Supreme Court, Oneida County

Decided on July 14, 2026

Index No. EFCA2023-002083

Elizabeth Snyder Fortino, J.

[*1]

On May 22, 2003, Defendants Christopher C. Armendola and Vanessa M. Armendola executed a promissory note (the "Note") in the sum of $52,000 in favor of Fleet National Bank, which was secured by a mortgage encumbering residential property at 709 Rutger Street, Utica, NY 13501. The mortgage and Note were assigned thereafter by Bank of America, N.A. (successor by merger to Fleet National Bank) to Christiana Trust, a division of Wilmington Savings Fund Society, in October 2015. Defendants executed a loan modification agreement with Christiana Trust which capitalized all arrears to form a total unpaid principal of $62,866. The mortgage and Note were assigned three more times thereafter: from Christiana Trust to US Bank National Association in 2017, from US Bank to JP Morgan Mortgage Acquisition Corp. in 2019, and finally, from JP Morgan to Plaintiff Athene Annuity and Life Company in March 2021, recorded September 28, 2021. Plaintiff was in possession of the Mortgage and Note at the time that this action was commenced.

It is undisputed that, in April 2022, Defendant Vanessa M. Armendola stopped making payments on the Note. Accordingly, on July 13, 2022, Rushmore Loan Management Services ("Rushmore"), Plaintiff's loan servicer, sent Defendant a letter stating that the cure amount on the Note was $5,272.44, due August 17, 2022 (NYSCEF Doc No. 124). The breakdown of the cure amount included $1,378.74 payments for the months of April through July with no additional charges. Defendant did not pay the cure amount by August 17, 2022.

On August 31, 2022, Defendant was approved by Utica Neighborhood Housing Service's "HomeOwnershipCenter" for the Emergency Mortgage Assistance Program, which assisted Defendants in paying six months of mortgage payments for April through September 2022. The Checks were all dated September 1, 2022 ^FN1 and totaled $8,247.29. According to the record before the Court, no updated notification as to a cure amount had been sent at that time.

On September 15, 2022, $1,378.74 received from Defendant was placed in a "suspense fund,"^FN2 which already had a balance of $242.52. Subsequently, $1,378.74 was removed from the suspense account and applied toward the April 2022 payment. On September 16, 2022, of the remaining $6,868.55 received from Defendant, $1,353.59 was applied toward the unpaid May 2022 payment. The balance ($5,514.96) was left in the suspense account. With the existing suspense funds ($242.52), the total suspense balance at that time was $5,757.48. On September 20, 2022, three payments of $1,378.74 were removed from the suspense account and applied toward the June 2022, July 2022, and August 2022 Note payments, leaving a remaining suspense account balance of $1,621.26.

At that point, the record shows only that Defendant was aware that the September payment would be lower than one full monthly payment ($1,378.74): $1,023.81. But on September 26, 2022, a payoff statement was generated putting the full loan payoff amount at [*2]$2,316.11 (adding corporate advance fees of $1,171.01 to the September payment amount stated above ($1,023.81)) to be paid off by October 21, 2022. On October 4, 2022, $1,171.01 was "reversed" from the suspense account and applied to "cure the outstanding recoverable advance fees" leaving $450.25 in the suspense account, which would leave a payoff amount of $1,145.10 before October 21, 2022 (NYSCEF Doc No. 63).

Thereafter, on November 14, 2022, Rushmore produced a new payoff statement providing a total unpaid principal of $1,023.81, interest of $21.83, "escrow/impound overdraft" fees of $2,289.85, recording fee of $87.50, and a credit of $664.78 from the suspense fund, leaving a payoff balance of $2,758.21 due by December 9, 2022 (NYSCEF Doc. No. 60).

RPAPL 1304 notices (sent January 19, 2023) and the notice of default sent March 23, 2023 gave September 1, 2022 as the date of default and placed the total amount to cure the default at $713.96 (see NYSCEF Doc. No. 45).

Plaintiff commenced this foreclosure action on August 17, 2023 alleging that Defendants defaulted under the terms of the Note on September 1, 2022, and that the amount now due and owing is $1,023.81 with interest from August 1, 2022, plus late charges and advances.

Following the filing of the complaint, the Court held a mandatory settlement conference on January 22, 2024, and continued to hold settlement conferences thereafter, releasing from conference on June 13, 2024. Thereafter, on August 9, 2024, Plaintiff moved for default/summary judgment and appointment of a referee. Defendants opposed and cross-moved to amend their answer.

This Court denied summary judgment and allowed Defendant to file a late answer. In denying summary judgment, the Court held that "there is a question of material fact regarding whether the defendant's payments were properly applied pursuant to the mortgage" (NYSCEF Doc. No. 90 & 91 [emphasis added]). The Court permit Defendant to amend her answer because she was actively involved in the foreclosure conference process where she articulated defenses to the action, and because of the questions of fact raised in response to the dispositive motion that "require[] a determination on the merits" (NYSCEF Doc. No. 90 & 91).

Now, Plaintiff makes a successive motion for summary judgment/default judgment and appointment of a referee arguing that the amended answer raises no issues of fact for trial, Defendant raised no valid affirmative defenses, and Plaintiff's cause of action has been sufficiently established to warrant judgment in Plaintiff's favor. Plaintiff claims that it is "incontrovertible" that Defendant defaulted on the loan by failing to pay her April 1, 2022 monthly installment. And payments subsequently made in September 2022 were "insufficient to satisfy [Defendant's] monthly mortgage obligation" and, "[s]pecifically, Defendant defaulted by failing to satisfy the escrow advance component of her monthly mortgage payment" (NYSCEF Doc. No. 103 at 4). Plaintiff argues that the referee can sort out how much is owed to Plaintiff and any confusion as to amount owed is not a basis to deny summary judgment.

In opposition and in support of their cross motion for summary judgment, Defendant argues that "Plaintiff failed to appropriately apply payments by the provisions outlined in the Note and Mortgage" (NYSCEF Docs 2 & 3). Defendant contends that, pursuant to the Mortgage, Defendant's payments should have been applied first to interest, then principal, and then any other fees. If Defendant's payments had been applied in that manner, the default would have been cured and Defendant would have "only owed $1,171.01 in non-principal, interest, or escrowed fees" (NYSCEF Doc No. 125), which Defendant claims would only require payment of $573.56 because of the available funds in the suspense account. Defendant argues that [*3]"Plaintiff's failure to adequately apply payments to the mortgage and reversing the final payment of principal and interest caused the default and the additional fees that have accrued since the alleged default in September 2022" (NYSCEF Doc. No. 122 at 3).

"Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default" (Wells Fargo Bank, N.A. v Osias, 156 AD3d 942, 943 [2d Dept 2017]; Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689 [2d Dept 2014]). "A default is established by (1) an admission made in response to a notice to admit, (2) an affidavit from a person having personal knowledge of the facts, or (3) other evidence in admissible form" (JPMorgan Chase Bank, Nat'l Ass'n v Deblinger, 201 AD3d 900, 901 [2d Dept 2022]).

"The law is clear that when a mortgagor defaults on loan payments, even if only for a day, a mortgagee may accelerate the loan, require that the balance be tendered or commence foreclosure proceedings, and equity will not intervene" (New York Guardian Mortgagee Corp. v Olexa, 176 AD2d 399, 401 [3d Dept 1991]; see Home Sav. of Am. v Isaacson, 240 AD2d 633, 633 [2d Dept 1997]). On the other hand, several courts have held that a summary judgment motion should be denied where the mortgagor asserts a valid defense, including tender of the entire amount then due, the mortgagee's opportunistic bad faith, or an unconscionable act (See, e.g., Grand Pacific Fin. Corp. v 97—111 Hale, LLC, 123 AD3d 764, 766 [2d Dept 2014] [fact issues existed as whether mortgagee acted in bad faith and engaged in oppressive and unconscionable conduct]; New York Guardian Mortgagee Corp. v Olexa, 176 AD2d 399, 402, [3d Dept 1991]; European American Bank v Harper, 163 AD2d 458, 461 [2d Dept 1990] [equitable remedy of foreclosure may be denied to prevent overreaching or other unconscionable conduct by mortgagee]; Di Matteo v North Tonawanda Auto Wash, 101 AD2d 692, 693 [4th Dept 1984] ["Unconscionability on the part of the mortgagee, however, has long been recognized as a defense to enforcement of an acceleration provision."], appeal dismissed, 63 NY2d 675 [1984]). In Di Matteo, the Appellate Division found that an inadvertent default by the mortgagor raised factual questions that might prevent foreclosure (101 AD2d at 692-693).

Here, the same issues of fact prevent granting summary judgment as prevented summary judgment on Plaintiff's initial motion. Defendant has raised valid defenses to summary judgment, creating an issue of fact as to whether the September 2022 payments should have cured the default, or whether the default was inadvertent given the manner in which Plaintiff applied Defendant's payments. For the reasons that follow, summary judgment is denied in part to Plaintiff, and denied in full to Defendant.

Legal Analysis

Initially, Plaintiff moves for summary judgment on each of Defendant's affirmative defenses. Plaintiff has made a prima facie showing of entitlement to summary judgment on Defendant's second (standing), fifth (no 90-day pre-foreclosure notice), and sixth (unclean hands or lack of good faith) affirmative defenses. Plaintiff established assignment of the Note to itself; that sufficient 90-day notice was provided; and that the elements of an unclean hands defense are not met. Defendant does not rebut this showing. Accordingly, summary judgment is granted with respect to those affirmative defenses.

With respect to the fourth and seventh affirmative defenses, denial of default (fourth) and tendering of payment or failure to mitigate damages (seventh), questions of fact remain preventing summary judgment. Insofar as Defendant's third affirmative defense (Plaintiff's [*4]entitlement to counsel fees) is contingent upon whether she defaulted, it cannot be resolved until that question is answered.

The only additional exhibits provided on the instant motion and cross motion for summary judgment were the amended verified answer and rejection of the amended answer in support of Plaintiff's motion, and an additional lender communication and discovery email in support of Defendant's cross-motion.^FN3 In the Court's view, these successive motions and additional exhibits failed to definitively resolve the "question of material fact regarding whether the defendant's payments were properly applied pursuant to the mortgage" (NYSCEF Doc. No. 90 & 91). Pursuant to CPLR 3212(b), the Court could have granted summary judgment in favor of any party at the time of the initial motion for summary judgment and did not based on the evidence presented to it. The evidence presented on this motion has not resolved the issue raised upon the prior motion.

In particular, the Court finds that there is not simply a question as to how much is owed on the Note—although that may be a separate issue for resolution by a referee—but whether payments were applied in such a way that caused the September default.

Looking first at the language of the Note and the Mortgage, the Note states:

YOUR RIGHT TO PROTECT THE COLLATERAL. If I do not pay the taxes or insurance premiums due on the Collateral, maintain the Collateral in good condition or repair, or promptly remove any claim against it, you may (but do not have to) do so and charge me the cost. I agree to pay any such amounts immediately on demand. So long as any such amounts remain unpaid, they shall be considered to be additional principal under this Note. My obligation to pay such amounts shall be secured by your interest in the Collateral and I agree to pay interest on sch amounts at the rate stated in this Note.

(NYSCEF Doc No. 109). Plaintiff argues that this language shows that "any past due escrow may be treated the same as additional principal," and therefore fees were assessed and recovered in accordance with the Note.

The Mortgage states the following:

Application of Payments. Unless otherwise provided in the Note or required by applicable law, all payments received by Lender shall be applied first to interest accrued through the date of payment, then to principal due to the date of payment, then to other charges, if any that have not been added to principal, and, finally, to principal that is not yet due.

(NYSCEF Doc No. 108).

Because the Note and the Mortgage are separate instruments, with the Note representing the primary personal obligation of the mortgagor, and the mortgage [acting as] merely the security for such obligation" (Commonwealth Land Title Ins. Co. v Prado, 176 AD3d 1164, 1166 [2d Dept 2019]), the terms of the Note take priority with respect to application of payment on the Note. As the language of the Mortgage itself indicates, the language in the Note is controlling as to application of payments (see NYSCEF Doc. No. 108 [Unless otherwise provided in the Note . [*5]. ."]).

The Note specifically provides that costs incurred where the borrower "do[es] not pay . . . taxes or insurance premiums [on the property], maintain the [property] in good condition or repair, or promptly remove any claim against it" may be charged to the borrower, and those amounts must be paid "immediately on demand" (NYSCEF Doc No. 109). The Note provides that "any amounts that remain unpaid . . . shall be considered . . . additional principal" (NYSCEF Doc. No. 109). In conjunction with the Mortgage, it appears that priority of payment should be (1) interest accrued through the date of payment; (2) principal due to the date of payment, which may include charges if they were added to the principal; (3) other charges that have not yet been added to the principal; and finally (4) any principal that has not yet come due.

The Note states that default occurs, among other things, when Defendant fails to make any payment within 10 days of the due date (NYSCEF Doc. No. 109). It is undisputed that Defendant defaulted in April 2022, but it is Plaintiff's position that Defendant failed to cure that default with her September payments. Plaintiff applied Defendant's September payments to each outstanding month of payments, bringing the Note current through August. Plaintiff then decided not to apply the last payment to the September 1, 2022 payment, creating a new default in September. The question then becomes whether Defendant was short in September inadvertently or should not have defaulted because of the manner in which Plaintiff applied their September payments.

First, although the relevant checks are dated September 1, 2022, it is unclear on what date they were sent to Plaintiff, and therefore whether Plaintiff was in receipt of those payments within 10 days of the September payment coming due. Therefore, there is an immediate issue of fact as to whether a September payment would have been made timely.

Second, Plaintiff argues that Defendant "defaulted by failing to satisfy the escrow advance^FN4 component of her monthly mortgage payment" (NYSCEF Doc. No. 103 at 4). From the record before the Court, it does not appear that a total payoff amount was generated by Plaintiff between July 13, 2022 and September 26, 2022, or that Plaintiff demanded that Defendant "satisfy the escrow advance component of her monthly mortgage payment," much less included an escrow component—or other charges—in her monthly payment at the time a September payment was due. Indeed, the payoff amount generated in September, which included additional charges, was not due until October 21, 2022.

The last statement regarding amount due was generated on July 13, 2022 and gave a cure amount of $5,272.44, due August 17, 2022, which it is undisputed Defendant did not timely pay. But on September 1, 2022, the payments made by Defendant satisfied this cure amount for the months of April through August, as well as covered payment for September's principal. But because the September payment would be the final payment, a new payoff statement needed to be generated incorporating any outstanding fees or incidentals due on the Note, and a demand for [*6]that amount made upon Defendant. No such statement exists in the record before the Court until September 26, 2022. This Court finds that there is an issue of fact as to whether Defendant had notice of the other charges and fees that would be due on the Note at payoff, i.e., among other things, the "escrow advance component," at the time of the September payment, and whether a demand was made therefore by Plaintiff.

Further, there is an issue of fact regarding whether Plaintiff properly applied Defendant's payments made in September. Plaintiff did not apply Defendant's payment to the outstanding principal due at the beginning of September, resulting, it seems, in a missed September payment. It further utilized Defendant's payment, which would have covered the September principal, "to cure the outstanding recoverable advance fees" (NYSCEF Doc No. 63). According to an exhibit attached to Defendant's motion papers, the corporate advance fees appear to be from filing and foreclosure fees from a previous case with a previous servicer (see NYSCEF Doc No. 125). Defendant argues that the corporate advances were not the type of charges that could be charged to the borrower and considered additional principal under the Note (see NYSCEF Doc. No. 121). There is an issue of fact regarding whether these fees were the type of charges that the Note indicates could be assessed as "additional principal." Even if they were, it is unclear on the record before the Court whether the charges to which Plaintiff applied Defendant's payments were "added to the principal" at the time of payment or not.

From Plaintiff's own loan history exhibit (NYSCEF Doc. No. 44), which seems to be an internal document, it appears that these fees were considered escrow advances and were kept separate from the principal. If, as it appears, these fees were not additional principal, payments should not have been applied to those charges prior to the principal, in accordance with the Note. If the payments had gone toward the principal, Plaintiff would not have been in default on September 1, 2022 because the principal would have been paid in full. Although Plaintiff is correct that it is well settled that a mortgagee is not required to accept an insufficient tender of payment of arrears (Bankers Trust Co. v Hoovis, 163 AD2d 937, 938-939 [3d Dept 1999]), where proper application of payment would have cured the default, and no fees had yet come due (given that no payoff amount or demand for the corporate advance fees were made until end of September and were not therefore due until October 2022), Defendant would not be in default in September 2022.

Accordingly, issues of fact remain unresolved on these successive motions for summary judgment and, after careful consideration of the papers, it is hereby

ORDERED that Plaintiff's motion for summary judgment is granted in part in so far as Plaintiff met its burden of showing that it is entitled to judgment as a matter of law on Defendant's second, fifth, and sixth affirmative defenses, and Defendant failed to rebut Plaintiff's prima facie showing; and it is further

ORDERED that Plaintiff's motion for summary judgment is otherwise denied; and it is further

ORDERED that Defendants' motion for summary judgment is denied.

This constitutes the Decision and Order of the Court.

ENTER:

Dated: 7/14/2026

Utica, New York

Hon. Elizabeth Snyder Fortino, J.S.C.