Aurora Loan Services, LLC v. Rivera, 17024/2008
Cite as: Aurora Loan Services, LLC v. Rivera, 17024/2008, NYLJ, 1202639806755, at *1 (Sup., SUF, Decided January 8, 2014)
Justice Jerry Garguilo
Decided: January 8, 2014
Plaintiff's Attorney: Stein Wiener & Roth, Carle Place, NY.
Defendant's Attorney for Jose R. Rivera: Peter D. Tamsen, P.C., Bay Shore, New York.
DECISION POST HEARING
This action was brought to foreclose a mortgage on certain premises situated in the County of Suffolk, State of New York. It is undisputed that a mortgage and note were executed by Jose R. Rivera. The aforesaid documents evidence a loan (principal sum of Six Hundred Twenty Four Thousand Dollars [$624,000.00] and an initial interest rate of 7.875 percent per year). It is undisputed that the first named defendant, Jose R. Rivera defaulted.
The matter was referred, pursuant to statute, to the foreclosure conference part for purposes of determining whether or not the parties could reach a mutually agreeable resolution whereby foreclosure might be avoided; and the evaluation of the potential for a resolution in which payment schedules or amounts might be modified and/or other work out options. At the conference part no resolution was achieved.
The Plaintiff claims the Defendant's financial circumstances, in connection with his default, rendered it impossible for the Plaintiff to offer any home retention option. The Defendant claimed the Plaintiff acted in bad faith in failing to offer a modification or other work out options so as to avoid the entire foreclosure process.
The Court conducted a hearing. The issue to be resolved at the hearing was whether or not the Plaintiff acted in bad faith. The Court took testimony and received evidence on October 30, 2013 and November 13, 2013. The Court invited the parties to submit their closing arguments on paper. The Court has received and considered the closing arguments.
Two witnesses were called. Leonard Saburro testified on behalf of the Defendant, Jose R. Rivera. Mr Saburro is the son-in-law of Mr. Rivera. Mr. Rivera never appeared as it was represented to the Court that be was old and in failing health. The Court allowed Mr. Saburro to testify. The Defendant while representing the unavailability of Mr. River never produced any document substantiating poor health. It was clear that Mr. Saburro was the driving force in attempting to arrive at a resolution short of foreclosure. The Plaintiff contends that "the record clearly demonstrates that Defendant Jose R. Rivera applied for a loan which he could not afford, at the behest of the only defense witness who appeared before this Court, his son-in-law Leonard Saburro, and thereafter promptly defaulted." The Court finds that the home was refinanced, there was Fifty Thousand Dollars ($50,000.00) taken as a "cash out" (which remains unaccounted) and was promptly in default.
The Defendant claims that the lender continuously offered trial modifications and thereafter reneged.
The testimony gives the Court no reason to doubt that Jose River could not afford the subject loan when he submitted his application for refinance on or about June 6, 2007. The defense witness, Mr. Saburro is neither an obligor nor a mortgagor.
Mr. Marquest Hughes testified on behalf of the Plaintiff. He is a default case specialist and testified to familiarity with programs regarding assistance and available options in situations involving default and foreclosure. His testimony came from a review of records, all electronically stored, concerning the loan from initiation to law day.
The loan application in question was completed by Mr. Saburro who worked as a loan officer. Mr. Saburro procured refinancing in the amount of Six Hundred Twenty Four Thousand Dollars ($624,000.00) on an interest only basis. Credible testimony established that the only income listed in said application was that of Mr. Rivera. The loan called for monthly payments of approximately Five Thousand Dollars ($5,000.00) and it is conceded that the loan fell into default within the first three (3) months.
Defendant's closing argument notes the following:
The intention of the Rivera family at the outset was to "Refinance" out of the interest only loan within two (2) years of its inception. That was the strategy when the loan was obtained. The plan was aborted as property values plummeted along with the income in the household. The once equity rich home was worth significantly less due to the decline in the real estate market and the reopening of the rifle range in the back yard making the exterior of the home sound like a war zone.
The Court places emphasis on the words "income in the household." Such is the case as Mr. Saburro and his family also reside in the subject premises. Upon questioning by the Court, it was determined that the Saburros' income was not a source of income listed during the application process. The point being that any decline in Mr. Saburro's income because of the housing crisis was of no moment. Additionally troubling was a fact that no testimony was adduced that Mr. Rivera continuously resides within the subject premises. The testimony offered by Mr. Saburro was that Mr. Rivera "goes back and forth" without any specifics regarding as to where Mr. Rivera actually resides. The Plaintiff notes the following in its closing argument:
Both Saburro and Hughes agreed that the default occurred very quickly and that on January 21, 2008 a delinquent letter was sent and received. Clearly, Rivera's default after three months of payment does not support the basis for any bad faith on the part of the Plaintiff. Rather, common sense and reason leads to the conclusion that Rivera shouldn't have refinanced his then performing loan and receive a cash out of $50,000.00 which he failed to use to help him through his difficulties in making the
payments he contractually agreed to. Rather, the only answer proffered regarding what happened to those funds was "I don't know, you'll have to ask my father-in-law?" Perhaps if Mr. Rivera, the defendant, was present we would know the answer. Perhaps he is unaware these proceeding are even occurring.
Mr. Saburro further testified that he sought to establish an immediate line of communications to the bank to try to get assistance. He testified as to several "trial" modifications. In essence, Mr. Saburro attempted to establish that the bank acted in bad faith in tendering these trial modifications without ever finalizing the same. However, Mr. Hughes testified that upon his review of the call history relating to the account no such attempts were made (telephonically). He testified that it was the bank which attempted to reach out to the borrower and those attempts were unanswered. In all probability, the creditor did reach out to the actual borrower, Mr. Rivera.
As noted hereinabove, Mr. Saburro testified that they had been offered a trial modification in 2009. The Plaintiff failed to offer any permanent relief, despite compliance with the terms. The Plaintiff claims that the statement is purposefully self-serving. As Plaintiff points out upon cross examination, Mr. Saburro was shown the original offer and admitted that it was not a trial modification. Both documents dated April 27, 2009 reflect a repayment plan. That agreement which was signed by Mr. Rivera required three (3) monthly payments with a lump sum-balloon of One Hundred Nine Thousand Four Hundred Ninety Dollars and Ninety One Cents ($109,490.91). It is apparent that Mr. Saburro accepted this agreement simply to keep the wolf from the door for an additional three months.
The Court finds that were no trial modifications offered in 2009.
CPLR §3408 provides for mandatory settlement conferences in certain residential foreclosure actions (see former CPLR §3408). In 2009, shortly after the passage of the subprime residential loan and foreclosure laws, the legislature amended a number of recently enacted statutes, including CPLR §3408 (see L.2009, ch. 507). The purposes of the amendments were to allow more homeowners at risk of foreclosure to benefit from consumer protection laws and opportunities to prevent foreclosure; to establish certain requirements for plaintiffs in foreclosure actions obligating them to maintain the subject property; to establish protections for tenants living in foreclosed properties; and to strengthen consumer protections aimed at the defeating "rescue scams" (governor's mem., Bill Jacket, L.2009, ch. 507, at 5). The 2009 amendments include a provision requiring that "both the plaintiff and defendant shall negotiate with good faith to reach a mutually agreeable resolution, including a loan modification, if possible" (CPLR §3408 [f]). Wells Fargo Bank, N.A., v. Meyers, 108 A.D.3d 9, 966 N.Y.S.2d 108, 12.
A foreclosure action is equitable in nature and triggers the equitable powers of the
Court (see Notui v. Darien Construction Corp., 41 N.Y.2d 1055, 396 N.Y.S.2d 169). Once equity is invoked, the Court's power is as broad as equity and justice require. See Mortgage Electronic Registration Systems Inc. V. Horkan (at 948, 890 N.Y.S.2d 326).
Mandates of 22 NYCRR 202.12-a[c], provide:
The parties shall engage in settlement discussions in good faith to reach a mutually agreeable resolution, including a loan modification if possible. The court shall insure that each party fulfills its obligation of the negotiating good faith and shall see that conferences not be unduly delayed or subject to willful dilatory tactics so that the rights of both parties may be adjudicated in a timely matter.
The Court found testimony of Plaintiff's witness, Hughes, to be truthful. His testimony that a modification is and was not a viable alternative is not disputed. Mr. Hughes established that the most recent review of the subject mortgage resulted in yet another denial and was conducted at the direction of the Court under the mandated mediation process. The parties cannot be forced to reach an agreement and the CPLR does not purport to require them to, and the courts may not endeavor to force an agreement upon the parties. Wells Fargo Bank, N.A., v. Meyers, 108 A.D.3d 9. Furthermore, a determination not to modify a mortgage loan by a foreclosing bank that is under no legal obligation to modify such a loan is not unconscionable conduct and does not constitute bad faith. JP Morgan Chase Bank, Nat. Ass'n v. Ilardo, 36 Misc.3d 359. It is clear that the case before the Court is not a case where a lender has wrongfully accepted large sums of monies and then refuses home retention relief.
It is the determination of the Court that the Defendant has failed to demonstrate that the Plaintiff has failed to act in good faith. Accordingly, any restrictions placed upon the Plaintiff's proceeding with foreclosure are vacated.
The foregoing constitutes the decision and Order of this Court.
Dated: January 8, 2014