defective foreclosure lawsuits

Court Bars Collection of Interest and Fees on Loan For Failure of Mortgage Company to Negotiate in Good Faith

April 22, 2014 by Elliot S. Schlissel

Justice Kenneth Sherman sitting in the Supreme Court Foreclosure Part in Kings County recently had a case before him involving what he felt was the bank’s failure to negotiate in good faith at the mandatory foreclosure settlement conferences. A special referee had written a report requesting all interest be tolled on a loan provided by American Home Mortgage Servicing (hereinafter referred to as “AHMS”) and they be further barred from collecting attorney’s fees related to their initiating a foreclosure legal action. Judge Sherman acknowledged receipt of the report and scheduled the matter for a hearing to decide if American Home Mortgage Servicing had engaged in bad faith negotiations at the mandatory foreclosure settlement conferences.

Statute Requires Good Faith Negotiations

Judge Sherman noted mandatory settlement conferences were required with regard to all foreclosure lawsuits brought concerning residential mortgages. In this case, the defendant was a resident of the property that was being foreclosed on. The enabling statutes creating the mandatory residential foreclosure conference parts mandated all parties negotiate in good faith at these foreclosure settlement conferences. Judge Sherman stated in his decision American Home Mortgage Servicing was represented by an attorney at the settlement conferences. However, the attorney for American Home Mortgage Servicing did not have the appropriate contractual authority to negotiate a loan modification in good faith which would resolve this foreclosure proceeding. The court specifically stated in its decision that on April 23, 2009, and on October 5, 2010, the attorneys for American Home Mortgage Servicing failed to appear by an attorney who had actual knowledge, ability and authority to negotiate a mortgage modification in a meaningful manner. Therefore the Judge ruled AMHS did not comply with New York Civil Practice Law and Rules Section 3408(c). This statute requires all parties to foreclosure court conferences negotiate in good faith. The court therefore barred AHMS from collecting any claimed interest, penalties and attorneys’ fees or costs incurred from the loan from April 23, 2009 to October 5, 2010.

Conclusion

Financial institutions are legally obligated under New York law to negotiate in good faith for the purpose of working out mortgage modifications at the mandatory foreclosure court conferences. Financial institutions who are represented by attorneys who have no real authority to work out reasonable loan modifications can be considered to have acted in bad faith, and in violation of New York State law.

Elliot Schlissel is one of the leading foreclosure defense attorneys in the Metropolitan New York area. For more than 45 years he has helped his clients fight foreclosure proceedings, obtain mortgage modifications and continue to live in their homes. He offers free consultations to all prospective clients.

Bank Fails to Prove it Has Standing on Date Foreclosure Action Started

April 17, 2014 by Elliot S. Schlissel

Justice David Schmidt, sitting in the Supreme Court Foreclosure Part in Kings County recently had a case before him concerning a foreclosure on a home where the defendant submitted a lack of standing defense. The foreclosure action was brought by US Bank as the trustee for Morgan Stanley Mortgage Loan Trust (hereinafter referred to as “MSMLT”). During the course of this proceeding, the attorneys for MSMLT brought a summary judgment motion against the defendants. (A summary judgment motion is a motion that alleges there are no questions of fact concerning the issues in the case and therefore the moving party should be entitled to judgment without the necessity of having the case go to trial).

The defendants submitted seven affirmative defenses in their answer. One of those affirmative defenses alleged the bank lacked the standing to bring this foreclosure lawsuit.

Lack of Standing

MSMLT argued that the defendants defaulted on the note due to the failure to make timely mortgage payments. The defendants had not made mortgage payments for a period of two years before MSMLT had started the lawsuit to foreclose on the their home. MSMLT alleged in their pleadings they were the holder of the note and mortgage which had been endorsed in blank and delivered to them before the lawsuit was initiated.

Justice David Schmidt denied the plaintiff’s application for summary judgment. He took the position the attorneys for MSMLT had failed to offer evidence of their standing to bring the foreclosure proceeding against the defendants. They failed to prove they had the note at the time of the commencement of the action. Judge Schmidt found there were triable issues of fact regarding delivery of the note from the original lender and endorser, Hemisphere National Bank, to MSMLT. The court further stated in its decision MSMLT made conclusory statements it had “continuous possession” of the note. These conclusory statements were not sufficient to establish standing in the eyes of the judge. The judge ruled plaintiff’s allegations that equated the possession of the note with the Uniform Commercial Code’s requisite delivery requirements was not convincing and therefore he denied the motion.

Conclusion

In each and every foreclosure lawsuit, the attorneys for the homeowners should allege a lack of standing defense. Our office has had numerous cases where banks have been unable to successfully foreclose on our client’s property due to their failure to prove they had standing to initiate the foreclosure lawsuit.

Elliot S. Schlissel is one of the leading foreclosure lawyers in the Metropolitan New York area having helped scores of his clients to stay in their homes and fight foreclosure lawsuits.

Filed Under: Foreclosure, Foreclosure Defense Tagged With: defective foreclosure lawsuits, foreclosure attorney, foreclosure defense, foreclosure defense attorneys, New York foreclosure attorney, New York foreclosure defense lawyers

Knowledge Of False Information In Financial Documents Used In a Mortgage Transaction Bars Recovery

April 4, 2014 by Elliot S. Schlissel

Judge Joseph Bianco, sitting in the United States District Court for the Eastern District of New York, recently had a case involving various improprieties concerning the acquisition of a mortgage. Plaintiffs, in this case, had obtained a mortgage on their home from Countrywide Mortgage Company (hereinafter referred to as “Countrywide”) in the year 2004.

After experiencing financial difficulties involving large credit card debt and anticipating a potential bankruptcy and/or foreclosure proceeding, they obtained a second mortgage on their home in the year 2008. Both the first mortgage and the second mortgage were combined in a “Consolidation, Extension and Modification Agreement (CEMA)”. The plaintiffs presented arguments that the 2008 transaction was fraudulent. They claimed Countrywide placed false financial information into their mortgage application in 2008. They also claim Countrywide concealed the 2004 mortgage was “split” from its underlying note as a result of the assigning of the mortgage to the Mortgage Electronic Registration Systems.

Judge Bianco after considering the arguments rendered a split decision. He rendered a decision dismissing the plaintiffs’ allegations of fraud because they had actual knowledge false financial information was contained in the 2008 mortgage loan documents. In spite of the fact they knew the information was false, they executed these documents. He went on further to say although the plaintiffs allege the 2004 mortgage note was invalid, their “splitting” theory was not in compliance with New York State’s “principal-incident rule”. A mortgage is unenforceable if it is detached from its note. However, the note is enforceable even if it is not maintained with the mortgage.

Quiet Title Claim Allowed to Continue

Although Judge Bianco dismissed the plaintiffs’ claims of fraud to set aside the 2004 and 2008 transactions, he did allow the lawsuit to continue under the theory the plaintiffs’ may be entitled to quiet title on this matter. Quiet title means having the mortgage rendered invalid against the property and the removal of the lien from the property.

Elliot Schlissel is a foreclosure attorney representing families who seek to fight foreclosure lawsuits throughout the Metropolitan New York area.

Filed Under: Foreclosure Defense Tagged With: Bankruptcy mortgage modification, defective foreclosure lawsuits, defective mortgages, financial crisis, foreclosure attorney, foreclosure crisis, New York foreclosure attorney

No Right to A Mortgage Modification

March 24, 2014 by Elliot S. Schlissel

foreclosure defense attorney A foreclosure proceeding was brought in Suffolk County before Supreme Court Justice Jerry Garguilo. Rivera had executed the mortgage and the personal obligation and he had failed to make his mortgage payments in a timely manner. Rivera had applied to Aurora Loan Services for a mortgage modification. They had taken the position he did not qualify for a mortgage modification.

It Is Alleged The Mortgage Company Acted in Bad Faith

Rivera brought a proceeding before Judge Garguilo claiming that Aurora Loan Services had acted in bad faith because they failed to offer him a mortgage modification or any other agreement to allow him to keep his house from being foreclosed on. It was presented to the court that Rivera was in bad health and could not appear in court. Rivera had a son-in-law by the name of Saburro. He was a loan officer. He came to court and testified Rivera was in bad health and that is why he did not appear in court. Saburro also testified Aurora Loan Services had repeatedly offered Rivera trial mortgage modifications. And at the end of each mortgage modification they would pull the rug out from under Rivera and advise him the mortgage modification was not going to be made permanent.

Judge Holds No Bad Faith

Justice Garguilo found that there were no trial mortgage modifications made. Judge Garguilo took the position the foreclosing bank has no obligation to modify a mortgage. Aurora’s failure to offer Rivera a mortgage modification was not unconscionable and it did not amount to bad faith. Aurora simply had no legal obligation to give Rivera a mortgage modification. It was a totally discretionary decision on their part. Judge Garguilo went on to state in his decision “it was clear the case was not one where a lender wrongfully accepted large sums of money and then refused home retention relief.” The court therefore ruled Aurora Loan Services did not act in bad faith because they did not provide Rivera with a mortgage modification.

Elliot S. Schlissel is a foreclosure defense lawyer representing homeowners throughout the Metropolitan New York area whose homes have been foreclosed on by financial institutions.

Filed Under: Foreclosure Defense, Mortgage Modification Tagged With: defective foreclosure lawsuits, foreclosure attorney, mortgage modification attorneys, New York foreclosure attorney

Foreclosure Case Dismissed: Bank Does Not Obtain Personal Jurisdiction Over The Defendant

March 20, 2014 by Elliot S. Schlissel

foreclosure defense attorney Justice Frances Francois Rivera sitting in a Supreme Court Part in Kings County recently had a case involving JP Morgan Chase Bank and a Mr. Birica. JP Morgan Chase Bank had started a foreclosure lawsuit in Kings County. The lawsuit claimed that Mr. Birica was the owner of the property involved in the foreclosure. It further stated in the Summons and Complaint he was also the individual who executed the personal loan documents and mortgage documents with regard to the property. The attorneys for JP Morgan Chase took the position Mr. Birica had defaulted on his payments with regard to the mortgage.

Vacating the Default Judgment

Mr. Birica brought an application to vacate the default and he submitted a Notice of Appearance and Verified Answer to the Complaint in the foreclosure lawsuit brought by JP Morgan Chase. In addition, he brought an application to dismiss JP Morgan Chase’s Complaint based on the theory that Chase lacked legal standing to bring the lawsuit and they had failed to properly serve the Summons and Complaint in the foreclosure proceeding on her.

The attorneys for Birica submitted a motion to the court which claimed she did not receive a copy of the Summons and Complaint in a timely manner. She therefore was unable to answer it. She claimed she resided in Rye, New York and the Summons and Complaint was served to an address in Queens, New York. The attorneys for Chase presented documentation that their process server had served Birica at an address in Rego Park by delivering a copy of the Summons and Complaint to her daughter and by thereafter mailing a copy to the address in Rego Park.

Judge Francois Rivera in ruling on the applications made by the attorneys for Birica found JP Morgan Chase did not meet its burden of proof establishing the Summons and Complaint in the foreclosure proceeding were properly delivered or mailed to Ms. Birica’s dwelling. He therefore dismissed the foreclosure lawsuit.

Conclusion

Financial institutions are held to a very high standard with regard to obtaining personal jurisdiction of individuals in foreclosure lawsuits.

Elliot S. Schlissel is a foreclosure defense attorney with more than 45 years of legal experience. His office has helped scores of families in the Metropolitan New York area stay in their homes. Elliot has previously been the President of the Commercial Lawyers Conference of New York, a creditors Bar Association, and he has extensive experience in litigating foreclosure defense cases and helping his clients obtain mortgage modifications.

Filed Under: Foreclosure, Foreclosure Defense Tagged With: defective foreclosure lawsuits, foreclosure, foreclosure attorney, New York foreclosure attorney, New York foreclosure defense lawyers

Foreclosure Fraud – Part II

March 18, 2014 by Elliot S. Schlissel

Rent to Buy Scams

A common foreclosure scam involves individuals approaching a homeowner whose home is in foreclosure and offering to have them refinance the home at a much lower interest rate. Unfortunately, the way this scam works is the homeowner is presented with documents that involve the transfer of the deed from the homeowner to the alleged foreclosure counseling company. The homeowner eventually finds out that he or she does not own their home and is now renting their home from the alleged foreclosure counseling company. Eventually the counseling company brings an eviction proceeding to evict the homeowner from their home and they thereafter try to sell the property or bring another rent paying tenant into the property.

The rent to buy scams also sometimes involve the tricking of the homeowner into signing documents that are presented to be applications for a home loan. However these applications actually are documents utilized to transfer the title of the property. Homeowners should be especially wary of signing any type of blank forms. In this type of scam the scammer presents a blank form to the homeowner and says “don’t worry we will fill it out and work with the bank to obtain a lower interest loan.” When the form is eventually filled out it turns out to be a document transferring title to the house.

Hire Attorneys Experienced in Defending
Homeowners In Foreclosure Lawsuits

The best way to ensure you are not being scammed and that your rights are being protected is to hire an attorney with a significant background in real estate and foreclosure defense matters to represent you with regard to foreclosure related issues concerning your home. When you hire a qualified attorney, you should request that you receive copies of all documents and paperwork in your file to make sure that the attorney is doing all that is necessary to protect your rights and interests.

Elliot Schlissel is an attorney with more than 45 years of experience representing clients in real estate related legal matters. Elliot and his team of attorneys have one of the busiest foreclosure defense law firms in the Metropolitan New York area. Elliot helps his clients stay in their homes, obtain mortgage modifications and take all other necessary actions to avoid losing their homes in foreclosure.

Filed Under: Foreclosure, Foreclosure Defense Tagged With: defective foreclosure lawsuits, foreclosure attorney, foreclosure defense, foreclosure fraud, foreclosure proceedings, New York foreclosure attorney

Beware of Mortgage/Foreclosure Fraud – Part I

March 11, 2014 by Elliot S. Schlissel

foreclosure defense attorneys The number of homes going into foreclosure on a national basis has been decreasing. However, the number of homes in the Metropolitan New York area that have been placed into foreclosure by financial institutions has not been going down during the past few months.

Homeowners who find themselves with financial difficulties can be vulnerable to fraudulent mortgage and foreclosure schemes. In California, a woman by the name of Jewel Hinkles swindled approximately 1300 homeowners out of $5,000,000 through a group of companies which she claimed were in the business of buying distressed properties from the homeowners. This is one of many examples of fraudulent foreclosure/mortgage schemes that have been perpetrated on individuals finding themselves in financial difficulty and unable to make mortgage payments on their home.

Avoiding Foreclosure Scams

The most important thing to take into consideration in avoiding being defrauded is if a deal sounds too good to be true, it probably is fraudulent! Foreclosure proceedings are subject to public disclosure in the courts. It is therefore easy for criminals who seek to scam homeowners by obtaining information about their foreclosure and making false representations to the beleaguered homeowner.

Another type of foreclosure scam which is common involves alleged foreclosure counseling companies. Sometimes these companies solicit business with flyers dropped off in homeowners’ mailboxes or they actually come knocking on the door of homeowners whose homes have been placed into foreclosure by financial institutions.

Filed Under: Foreclosure, Foreclosure Defense Tagged With: defective foreclosure lawsuits, defective mortgages, foreclosure defense, foreclosure defense attorneys, New York foreclosure attorney, predatory lending

Negotiations with Bank Does Not Stop Foreclosure Lawsuit

January 14, 2014 by Elliot S. Schlissel

A foreclosure lawsuit was brought by Citi Mortgage against Vatash. Vatash submitted an answer with affirmative defenses to the summons and complaint served by Citi Mortgage. Citi Mortgage moved for summary judgment. In their application they sought to dismiss the answer brought by Vatash. Vatash claimed, in his answer, Citibank lacked standing to bring this foreclosure action. He also claimed Citibank’s motion was inappropriate because he was involved in discussions with Citi Mortgage concerning a loan modification. He took the position since loan modification discussions were ongoing, Citibank had no right to move forward with the foreclosure case.

Standing Argument Dismissed

Justice Thomas Whelan sitting in a Supreme Court Part in Suffolk County, ruled Vatash’s argument that Citi Mortgage didn’t have standing was procedurally defective. The ruling was based on the allegation that Vatash failed to assert lack of standing in his answer or in a pre-answer motion to dismiss. In addition, the court took the position the argument even if it had been submitted appropriately in the answer, was substantively without merit. The court held Citi Mortgage was the owner and holder of the note and mortgage upon its merger with the original financial institution which made the loan.

The court ruled in favor of Citi Mortgage’s application for summary judgment (an application to grant a judgment without the need for a trial because there are no issues of fact). The court took the position the opposition papers submitted by Vatash did not create an issue of fact or an adequate defense.

Negotiations Do Not Stop Foreclosure Cases from Moving Forward

The Court specifically held the fact that Vatash was engaged in negotiations and/or discussions with Citi Mortgage is not a defense to the foreclosure lawsuit. Citi Mortgage’s motion for summary judgment was granted.

Conclusion

There are a number of important issues which were dealt with in this case. To start with, a lack of standing argument must be plead in the answer to the Summons and Complaint. Secondly, discussions with a bank concerning mortgage modifications or other ways of resolving the case have no impact on the foreclosure lawsuit moving forward.

Elliot Schlissel is a foreclosure defense lawyer. His office has represented homeowners for more than 45 years on mortgage foreclosure lawsuits throughout the Metropolitan New York area.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Modification Tagged With: defective foreclosure lawsuits, foreclosure, foreclosure attorney, foreclosure defense, foreclosure defense attorneys, mortgage modification, Mortgage Modification new york attorney, New York foreclosure attorney

Mortgage Lender Penalized for Failure to Comply with Notice Requirements

January 11, 2014 by Elliot S. Schlissel

Judge Dolinger sitting in the Supreme Court in Rochester recently ruled a mortgage lender who did not comply with the “consumer friendly notice requirements under New York State law should be given a second chance to comply with the statute.” However, the lender was permanently enjoined from imposing any interest, fees, costs or legal expenses on the borrower from 90 days before the filing of the complaint until the bank complies with the New York notice requirements.

Foreclosure Prevention Tenant Protection and Property Management Act

The Foreclosure Prevention Tenant Protection and Property Management Act of 2009, requires a lender give the homeowner notice prior to the house being foreclosed on. In the case before Judge Dolinger, Citi Mortgage failed to comply with this statute. Judge Dolinger was concerned if the case was dismissed, Citibank would get a second chance to comply with the statute’s notice requirements. However, the judge noted in his decision the bank’s failure to comply with the notice requirements in their first attempt. If they were successful in the second attempt the borrower would be worse off because they would be responsible for the entire amount of the unpaid debt including the portion of the interest penalties and attorneys fees which accrued on the debt during the period of time between Citi Mortgage’s first chance at complying with the statute and their second chance. Judge Dolinger wrote in his decision, “the borrower is worse off because the amount of the debt has been increased during the two year period in which the foreclosure action has been pending making a recasting of the mortgage more costly, if not prohibitively so.” To deal with this, Judge Dolinger entered an order permanently enjoining the bank from imposing any interest, fees or legal expenses on the borrower from 90 before the filing of the complaint until such time as they complied with the statute.

Notice Regarding Foreclosure Lawsuit

New York Real Property Actions Proceedings Law (RPAPL) § 1304 requires a creditor to notify a borrower by registered or certified mail as well as by first class mail, offering assistance on how to avoid foreclosure. Citi Mortgage had failed to comply with this section of the Real Property Actions Proceedings Law. In the case before Judge Dolinger, he stated “there was no sworn statement from any bank official regarding the mailing.” Judge Dolinger, based on the bank’s failure to provide the sworn statement regarding the mailing, could have dismissed the foreclosure lawsuit. He refused to do so because he stated he “will not allow the bank to escape the consequences of its failure to follow” the law. Judge Dolinger went on to state “when and if the bank complies” with this statute it can collect “any principal payments due at any time under the note and mortgage.” Judge Dolinger’s ruling, however, denied the bank the ability to collect interest, fees, costs and attorneys fees during the period of time the bank was in non-compliance with the statute.

Conclusion

This was a victory for the mortgagors, albeit a small victory.

Filed Under: Foreclosure, Foreclosure Defense Tagged With: defective foreclosure lawsuits, foreclosure, foreclosure defense, foreclosure defense attorneys, New York foreclosure attorney

Foreclosure Dismissed – Citibank Has No Standing

January 3, 2014 by Elliot S. Schlissel

In a case before Justice Lizbeth Gonzalez, in the Supreme Court of Bronx County, the judge dismissed a foreclosure lawsuit brought by Citibank.

Citibank had filed a foreclosure proceeding against a homeowner named McCray. They had taken this action on behalf of a Bears Stearns Alt-A Trust. McCray brought a motion requesting the foreclosure lawsuit be dismissed. He argued Citibank had lacked standing to bring the lawsuit. Citibank claimed it had standing to bring the lawsuit because it was the holder of the original note.

Holder or Assignee of the Note and Mortgage

Judge Gonzalez in her decision stated a foreclosing party in a foreclosure lawsuit has standing when they are both the holder or assignee of the mortgage and underlying note at the time the action is commenced.

Citibank’s attorneys had argued they were the holder of the note. However, their legal submissions did not state they also were the holder of the mortgage.

Motion to Dismiss Case Granted

Judge Gonzalez found that there was no proof submitted by Citibank they were the holder of both the mortgage and the note at the time of the initiation of the lawsuit. The court therefore granted McCray’s motion to dismiss. Judge Gonzalez found that Citibank did not submit adequate proof it had the right to the debt in the absence of documentation of chain of custody and proof the mortgage and notes were lawfully assigned and held by it prior to commencing the lawsuit. Since Citibank did not establish and meet the requirements they had standing to bring the foreclosure lawsuit, Judge Gonzalez held that they did not have standing to foreclose and their foreclosure lawsuit was dismissed.

Conclusion

Before a financial institution can bring a foreclosure lawsuit they must be able to prove that they are the holder of both the note and mortgage. In addition, they must show that the mortgage has been rightfully assigned to them and the assignment was properly filed. The documentation of the assignment, the possession of both the note and the mortgage, should be attached to the summons and complaint in the foreclosure legal action. If the financial institution does not do this, the court should dismiss the case for lack of standing.

Elliot S. Schlissel is a foreclosure defense attorney. His office has helped homeowners in scores of cases fight foreclosures and remain in their homes.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Modification Tagged With: defective foreclosure lawsuits, foreclosure, foreclosure attorney, foreclosure defense attorneys, foreclosure defense lawyers, foreclosure proceedings, New York foreclosure attorney, New York foreclosure defense lawyers

Court Bars Collection of Interest and Fees on Loan For Failure of Mortgage Company to Negotiate in Good Faith

Bank Fails to Prove it Has Standing on Date Foreclosure Action Started

Knowledge Of False Information In Financial Documents Used In a Mortgage Transaction Bars Recovery

No Right to A Mortgage Modification

Foreclosure Case Dismissed: Bank Does Not Obtain Personal Jurisdiction Over The Defendant

Foreclosure Fraud – Part II

Beware of Mortgage/Foreclosure Fraud – Part I

Negotiations with Bank Does Not Stop Foreclosure Lawsuit

Mortgage Lender Penalized for Failure to Comply with Notice Requirements

Foreclosure Dismissed – Citibank Has No Standing

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