Alliance Mtge. Banking Corp. v Dobkin

[*1] Alliance Mtge. Banking Corp. v Dobkin 2008 NY Slip Op 50793(U) [19 Misc 3d 1121(A)] Decided on March 28, 2008 Supreme Court, Nassau County Palmieri, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 28, 2008
Supreme Court, Nassau County

Alliance Mortgage Banking Corp. c/o Wilshire Credit Corporation, Plaintiff,

against

Jo-Anne S. Dobkin, et al., Defendants.



10625/06



Steven J. Baum, P.C.

Victor Spinelli, Esq.

Attorney for Plaintiff

900 Merchants Concourse, Ste. 412

Westbury, NY 11590

Jo-Anne Dobkin

Defendant pro se

Daniel Palmieri, J.

Upon the foregoing papers and a hearing held on March 19, 2008, this motion by the defendant Jo-Anne S. Dobkin, pro se, in effect,for an order vacating the judgment of foreclosure and sale in this foreclosure case and barring any attempt to sell her home under that judgment is denied. The temporary stay of proceedings granted upon the signing of the order to show cause and extended by the undersigned pending this decision is vacated.

Reading the order to show cause liberally, and based upon the testimony adduced at the hearing, it is clear that the defendant seeks to halt any further attempt to bring this foreclosure action to its conclusion based on her claim that the plaintiff engaged in what is often referred to as "predatory lending" under the New York State Banking Law.

At the outset, it should be noted that the Court is not without sympathy for the defendant, and indeed all foreclosure defendants, who wish to maintain the family home but simply cannot meet the mortgage payments due. However, absent the violation of some statute or other relevant legal principle the law does not permit judges to simply ignore payment obligations voluntarily taken on by mortgagors even if it should have been evident to both lender and borrower that the loan was likely beyond the borrower's ability to repay.

That was certainly the case here. As a practical matter the lender should not have offered, and the borrower should not have accepted, the two loans at issue. [FN1] Nevertheless, the defendant has been unable to show more than that. She has claimed she was the victim of predatory lending, but has not demonstrated that there was any fraud on the part of the lender, or even any failure to disclose fully the terms of the loans. She relies on only one statute, Banking [*2]Law § 6-l. However, she has not been able to provide any proof that she falls under its protections, nor under a related Federal statute. See, Home Ownership and Equity Protection Act of 1994 ["HOEPA"] (15 USC § 1639).

Neither of these statutes allow mortgagors to escape their legal obligations simply because they borrowed too much. Rather, their protections are triggered only where certain types of home loans are taken, described by the Banking Law as "high-cost" loans. The defendant's loans are not of this type.

Specifically, and insofar as is relevant here, to qualify for the protections of the State statute the loan has to be a "home loan" which under the law in effect at the time of this transaction meant an amount not to exceed $300,000. Banking Law § 6-l former (1)[e]. The two loans made here by the plaintiff lender were $ 83,708 and $ 334,832, which together total $ 418,540.

Further, even if one were to treat the lower amount as a separate transaction (which would be ignoring the reality of the home purchase), the smaller loan would not qualify as a "high-cost home loan," which definition must also must be satisfied to trigger the statute. This is defined as a loan whose interest rate is more than 8% over the yield of treasury securities with a maturity date comparable to the length of the loan (9% if it is a junior/subordinate loan), or one where the total of points and fees payable by the borrower is more than 5% of what was borrowed if the loan was for over $50,000, the case here.. Banking Law § 6-l (1)[d],[g]i,ii. The defendant offered nothing at all with regard to the rate of interest, and 5 % of $ 83,708 is $ 4,185.40. The amount listed payable to plaintiff on the closing sheet submitted with the order to show cause was $ 2,581.60. Accordingly, the Banking Law section upon which defendant relies does not apply, even if one were to treat this loan separately.

Nor does HOEPA, the Federal statute, apply. That law provides an even more stringent test, in that to qualify for protection the borrower must show that the percentage interest charged is more than 10% over the comparable treasury rate, or that the total of points and fees exceed 8 % of the total loan amount. 15 USC §§ 1639, 1602(aa). The total fees complained of at the hearing were approximately $10,000, and the documents show at most $ 12,635. This falls far short of $33, 483, which is 8 % of the total borrowed.

In sum, the Court is left with the unhappy result of a loan that should never have been taken, but for which the defendant is responsible. There is no challenge made to the procedural aspects of the foreclosure, and indeed the undisputed history of this litigation is devoid of any hint of error on the part of plaintiff's attorneys in the prosecution of the action.

Thus, under the well-established law that a defendant seeking to vacate a judgment must show a reasonable excuse for the default in failing to answer the complaint and a meritorious defense (CPLR 5015[a]; Chemical Bank v Vasquez, 234 AD2d 253 [2d Dept. 1996]), the Court must deny this motion.

This shall constitute the Decision and Order of this Court.

E N T E R

DATED: March 28, 2008

_____________________________ [*3]

Hon. Daniel Palmieri

Acting Supreme Court Justice

TO:

Steven J. Baum, P.C.

Victor Spinelli, Esq.

Attorney for Plaintiff

900 Merchants Concourse, Ste. 412

Westbury, NY 11590

Jo-Anne Dobkin

Defendant pro se Footnotes

Footnote 1: Although neither party specified which one of the loans underlies the foreclosure, it is apparent from the judgment of foreclosure that it was the larger of the two, as noted below.