Summary
In Davis, the borrowers made the commonly-asserted argument that defendant Citibank breached the terms of their HAMP Trial Period Plan (“TPP”) by failing to permanently modify their loan (see id.).
Summary of this case from CitiMortgage, Inc. v. SultanOpinion
4210/09.
Decided June 29, 2011.
The following papers have been read on this motion:
Papers Numbered
Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed Opposing Affidavits (Affirmations) Reply Affidavits (Affirmations) (Affirmation) Other PapersAre parties required to negotiate in good faith during the foreclosure settlement conferences?In light of the state and federal statutes, particularly CPLR § 3408, this Court holds that not only are the parties required to come to this Court in good faith, but also to negotiate in good faith towards creation of a mutually satisfactory modification agreement.
This matter has been referred to this Part because of a purported failure of the plaintiff to negotiate in good faith during the statutorily mandated conferences held in the Foreclosure Settlement Conference Part. See, CPLR § 3408 (requiring good faith). In addition to the statutory mandate of good faith, precedence places the onus on the lender-plaintiff "who seeks equitable relief from this Court . . . to satisfy the requisites of equity and come to this Court with clean hands.'" M T Mortgage Corp. v. Foy , 20 Misc 3d 274 [NY Sup. 2006] citing, Junkersfeld v. Bank of the Manhattan Co., 250 A.D. 646 [1st Dept. 1937]. The record indicates that the plaintiff not only has engaged in dilatory tactics, as indicated herein, but has failed to make the required showing of good faith in negotiations to the satisfaction of this Court, as well as the JHO who has overseen the settlement negotiations.
In a situation such as this case, where there has been a lack of good faith in settlement negotiations or the creation or servicing of the instant loan and mortgage, the Court is not left without remedy. As a court of equity, all sides are required to adhere to the principles of good faith in their dealings. They must come in with clean hands and they must do equity in order to receive equity. Federal National Mortgage Association v. Ricks, 83 Misc 2d 814, 822, 823 (Supreme Court Kings County, 1975) see also, Aames Funding Corp., 25 Misc 3d 1234(A) [NY Sup 2009].
Seventeen conferences were held before JHO Hubsher in the course of twenty-two months (beginning on April 23, 2009 and ending on February 9, 2011), to determine whether the defendant qualified for the HAMP program. Defendant purportedly could not locate' the first three applications defendant submitted. At plaintiff's request, defendant submitted five applications in total.
On February 3, 2010 "plaintiff stated that it could neither offer nor deny a modification. . . . .because defendant [who is not and has never been self-employed] failed to provide a tax return for self-employed persons." On May 14, 2010 plaintiff denied defendant's application "due to insufficient income." On June 23, 2010 plaintiff denied defendant's request for the HAMP Program because "the payments could not be lowered to meet the 31% debt to income requirement." On October 12, 2010, plaintiff denied defendant's application because "the property value was too high to qualify for a HAMP modification."
Report and Recommendation of JHO M. Hubsher is made a part of this decision.
To date, plaintiff has failed to provide proper review and extend to defendant an affordable loan modification.
By directive dated November 9, 2010, JHO Hubsher tolled interest accruing from the initial conference. Plaintiff thereafter extended an offer to defendant with approximately $140,000 in interest and fees, including the interest accrued during settlement conferences — an offer blatantly in disregard of JHO Hubsher's directives.
Therefore, this Court stays the entire matter until such time as the plaintiff moves the Court to resume negotiations in good faith. Additionally, plaintiff's attorney is sanctioned 50% of interest due to the plaintiff from April 23, 2009, the date of first HAMP conference, until June 3, 2011, the date of the parties appearance in Part 13, due to delay directly attributable to plaintiff. Further, defendant is directed to pay $3,000 per month to the County Clerk until the stay is lifted or the amount of the mortgage repaid.
Although a formal hearing has not been held, the parties may request a formal hearing, on the record, within ten (10) days of the receipt of this decision, to contest the findings herein and the findings of the Judicial Hearing Officer.
An amount offered by the defendant during oral argument in Part 13. The clerk is authorized to accept a larger payment.
In the event that the defendant fails to pay a monthly payment by the 15th of each month, the plaintiff may move to lift the stay and continue the foreclosure process. In the event that foreclosure is issued, the amount of money paid to the County Clerk by the defendant will be returned to the defendant. The Court also understands that the amount of money required to be paid into this court will never satisfy the mortgage in question nor remove the mortgage from the official record. However, this court is not in a position, without the consent of the parties, to do more to solve this homeowner's immediate problem. This court is not in a position to alter the face of the contract without consent of all of the parties.
As a final note, the record reflects that there is a question as to the genuineness of plaintiff's possession of the mortgage, and the possession of the mortgage at the inception of this action. There is indication that the assignments may have been flawed. It is this Court's position that the plaintiff, who assigns and receives mortgages with reasonable frequency, cannot avoid the obligations of the state and federal statutes by the continued sale and transfer of mortgages. This Court will not be a willing participant in plaintiff's smoke and mirrors.
This constitutes the decision and order of the Court.