Bank Punished For Negotiating In Bad Faith: Court Limits Their Interest Rate to 2%

homeowner's attorneyJustice Debra Silber sitting in a Supreme Court foreclosure court in Kings County, New York recently had a case involving bad faith in negotiations by Deutsche Bank. In this case the defendant moved for, and was granted, an Order which confirmed a report of a special referee made at the foreclosure conference which found that Deutsche Bank had acted in bad faith in violation of New York Civil Practice Law and Rules section 3408(f).

Bad Faith by Bank

Justice Silber, in her decision, found the actions and inactions by Deutsche Bank clearly indicated an absence of good faith as was contemplated by the New York Statute. During a period of ten months the bank delayed the underwriting of husband’s mortgage modification application. The referee found Deutsche Bank’s failure to act during a 10 month period was a dilatory tactic. Justice Silber concluded the husband had sought to obtain a mortgage modification for a period of 6 months. He had made 18 appearances at foreclosure mediation conferences. In determining the appropriate sanction to punish Deutsche Bank for its failure to work with the defendant in this case regarding his mortgage modification application, the court decided to reduce the interest rate to 2% on the balance of the mortgage which accrued after August 1, 2010. This was the date Justice Silber deemed the bank should have approved the husband’s HAMP mortgage application. In addition, the bank and its loan servicer organization were barred from collecting attorney’s fees with regard to the foreclosure lawsuit which accrued after August 1, 2010.


If a bank fails to negotiate in good faith mortgage modifications at foreclosure court mediation conferences, there are remedies available to the homeowner.

foreclosure defense lawyersElliot S. Schlissel is a foreclosure attorney who litigates foreclosure cases. He seeks to keep homeowners in their homes.

Foreclosure Dismissed, Bank Fails To Show It Was The Holder Of The Note

mortgage modification and bankruptcy attorneys on long islandJustice Francois Rivera, sitting in the Real Property Part in Supreme Court, Kings County, recently dismissed a foreclosure case brought by Loancare against Mr. Coleman.

The foreclosure lawsuit claimed Coleman had failed to make payments on the note and mortgage. It further claimed he took no action to cure the default. Coleman submitted an Answer which contained seventeen affirmative defenses. One of the affirmative defenses was that the bank lacked standing to bring this lawsuit.

Justice Rivera noted in his decision, before commencing a foreclosure lawsuit a plaintiff must have a legal or an equitable interest in the mortgage.

Transfer of the Mortgage

Coleman initially had given a mortgage to Lend America. Lend America executed and delivered the mortgage and note to Mortgage Electronic Registration Systems, Inc., (hereinafter referred to as “MERS”) as Lend America’s nominee.

When Loancare brought the lawsuit, they did not claim or prove that Lend America delivered the note to MERS. Therefore MERS was never the holder of the note. Since they didn’t have the note to begin with, they couldn’t assign it! Since MERS couldn’t assign it to Loancare, Loancare never became the holder of the note pursuant to a written assignment prior to initiating the foreclosure lawsuit. In addition, Justice Rivera pointed out in his decision Loancare did not allege the facts and circumstances as to who and which entity physically delivered the note.

Justice Rivera therefore decided Loancare did not establish a prima facie case that it was the holder and/or assignee of the note and mortgage. Justice Rivera therefore dismissed the lawsuit based on the fact the plaintiff had no standing to bring this foreclosure proceeding.


Submitting an appropriate Answer with numerous affirmative defenses and especially alleging lack of standing, is very important when responding to a foreclosure lawsuit. If Coleman had failed to allege lack of standing in his Answer, he would have waived this affirmative defense and Loancare would have been successful in obtaining a judgment of foreclosure and selling Coleman’s home.

foreclosure defense attorneysElliot S. Schlissel is a foreclosure attorney who helps homeowners fight foreclosure lawsuits and stay in their home.

Foreclosure And Your Credit Score

New York foreclosure and bankruptcy attorneyThe initiation of a foreclosure lawsuit by a financial institution against you will have a negative impact on your credit score. For most families, their home is their most significant asset and investment. When the family gets served with a Summons and Complaint in a foreclosure lawsuit, not only are they facing the potential loss of their home, but in addition, their credit worthiness is also being negatively impacted. Foreclosure lawsuits generally cause individual’s credit scores to be reduced by between 150 and 300 points. The foreclosure action can remain on your credit report for between 7 and 10 years.

Reduced Credit Scores

The reduction in your credit score may make it more difficult for you to rent an apartment should you decide to leave your home, do a short sale, or give the bank a deed in lieu of foreclosure. In addition, a reduced credit score will make it more difficult to obtain car loans, personal loans and credit cards. Some employers also look into an individual’s credit scores as part of their employment process. A low credit score may lead a potential employer to a negative conclusion regarding an individual’s level of responsibility or character.

Maintaining Your Credit Score During Foreclosure Litigation

Do not despair! Action can be taken to maintain your credit score even during the course of foreclosure litigation. If you have credit cards you should use 2 or 3 credit cards each and every month. It is important you make timely payments on these credit cards even if the payments are only minimum payments. Each time you use your credit cards it will give you positive points on your credit score. In addition, if you have car loans, personal loans, or other debt you should make your payments in a timely manner on these debts. Your continued use of credit cards, paying loans such as car loans, over time will completely rebuild your credit score. My office has represented individuals who while in foreclosure maintained credit scores of over 700 points.


Even though a foreclosure will have a negative impact on your credit score it is possible to maintain your credit score during the course of foreclosure litigation.

New York foreclosure defense attorney IslandElliot S. Schlissel is a foreclosure attorney who is familiar with the multitude of problems caused by the sub-prime mortgage crisis in America. He represents homeowners in foreclosure cases throughout the Metropolitan New York area and takes legal action to preserve their home ownership rights and help them obtain mortgage modifications.

How A Home Is Sold In Foreclosure

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Elliot S. Schlissel is a foreclosure lawyer who has been representing homeowners for more than 20 years.  His goal is to keep homeowners in their homes.  He defends homeowners in foreclosure lawsuits and helps his clients in obtaining mortgage modifications.  He and his associates can be reached for consultation at 516-561-6645, 718-350-2802 or by email to

“In Foreclosure!” What Does This Mean?

foreclosure defense attorneyWhen someone says they are “in foreclosure” they are referring to the fact the holder of their mortgage has filed a lawsuit against them in the Supreme Court of the County in which their home is located. Lenders in New York State, which are most often banks or mortgage companies, bring foreclosure lawsuits to obtain judgments against homeowners. When the foreclosing bank obtains the judgment of foreclosure, they can then take the next step and ask the court to appoint a referee to sell the home at auction. When the sale takes place, any funds received from the sale are given to the bank to pay off the loan owed by the homeowner. If there are funds left over after paying off the mortgage the homeowner can claim the funds.

It is then fair to say a home is “in foreclosure” until the time the home is sold at auction and a new individual or entity purchases the home.

Is Your Home “In Foreclosure”?

Should your home be in foreclosure, it is important you know what stage the foreclosure is at. This will let you know the progress of the lawsuit. If you are litigating the lawsuit, you need to know whether you are winning or losing the lawsuit. The stage it is at can give you some idea as to how long you can remain in your home if things aren’t going well in the foreclosure lawsuit.

Foreclosure Defense Lawyer

If you want to sleep at night and know you are protected in the foreclosure lawsuit, the best way to deal with that is to hire a qualified foreclosure defense lawyer. Our law firm has hundreds of foreclosure defense cases pending in the courts in the Metropolitan New York area. In most cases, the homeowners we represent get to live a minimum of 3 years without paying any expenses on their homes during the pendency of the foreclosure lawsuits. We offer free consultations and our phones are monitored 24/7. Should you have questions or concerns about your home going into foreclosure, call us. We can be reached at 1-800-344-6431, 516-561-6645, and 718-350-2802.foreclosure defense lawyer New York and Long Island

Bank Sanctioned For Failure to Negotiate a Mortgage Modification In Good Faith

mortgage modification attorneysA 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.


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.foreclosure lawyer New York

Homeowner Sues Bank For Breach of Contract Regarding Temporary Mortgage Modification

mortgage modification attorneysHomeowner Lyo brought a breach of contract proceeding against Bank of America. Lyo had attempted to obtain a mortgage loan modification from Bank of America. She had contacted Bank of America. Bank of America sent her an application for a loan modification. Thereafter Bank of America accepted and mailed Lyo an agreement for a trial modification mortgage plan.

Payments Made Under Trial Mortgage Modification

Lyo made all necessary payments under the trial program. She continued to make payments which were accepted by Bank of America even after the trial program finished. However, Bank of America never sent her a permanent mortgage loan modification. Bank of America notified Lyo she did not meet the eligibility requirements for a modified loan. They claimed this was due to the present value of her home.

23 Payments Accepted, 24th Payment Rejected

Bank of America had accepted payments from Lyo for 23 consecutive months after she had agreed to the trial period mortgage modification plan. Bank of America rejected her 24th payment. Supreme Court Justice Judith McMahon sitting in the Supreme Court Part in Richmond County ruled Lyo’s temporary mortgage modification plan could be considered an enforceable agreement. This agreement granted Lyo a loan modification as described within the terms of the agreement. She found the language in the temporary mortgage modification plan unequivocally provided, if Lyo complied with all the conditions, Bank of America was obligated to grant her a permanent loan modification. Bank of America’s application to dismiss Lyo’s breach of contract lawsuit against it was therefore denied.


Numerous homeowners come to my office each and every month with a story of woe concerning temporary mortgage modifications. The story goes as follows, the bank offered them a temporary mortgage modification and they accepted it. They thereafter made payments for a period of time, usually six months, under the temporary mortgage modification plan. Thereafter the bank comes up with some type of reason to turn them down for a permanent loan modification. Sometimes the reasons are very spurious. Homeowners who fulfill their obligations under temporary mortgage modification plans should always be given a permanent mortgage modification under the same terms!foreclosure defense lawyer on Long Island and New York City

Failure to State Statute of Limitations Defense in Answer Waives The Defense

foreclosure defense lawyersWells Fargo Bank brought a foreclosure legal action in the Supreme Court of Bronx County. The case was before Justice Mary Ann Brigantti. The defendant in the case, Ali, brought a motion to dismiss Wells Fargo’s Complaint. The motion claimed the residential foreclosure lawsuit was time barred.

The bank had initiated the foreclosure case with an Order of Reference entered in its favor. It had accelerated the mortgage when Ali failed to make payments on the loan. Ali’s moving papers stated the new foreclosure proceeding was not initiated until almost a year after the six year statute of limitations to bring a new foreclosure lawsuit had expired.

Statute of Limitations Defense Waived?

The bank claimed Ali waived the statute of limitations as a defense because he had not plead this defense in his answer. In addition, Wells Fargo’s attorneys claimed the initial acceleration of the mortgage (at the time of the accelerating of the mortgage the statute of limitations begins to run) may not have been valid because at the time it took place, Wells Fargo may not have had standing to commence the lawsuit. This was because the assignment was executed sending the mortgage to Wells Fargo after the lawsuit was initiated. The bank also claimed they revoked the prior acceleration of the loan by voluntarily discontinuing the prior lawsuit without prejudice in 2012.

Judge Brigantti denied Ali’s motion to dismiss. Her decision stated he waived the statute of limitations as a defense because he did not plead it as a defense in his Answer to the bank’s Complaint. In addition, the judge stated Ali did not establish the bank properly accelerated the debt in the prior lawsuit which was discontinued in 2007. Since Ali didn’t prove the acceleration of the debt he cannot argue the statute of limitations was triggered.


It is important to allege a statute of limitations defense in the event there is any possibility six years has elapsed from the initial acceleration of the note and mortgage. The statute of limitations is an extremely powerful defense. This is because it is a complete defense to bringing a lawsuit on the note. If the statute of limitations has expired, the bank’s lawsuit will be dismissed by the court if an appropriate motion is made.foreclosure lawyer on Long Island and New York City

Question As To Whether Bank Possessed Note Before Starting Foreclosure Lawsuit

foreclosure defense lawyerWells Fargo brought a foreclosure lawsuit against defendants in a Supreme Court Foreclosure Part in Kings County. The case was before Supreme Court Justice Carolyn Demarest. Wells Fargo eventually brought a motion to strike the defendant’s Answer and for summary judgment. The bank’s moving papers in the motion stated the defendants did not make a single payment on the note. The default was more than nine years old.

Note And Mortgage Assigned On Numerous Occasions

Justice Carolyn Demarest looked into the fact the note and mortgage had been assigned many times. Upon close examination she found all three assignments were assigned by a single person. This individual was identified only as an “authorized signator”. There was no explanation as to which entity the person was working for at the time he signed all three assignments. In addition, the bank alleged it had physical possession of the note before the commencement of the action. However, the judge found there was no explanation in the affidavit submitted by the bank’s servicer as to why assignment number three was dated more than a month before assignments one and two.

Bank’s Standing to Foreclose Challenged

The homeowners challenged the bank’s standing to proceed on this foreclosure lawsuit. Justice Demarest in her decision stated, the bank claimed the physical possession of the note, in and of itself, gave it standing at the time of the commencement of the lawsuit.

Summary Judgment and Motion to Dismiss Denied

Justice Demarest found the defendants had raised an issue of fact with regard to whether the bank actually had possession of the note before the action was initiated. Based on this, she denied the bank’s motion for summary judgment and to strike the defendant’s first and fifth affirmative defenses.


It is clear the bank’s representations cannot possibly be true in this case. As stated most eloquently by William Shakespeare, “there is something rotten in Denmark.”foreclosure attorney on Long Island and New York City

The Foreclosure Legal Process On A Step By Step Basis – Part IV

foreclosure lawyer Long IslandLitigation

Litigation only begins in the foreclosure proceeding after the case leaves the settlement conference area. At that point, there is a stage in the lawsuit called the discovery stage. The discovery stage allows the parties to the lawsuit to request documents, information, and respond to written requests to answer questions called Interrogatories or a Bill of Particulars. It is important that homeowners who have submitted Answers participate in the discovery process. This allows them to obtain information with regard to bank practices, underwriting, and all other issues involved in their transaction with the bank.

The lender can also make discovery demands upon the homeowner. The lender’s discovery demands usually relate to issues raised by the homeowner in their Answer. Another purpose for the lender’s discovery demands is to obtain more information for them to be successful in their foreclosure lawsuit.

Motion Practice

In almost all foreclosure lawsuits, the attorneys for the financial institution at some point bring a motion for summary judgment. In the motion for summary judgment, the attorneys for the financial institution allege the defenses in the homeowners’ Answer are completely without merit. The standard in a motion for summary judgment is to determine whether there is an issue of fact for the court to really look at in the lawsuit.

Summary Judgment

Another way of looking at a motion for summary judgment is that it is a request by the attorneys for the bank to eliminate the homeowner’s Answer, avoid a trial, and go right to judgment. The court will grant the motion for summary judgment if they believe the homeowner has not presented any valid defenses or there is no evidence or documentation to their defenses and/or affirmative defenses.foreclosure attorney on Long Island and New York City

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