MERS v Lopez w

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Decided on March 12, 2012Supreme Court, Queens County

Mortgage Elec. Registration Sys., Inc. v Lopez

2012 NY Slip Op 50458(U)

Decided on March 12, 2012

Supreme Court, Queens County

McDonald, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law 431.

This opinion is uncorrected and will not be published in the printed OfficialReports.

Mortgage Electronic Registration Systems, Inc., Plaintiff,

against

Cesar Lopez; MARIA LOPEZ; CHRISTIAN LOPEZ;MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,

INC., as nominee for WALL STREET MORTGAGEBANKERS 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 BYTRANSIT ADJUDICATION BUREAU; CITY OF NEW

YORK BY ENVIRONMENTAL CONTROL BOARD; CITYOF 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 AUTOMOBILEINSURANCE, as sub. of ALBERT SPENCER; NY

FINANCIAL SERVICES, LLC; PORTFOLIO RECOVERYASSOCIATES LLC, WORKERS' COMPENSATION BOARDOF NEW YORK; LIBERTY POINT CORP.; STUYVESANT

FUEL SERVICE CORP.; PEOPLE OF THE STATE OF NEWYORK; METRO PORTFOLIOS INC.; ASTRID LOPEZ;

Page 1 of 7Mortgage Elec. Registration Sys., Inc. v Lopez (2012 NY Slip Op 50458(U))

3/14/2012http://www.courts.state.ny.us/reporter/3dseries/2012/2012_50458.htm


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7439/09

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 tosuch 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 ForeclosureSettlement 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.

[*2]Services, Inc. v Coakley, 83 AD3d 1038 [2011], lv to appeal denied17 NY3d 708

KATERA JOHNSON; ARNOLD RIVERS, Defendants.




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d .com[2011]), plaintiff has failed to establish that Vanderbilt presently holds the note, whichwas endorsed by Christine Holman, assistant vice-president of Wall Street Mortgage, inblank and without recourse on behalf of Wall Street Mortgage (see Bank of New York vSilverberg, 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 mustprovide a reasonable excuse for the default and demonstrate a meritorious defenseto the action, when opposing a motion for leave to enter judgment upon its failureto appear or answer and moving to extend the time to answer or to compel theacceptance 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 lieswithin 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. vMcGown, 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-ratemortgages 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




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d .comdisclose to them when they applied for the loans that the primary mortgage loan wouldhave an adjustable interest rate, the initial payments would be sufficient only to pay theinterest accruing on the loan, and the monthly mortgage payment would increasesignificantly 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 [*3]

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 agentfor 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.




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d .comThe copy of the summons on file in the clerk's records in this action provided notice ofcommencement of this suit, but also called upon defendants Lopez to answer the complaintand to serve a copy on plaintiff's attorney. It warned, in bold type, that failure to respond tothe 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 thatthey 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, [*4]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.




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d .comTo the extent defendants Lopez oppose that branch of the motion by plaintiff for leaveto enter a judgment of foreclosure and sale on the ground plaintiff failed to serve them with acopy of the notice of the motion for a judgment of foreclosure and sale, they were not entitledto 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 securitiesas 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 andprincipal 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]). [*5]

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 (AO431/11), 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 Complaintand any supporting affidavits or affirmations filed with

the Court, as well the accuracy of the notarizations contained in the supporting documents




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d .comfiled therewith" (emphasis supplied). Such affirmation, however, is at odds with theother affirmation of plaintiff's counsel dated June 4, 2011 wherein counsel stated thecomplaint 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.

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