; and ... confirmed the factual accuracy of the allegations set forth in the Complaint and any supporting affidavits or affirmations filed with the Court, as well the accuracy of the notarizations contained in the supporting documents filed therewith" (emphasis supplied). Such affirmation, however, is at odds with the other affirmation of plaintiff's counsel dated June 4, 2011 wherein counsel stated the complaint contained errors as to the date of default and the amount of the monthly payment. Thus, the branch of the motion for leave to enter the judgment of foreclosure and sale is denied without prejudice to renewal based upon proper papers, including an affirmation by plaintiff's counsel, clarifying this issue, and upon proper service, including service upon defendants Lopez (see Home Sav. Bank v Chiola, 203 AD2d 525 [1994]).

Dated: Long Island City, NY

March 12, 2012

______________________________

ROBERT J. MCDONALD

J.S.C.