A foreclosure action was referred to Justice Genine Edwards who sits in Kings County. The lawsuit had been referred to her for a bad faith and standing hearing after more than 25 foreclosure conferences had been held regarding the case during a period of more than 36 months. After numerous attempts to reach an agreement between the homeowner and the bank, a hearing was conducted by Justice Genine Edwards.

Foreclosure Court Conferences

The foreclosure court conferences had taken place before a referee. The referee had written a report which stated the defendant, Diakite had qualified for a HAMP trial mortgage modification. In addition, Diakite had made three monthly payments under the HAMP temporary mortgage modification. After the three payments were made, the bank refused to accept any further payments from Diakite.

Three Mortgage Payments Made Under The Temporary Mortgage Modification

The first three mortgage trial modification payments were accepted by Aurora Loan Services. Aurora rejected the final modification. They claimed Diakite needed to restart the process all over again since Aurora did not receive the executed mortgage modification agreement from Diakite. Diakite indicated the reason she didn’t send it to Aurora was that she had never received it in the first place. Nationstar Mortgage thereafter informed Diakite the servicing on the loan was being transferred to them from Aurora. Nationstar thereafter denied Diakite’s HAMP application. They claimed Diakite did not provide necessary documentation.

The Judge’s Decision

Justice Edwards took into consideration that while she had directed the bank to produce a copy of the mortgage and the note and any assignments which indicated proof of ownership of both instruments, the bank had failed to produce any documentation whatsoever. She concluded the record supported the referee’s report. The plaintiff had failed to negotiate in good faith pursuant to New York Civil Practice Law and Rules section 3408. Justice Edwards therefore confirmed the referee’s report and stayed all interests, costs, and attorneys fees due and owing to the bank from March 1, 2010 until October 27, 2014, the date the hearing took place before her.

Conclusion

More and more banks are being sanctioned for failure to negotiate in good faith at mortgage modification conferences. Making homeowners provide documents over and over again, not taking responsibility for misplacing the documents, or losing the documents is simply unfair. In addition, it is unfair to grant a homeowner a mortgage modification, have them pay the required amount pursuant to the modification for between three and six months and thereafter have the bank say, no we are not going to make the modification permanent.