Deutsche Bank Natl. Trust v West

[*1] Deutsche Bank Natl. Trust v West 2009 NY Slip Op 50405(U) [22 Misc 3d 1132(A)] Decided on February 10, 2009 Supreme Court, Kings County Dabiri, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 10, 2009
Supreme Court, Kings County

Deutsche Bank National Trust, as trustee for HSI Asset Securitization Corporation Trust 2006-HE2,, Plaintiff,

against

Stephen J. West Et. Al., Defendants.



38830/07



Counsel:

Plaintiff: Steven J. Baum, P.C. 716-204-2400

Defendants: Randall S. Newman 212-797-3737; Dorsey and Whitney 212-964-6611

Gloria M. Dabiri, J.

In this residential mortgage foreclosure action, plaintiff seeks an order, inter alia, granting it summary judgment dismissing the verified answer of defendants Stephen J. West and Sylvia C. West, appointing a referee to compute the amount due and amending the caption.

Defendants Stephen and Sylvia West purchased the subject property located at 200 Linden Blvd., in Brooklyn, on or about July 19, 1971 and have used the property as their primary residence since such time. The Wests assert violations of the Truth in Lending Act (15 USC 1601 et seq.,) (TILA) in opposition to the motion and as an affirmative defense, in their May 14, 2008 verified answer. In this regard, defendants contend that they were solicited by Domus Mortgage Services, Inc. (Domus), a mortgage broker, during the summer of 2006 regarding refinancing their existing mortgage. Defendants affirm that on Monday, August 28, 2006 they attended a closing and refinanced their existing mortgage by obtaining two loans a $400,000 two year adjustable rate mortgage at 7.99% and a $100,000 second mortgage with an initial interest rate of 11.99%. In doing so, defendants contend that they incurred approximately $30,000 in closing costs. [*2]

Defendants contend that upon arriving at the closing on Monday, August 28, 2006 all the closing documents were filled in and dated Saturday, August 26, 2008. They inquired about this discrepancy, were advised that the date of the documents was not important and they, therefore, executed the closing documents as drafted. At the closing, the defendants were provided with a "Notice of Right to Cancel" form which advised them of their right to cancel the transaction within three business days, expiring at midnight on August 30, 2006. Defendants aver that on August 30, 2006 they contacted Domus seeking to cancel the transaction, but were advised that the rescission period had expired. Defendants assert that Domus and the mortagee, WMC Mortgage Corp., violated TILA by failing to provide a disclosure which clearly and conspicuously disclosed the date the rescission period expired. Defendants now seek rescission of the transaction.

The Truth in Lending Act was enacted to "assure a meaningful disclosure of credit terms so that [consumers] will be able to compare more readily the various credit terms available to [them] and avoid the uninformed use of credit" (Fiorenza v Fremont Inv. & Loan, 2008 WL 2517139, 2008 U.S. Dist. LEXIS 47831 [SDNY, June 19, 2008]). In furtherance of this goal, the statute requires that creditors provide borrowers with "clear and accurate disclosures of terms [including] finance charges, annual percentage rates of interest, and the borrower's rights," as well as notice of the borrower's right of rescission (id.).

TILA authorizes a borrower whose loan is secured with his or her "principal dwelling," and who has been denied the requisite disclosures, to rescind the loan transaction entirely until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under the statute, together with the required material disclosures, whichever is later (Beach v Ocwen Fed. Bank, 523 US 410, 412 [1998]; 15 USC §1601 et seq). However, if the creditor fails to deliver the material disclosures required or the notice of the right to rescind, the three day rescission period may be extended for three years after the date of consummation of the transaction or until the property is sold, whichever occurs first (Fiorenza v Fremont Inv. & Loan, supra; 15 USC § 1635 [f]; see 12 CFR § 226.23[a][3]; Ngwa v Castle Point Mortg., Inc., 2008 WL 3891263, 2008 U.S. Dist. LEXIS 63552 [SDNY Aug. 20, 2008]). A consumer who has the right to rescind a transaction under 15 USC §1635 may rescind the transaction as against any assignee of the obligation (Fiorenza v Fremont Inv. & Loan, supra).

Courts have held that notice which incorrectly states the expiration date for the rescission period does not provide "clear and conspicuous" notice to the borrower, entitling the borrower to a three year rescission period (Bell v Parkway Mortgage, Inc., 309 BR 139, 157 [2004], citing Taylor v Domestic Remodeling, Inc., 97 F3d 96, 98-99 [5th Cir 1996]; see also Aubin v Residential Funding Co., LLC, 565 F Supp 2d 392, 397 [D Conn 2008]). Inasmuch as defendants have raised an issue of fact as to whether they were effectively advised of their rescissionary right under TILA, summary judgment is inappropriate (Bankers Trust Co. of California v Ward, 269 AD2d 480 [2000]; Staley v Americorp Credit Corp, 164 F Supp 2d 578, 582-584 [2001]; see generally Bank of New York v Waldon, 194 Misc 2d 461 [2002]). Accordingly, it is [*3]

ORDERED, that the motion is granted to the extent that leave to amend the caption is granted and the motion is otherwise denied; it is further

ORDERED, that the caption is amended to read as follows: -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

Deutsche Bank National Trust, as trustee

for HSI asset Securitization Corporation

Trust 2006-HE2,Index No. 38830/07

Plaintiff,

- against -

Stephen J. West, Sylvia C. West, Mortgage

Electronic Registration Systems, Inc. as

nominee for WMC Mortgage Corp., New York

City Environmental Control Board, New York

City Parking Violations Bureau, and New York

City Transit Adjudication Bureau,

Defendants. -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

and it is further,

ORDERED, that all parties are to appear in the Intake Part on March 6, 2009, 9:30 am, for a preliminary conference.

E N T E R,

_________________

J. S. C.