Recitation in accordance with CPLR 2219(a) of the papers considered on Plaintiff'smotion for an order, among other things, granting judgment by default and an order of reference:

-Notice of Motion for Default Judgment and for Order of Reference

Order of Reference, Default Judgment and Amendment of Caption (Proposed)

Affirmation in Support and of Regularity

Affidavit of Merit

Exhibits A-G

-Affirmation of Compliance with CPLR 3408

Exhibits A-B

Plaintiff was represented by Michelle K. Pak, Esq. of Cullen and Dykman LLP.

In this mortgage foreclosure action commenced on October 20, 2010, Plaintiff 1st United Bank moves for an order, among other things, granting judgment by default and an order of reference. The mortgaged property is located at 238 Wyckoff Avenue, Brooklyn; defendant Wyckoff Enterprises, LLC is the record owner of the property and the mortgagor; defendant "Gerald Lopez" is a member of the mortgagor and a signatory to the underlying note. [*2]

On September 26, 2011, Plaintiff filed a Request for Judicial Intervention, seeking a Residential Mortgage Foreclosure Conference. In a Foreclosure Request for Judicial Intervention Addendum, Plaintiff advised that the action involved "a one-to [sic] four-family owner-occupied residential property," and that the mortgage loan is "subprime/high-cost/non-traditional [RPAPL §1304(5)].)" According to Plaintiff's current counsel, who took over on March 28, 2013, a conference was never scheduled. The court's civil case management database confirms this.

On April 3, 2013, according to counsel, counsel contacted the Foreclosure Department, and was told by a clerk that a settlement conference would not be scheduled because "the parties are not entitled to a residential foreclosure settlement conference as the primary defendant and borrower under the mortgage is a corporation and not a natural person." (See Affirmation of Compliance with CPLR §3408.) There is nothing in the governing statute (see CPLR 3408) or the applicable Uniform Rules (see Uniform Civil Rules for the Supreme Court and the County Court §202.12-a, 22 NYCRR §202.12-a) that expressly addresses the issue.

This action rests on a Note and Mortgage, each dated February 7, 2007, given to Hemisphere National Bank. Except for the signature lines, the Note does not identify any party to the Note other than Hemisphere as "Lender"; the other party or parties are simply designated "I." There are two signatures on the Note, both of Geraldo Lopez. Under one signature appears "Wyckoff Enterprises, LLC by Geraldo Lopez, member"; under the other signature appears "Geraldo Lopez." A Prepayment Addendum to Note shows the "Borrower(s)" as "Wyckoff Enterprises, Geraldo Lopez." Mr. Lopez signed the Addendum twice, with no further description. The Mortgage identifies "Borrower(s)" as Wyckoff Enterprises, LLC, the record owner of the mortgaged property, and is signed by Geraldo Lopez, "Borrower" with "Wyckoff Enterprises, LLC by Geraldo Lopez, member."

The Complaint alleges that "the defendants, Wyckoff Enterprises, LLC and Gerald Lopez have failed and neglected to comply with the conditions of mortgage(s), bond(s) or note(s)" (see paragraph "Seventh"), and a Schedule "A" describes Gerald Lopez as "Obligor by virtue of the Note." The Note refers to the mortgage of the same date, and to "possible losses which might result if I do not keep the promises which I make in this Note." (See Note, ¶ 10.)

From what appears from the papers submitted on this motion, defendant Gerald Lopez (presumably the Geraldo Lopez who signed the Note and the Mortgage) is personally obligated on the Note by reason of his signature in both his individual capacity and his representative capacity as a member of Wyckoff Enterprises, LLC. (See Uniform Commercial Code §3-403[2][a]; Klapper v Integrated Agric. Mgt. Co., 149 AD2d 765, 766-67 [3d Dept 1989]; Barden & Robeson Corp. v Ferrusi, 52 AD2d 1061, 1062 [4th Dept 1976]; Manufacturers Hanover Trust Co. v Eisenstadt, 64 Misc 2d 397, 399—401 [Sup Ct, NY County 1970]; see also Salzman Sign Co. v Beck, 10 NY2d 63, 67 [1961]; Bond Safeguard Ins. Co. v Forkosh, 107 AD3d 750, 751 [2d Dept 2013]; Freidus v Sardelli, 192 AD2d 578, 580 [2d Dept 1993]; Dulik v Amante, 173 AD2d 674 [2d Dept 1991].)

The question then is whether Mr. Lopez is to be deprived of the settlement conference [*3]proceedings mandated by CPLR 3408 only because the mortgage and the mortgaged property are in the name of a limited liability company? The benefit of the mandated conference is not merely procedural, since the statute provides, "Both the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible" (see CPLR 3408[f].) A plaintiff's failure to negotiate in good faith can have important consequences. (See Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 19-23 [2d Dept 2013].)

CPLR 3408(a) provides in part for mandatory settlement conference proceedings "[i]n any residential foreclosure action involving a home loan as such term is defined in [Real Property Actions and Proceedings Law §1304], in which the defendant is a resident of the property subject to foreclosure, . . . for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, including, but not limited to determining whether the parties can reach a mutually agreeable resolution to help the defendant avoid losing his or her home."

RPAPL §1304(5)(a) defines a "home loan" in pertinent part as "a loan . . . in which . . . (i) [t]he borrower is a natural person; (ii) [t]he debt is incurred by the borrower primarily for personal family, or household purposes; [and] (iii) "[t]he loan is secured by a mortgage . . . on real estate improved by a one to four family dwelling . . . used or occupied, or intended to be used or occupied wholly or partly, as the home or residence of one or more persons and which is or will be occupied by the borrower as the borrower's principle dwelling." Notwithstanding the use of the singular, there may be more than one "borrower" on a "home loan" (see Aurora Loan Services v Weisblum, 85 AD3d 95, 105 [2d Dept 2011].)

Both CPLR 3408(a) and RPAPL 1304(5)(a) revolve textually around the loan rather than the mortgage, and upon residency rather than ownership, consistent with the legislative purpose "to help the defendant avoid losing his or her home" (see CPLR 3408[a].) The plaintiff's claim is on the debt as represented by the note, with the mortgage providing security for payment, and foreclosure a remedy for enforcement if payment is not made. It is the note that carries the mortgage, not the mortgage that carries the note. (See Bank of New York v Silverberg, 86 AD3d 274, 280 [2d Dept 2011].)

Where a defendant is personally obligated on the note, and satisfies the residency requirements specified in CPLR 3408(a) and incorporated through the definition of "home loan" in RPAPL §1304(5)(a) (see HSBC Bank USA, Natl. Ass'n v McKenna, 37 Misc 3d 885, 895-96 [Sup Ct, Kings County 2012]), the defendant's entitlement to statutory settlement conference proceedings comports with the plain meaning of both provisions, whether or not the defendant holds legal title to the mortgaged property. Understanding CPLR 3408(a) in light of its clearly-expressed remedial purpose is also consistent with at least one other example of legislative concern for "owner-occupied" residential property, whether or not legal title is held by a corporate entity. (See Administrative Code of the City of NY §7-210; Velez v City of New York, 97 AD3d 813, 814 [2d Dept 2012]; Boorstein v 1261 48th St. Condominium, 96 AD3d 703, 703-04 [2d Dept 2012]; Schwartz v City of New York, 74 AD3d 945, 946 [2d Dept 2010]; but see Gordy v City of New York, [*4]67 AD3d 523 [1st Dept 2009].)

Whether in the particular case, and as a factual matter, the defendant qualifies for mandatory settlement conference proceedings will be determined preliminarily as part of those proceedings by the court or a referee (see HSBC Bank USA, Natl. Ass'n v McKenna, 37 Misc 3d at 890-94.)

Here, as noted above, Plaintiff apparently determined, based upon the facts known to it, that a foreclosure settlement conference was mandated by CPLR 3408(a). Plaintiff sought the conference with its Request for Judicial Intervention, asserting that the loan was a "high cost," "subprime," or "non-traditional" home loan that CPLR 3408(a) addressed before the provision was broadened in 2009 to cover any "home loan" (see Aurora Loan Services, LLC v Weisblum, 85 AD3d at 104-05.)

Plaintiff's motion is granted only to the extent that the clerk of the Foreclosure Settlement Conference Part is directed to schedule this action for proceedings in that Part as soon as practicable. The motion is otherwise denied with leave to renew after the conclusion of those proceedings if there is no resolution.

November 6, 2013___________________

Jack M. Battaglia

Justice, Supreme Court