[*1]
US Bank Natl. Assn. v Waters
2014 NY Slip Op 50932(U) [43 Misc 3d 1235(A)]
Decided on June 9, 2014
Supreme Court, Queens County
McDonald, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on June 9, 2014
Supreme Court, Queens County


US Bank National Association, AS TRUSTEE FOR SASCO 2005-RF5 3476 Stateview Boulevard Ft. Mill, SC 29715, Plaintiff,

against

Ronald Waters, LORRAINE WATERS, CARNEGIE CAPITAL LLC, NEW YORK CITY DEPARTMENT OF FINANCE, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY TRANSIT ADJUDICATION, PEOPLE OF THE STATE OF NEW YORK, JOHN DOE (Said name being fictitious, it being the intention of the Plaintiff to designate and all occupants of premises being foreclosed herein, and any parties, corporations or entities, if any, having or claiming an interest or lien upon the mortgaged premises), Defendants.




34272/2009
Robert J. McDonald, J.

The following papers numbered 1 to 17 were read on this motion by plaintiff and the counterclaim-defendant, US Bank National Association as Trustee for SASCO 2005-RF5, for an order dismissing the answer of the defendant, Lorraine Waters, including any affirmative defenses; granting summary judgment in favor of the plaintiff; granting a default judgment against Ronald Waters and all other non-answering defendants; for an order pursuant to RPAPL § 1321 appointing a referee to ascertain and compute the amount due to the plaintiff; for an order amending the caption to delete "John Doe" as a party defendant; and for an order declaring defendant Carnegie Capital LLC's prior [*2]adverse lien to be invalid and extinguished and reforming the record to so reflect:

Papers



NumberedNotice of Motion Affidavits-Exhibits-Memo of Law......1 - 7



Affirmation in Opposition.............................8 - 13



Reply Memorandum ....................................14 - 17



In this mortgage foreclosure action, plaintiff moves for an order striking the answer of defendant Lorraine Waters; granting summary judgment against said defendant on the ground that her answer contains no valid defense and no triable issue of fact exists; granting a default judgment against the remaining defendants who have not answered; appointing a referee to compute the sum due and owing to plaintiff; and amending the caption.



This foreclosure action pertains to the property located at 17-23 142nd Place, Jamaica, New York. Based upon the record before this court, the defendants, Lorraine and Ronald Waters, entered into a note and mortgage with Washington Mutual Bank, FA on February 23, 2004 in the principal amount of $225,622 in order to re-finance a prior mortgage loan. The plaintiff asserts that defendants defaulted on their mortgage when they failed to make their monthly mortgage payments beginning July 1, 2009.The plaintiff subsequently accelerated the defendants' mortgage and brought an action to foreclose its mortgage by filing a lis pendens and summons and complaint on December 22, 2009. The plaintiff submits affidavits of service on all of the named defendants. Defendant Lorraine Waters was personally served with a copy of the summons and complaint and all necessary RPAPL notices, pursuant to CPLR 308(2) on December 28, 2009, at her residence by leaving same with her husband, a person of suitable age and discretion. Defendant's husband, Ronald Waters, was also served personally. Although the defendants failed to serve a timely answer, the parties stipulated to permit Lorraine Waters to file a late answer. The defendant served an answer dated September 29, 2010 containing a general denial, affirmative defenses and counterclaims, including lack of standing, partial or full payment, RPAPL §§ 1302 and 1304, unclean hands, violation of implied covenant of good faith and fair dealing and breach of contract. Besides Lorraine Waters, none of the other defendants answered the summons and complaint and are in default. Plaintiff filed a reply to the counterclaims on or about October 26, 2011.



Foreclosure Settlement conferences were scheduled in this [*3]matter from March 2010 through January 2011. At the conference scheduled for January 13, 2011, the defendant Lorraine Waters appeared, however, Referee Leonard Florio found that the case could not be settled and ordered that the plaintiff should proceed by motion for an Order of Reference. The Referee found that the defendants were denied both a HAMP and in-house loan modification.



In support of the motion for summary judgment, the plaintiff submits the affirmation of counsel, Jessica L. Gavrich, Esq., the affidavit of Alisha Mulder, a Vice President of Loan Documentation for Wells Fargo Bank, N.A., the mortgage loan servicing agent of the plaintiff; a copy of the Note and Mortgage; copies of the affidavits of service on all the defendants; a copy of the pleadings; a copy of the mortgage trust agreement; a copy of the assignment of the mortgage from Washington Mutual to US Bank National Association SASCO; loan modification and forbearance agreements; 90 day notice of intent to foreclose; copy of the RPAPL 1304 notices sent to the defendant with the summons and complaint; and a copy of the attorney affidavit pursuant to the Administrative Order of the Chief Administrative Judge dated December 12, 2013 under AO/548/10, executed by Jessica L. Gavrich, Esq.



The plaintiff also submits an affidavit from Alisha Mulder, a Vice President of Loan Documentation for Wells Fargo Bank National Association who services the loan in issue for US Bank National Association. Ms. Mulder states that the assets of the plaintiff's Trust consist of a pool of mortgage loans which at the commencement of the action included the loan at issue in the instant action. She states that based upon her personal review of Wells Fargo's records, Ms. Waters and her husband obtained a mortgage loan from Washington Mutual Bank on February 23, 2004. She states that prior to September 1, 2005, Washington Mutual executed an allonge to the Note endorsing it in blank and physically transferring the note and mortgage to the plaintiff Trust. Ms. Mulder states that the Trust maintained physical possession of the note and mortgage at the time the action was commenced. IN addition, an assignment of mortgage was executed on December 9, 2009 and recorded on February 17, 2010. She states that the Defendants defaulted on their loan in September 2006. Prior to commencing a foreclosure action the plaintiff attempted to assist the defendants with appropriate loss mitigation.



A Special Forbearance Agreement was signed by the parties on January 15, 2007 in which the defendants agreed to make payments from February 2007 through May 2007. When the defendants complied with their payment obligation under the January 2007 [*4]Special Forbearance Agreement, the defendants were approved in May 2007 for a permanent loan modification establishing a new principal balance of $228,533.96. However, defendants again defaulted in January 2008. At that time a second Forbearance Agreement was signed by the parties. When the defendants complied with the January 2009 agreement, defendants signed a second loan modification agreement in April 2009, lowering their interest rate and reducing their monthly payment and establishing a new principal balance. However, when the defendant defaulted under the second loan modification, the plaintiff mailed a notice of default to the defendants as well as a 90 day notice pursuant to RPAPL § 1304. On January 8, 2010 and June 4, 2010, defendants signed additional forbearance agreements. However, when the defendants failed to comply with the forbearance agreements, the bank could not approve the defendants for a loan modification. Ms. Mulder states that to date the defendants have not cured their default.



In her affirmation, plaintiff's counsel, Jessica Gavrich, Esq., asserts that in February 2004, defendant obtained a mortgage loan from Washington Mutual Bank in the principal amount of $225,622.00 in order to refinance a prior mortgage loan on real property located in Jamaica, Queens. The mortgage loan was memorialized by a note and mortgage executed by Lorraine Waters and Ronald Waters and recorded on July 7, 2004. Counsel states that the loan was subsequently assigned and physically delivered to plaintiff on September 1, 2005. Counsel asserts that the original note, endorsed in blank was physically delivered to the plaintiff prior to the date this action was commenced. The transfer of the Mortgage to the Trust was later memorialized in a written Assignment of Mortgage dated December 9, 2009 and recorded February 17, 2010. Thus, counsel states that the plaintiff is the current holder of the note and mortgage and was the holder of the note and mortgage on the date the action was commenced. The written assignment of the mortgage was recorded on February 17, 2010. The record contains copies of the indorsed note, mortgage and assignment of mortgage.



Plaintiff contends, based upon the evidence submitted, that plaintiff has made a prima facie showing that it is entitled to summary judgment against the answering defendant, an order striking the affirmative defenses and counterclaims and an Order of Reference. Plaintiff asserts that the defendants were all lawfully served with a summons and complaint and that the Court therefore has personal jurisdiction. In addition, the plaintiff asserts, contrary to the defendant's contention, that it had standing to bring the action by presenting sufficient evidence of the written assignment and physical transfer of the note and [*5]mortgage to the plaintiff prior to the commencement of the action. Plaintiff asserts that it has established a prima facie entitlement to summary judgment based upon its submission of the Note with Allonge, the Mortgage, the Trust Agreement, the notice of default and the affidavit of Ms. Mulder evidencing the defendants' failure to make the contractually required loan payments. Counsel also asserts that there are no triable issues of fact with respect to any of the affirmative defenses or counterclaims asserted by the defendant.



In this regard, the plaintiff contends that the defendant's answer, should be stricken as the defendant has failed to set forth any factual basis or factual assertions of wrongdoing on the part of the plaintiff. Firstly, counsel asserts that partial payment is not a defense to foreclosure, as the amount of the judgment is properly to be determined by a Referee (citing Barclay's Bank of New York, N. A. v Smitty's Ranch, Inc., 122 AD2d 323[ 3rd Dept. 1986]). Secondly, counsel submits evidence that it sent the appropriate pre-foreclosure notices pursuant to RPAPL § 1304 and made the appropriate representation that it is the holder of the note and mortgage pursuant to RPAPL § 1302. Thirdly, counsel asserts that generally, unclean hands is not recognized as a defense to a foreclosure. "New York law ordinarily permits an unclean hands defense only when plaintiff's reprehensible conduct is "directly related to the subject matter in litigation and the party seeking to invoke the (unclean hands) doctrine was injured by such conduct" (Mallis v Bankers Trust Co., 615 F2d 68 [2d Cir 1980]). With respect to the claim of breach of contract based upon the plaintiff's alleged failure to comply with FHA and HUD regulations, requiring mortgagees to engage in loss mitigation efforts pursuant to 12 U.S.C. § 1715u, plaintiff asserts that FHA regulations govern the relationship between lenders and the FHA and not the relationship between lenders and borrowers and do not provide homeowners with a private right of action. With respect to the defense of lack of good faith and fair dealing, the plaintiff asserts that it offered the defendants several forbearance agreements and approved two separate loan modifications prior to commencing the action for foreclosure.



In opposition, Lorraine Waters submits an affidavit stating that the plaintiff's motion for summary judgment must be denied as there are material questions of fact as to whether plaintiff had standing and whether the plaintiff complied with the loss mitigation protocols required by the mortgage contract and 24 CFR 203.600 et seq. Defendant asserts that the plaintiff failed to comply with the numerous regulations promulgated by HUD in servicing the mortgage.



It is well settled that a plaintiff in a mortgage foreclosure action establishes a prima facie case of entitlement to summary judgment through submission of proof of the existence of the underlying note, mortgage and default in payment after due demand (see Witelson v Jamaica Estates Holding Corp. I, 40 AD3d 284 [1st Dept. 2007]; Marculescu v Ouanez, 27 AD3d 701 [2d Dept. 2006]; US. Bank Trust National Assoc. v Butti, 16 AD3d 408 [2d Dept. 2005]; Layden v Boccio, 253 AD2d 540 [2d Dept. 1998]; State Mortgage Agency v Lang, 250 AD2d 595(2d Dept.1998]). Upon such a showing, the burden shifts to the defendant to produce evidence in admissible form sufficient to raise a material issue of fact requiring a trial.



This Court finds that the plaintiff's submissions are sufficient to establish its entitlement to summary judgment against defendant mortgagor, Lorraine Waters. The moving papers demonstrate, prima facie, that none of the asserted defenses and/or counterclaims set forth in the answer of defendant are meritorious and plaintiff is entitled to summary judgment on its claims against Lorraine Waters (see EMC Mortg. Corp. v Riverdale Assocs., 291 AD2d 370 [2d Dept. 2002]; State of New York v Lang, 250 AD2d 595 [2d Dept. 1998]). As stated above, the complaint herein sufficiently sets forth a valid cause of action for foreclosure. Plaintiff has submitted a copy of the mortgage, note and affidavit from Ms. Mulder establishing defendant's default in payment. The plaintiff demonstrated proper service of the summons and complaint and showed by admissible evidence that it had standing to commence the action as it had properly been in physical possession of the note and mortgage as of the date of the commencement of the action. In addition, the plaintiff has submitted sufficient proof to show that notices were served on the defendant in compliance with RPAPL §§ 1303 and 1304. Therefore, the moving papers demonstrated, prima facie, that none of the asserted defenses set forth in the answer of defendant or in the defendant's cross-motion are meritorious and plaintiff is therefore entitled to summary judgment on its claims against Ms. Waters (see State of New York v Lang, 250 AD2d 595 [2d Dept. 1998]).



The burden then shifted to defendant to establish the existence of a triable issue of fact (see State Bank of Albany v Fioravanti, 51 NY2d 638, 647 [1980]). In opposition to the motion, the defendant failed to submit any evidence which would raise a question of fact. As stated above, plaintiff demonstrated that it had standing to commence the action, that partial payment is not a defense to the action as the amount of the judgment will be determined by the Referee. Plaintiff also demonstrated that it complied with the RPAPL notice provisions.



Lastly, the plaintiff demonstrated that prior to commencing the action for foreclosure it made substantial efforts to provide the defendants with loss mitigation opportunities. The defendants were provided with at least three forbearance agreements and two separate loan modification agreements which included lowering their interest rate and recalculating the amount of principal on the loan. Thus, this Court finds that the plaintiff demonstrated that it substantially complied with the HUD and FHA regulations requiring loss mitigation efforts and also that the plaintiff did not violate their covenant of good faith and fair dealing. Moreover, as stated by the plaintiff, the FHA and HUD regulations concerning loss mitigation, to wit, the provisions of 12 U.S.C. § 1715u under which 24 C.F.R. §§ 203.605 and 203.616 are promulgated do not provide homeowners with a private right of action (see Miller v GE Capital Mortg. Servs., 124 Fed. Appx. 152, 2005 U.S. App. LEXIS 1778 (4th Cir., 2005][the statute's focus is on regulating mortgagees not protecting mortgagors]). Moreover, the failure of a mortgagee to comply with these federal regulations is not subject to judicial review (see 12 U.S.C.§ 1715u(d); Dean v HUD, 2000 U.S. Dist. LEXIS 6361 [W.D.NY 2000]; Wells Fargo Bank, N.A. v Favino, 2011 U.S. Dist. LEXIS 35618; Mortgage Elec. Sys. v Rosser, 8 Misc 3d 1003(A)[Sup. Ct. Suffolk Co. 2005]).



Accordingly, the plaintiff's motion for summary judgment is granted and the affirmative defenses and counterclaims contained in the defendant's answer are stricken. The submissions further reflect that plaintiff is entitled to amend the caption to delete "John Doe" as a party defendant. That branch of the motion for a default judgment against the remaining defendants who have not answered or appeared herein is granted. Plaintiff's further application for the appointment of a referee to compute the amounts due under the subject mortgage is also granted. The branch of the motion for an order declaring Carnegie Capital LLC's prior adverse lien to be invalid and extinguished is denied as the plaintiff has failed to provide a factual or evidentiary basis to support this relief.



Settle order on notice.Dated: June 9, 2014

Long Island City, NY______________________________

ROBERT J. MCDONALD

J.S.C.