AAMES Funding Corp. v Dudley

[*1] AAMES Funding Corp. v Dudley 2009 NY Slip Op 52410(U) [25 Misc 3d 1234(A)] Decided on November 30, 2009 Supreme Court, Kings County Kramer, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 30, 2009
Supreme Court, Kings County

AAMES Funding Corporation d/b/a, AAMES HOME LOAN, Plaintiff,

against

Everton Dudley, GLENISS STEWART, AAMES FUNDING CORPORATION d/b/a AAMES HOME LOAN, HOUSEHOLD BANK, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, HOME HEATING OIL, INC., BROOKLYN UNION GAS/KEYSPAN ENERGY DEL., NEW YORK CITY PARKING VIOLATIONS BUREAU, DENISE SELVY, Defendants.



29781/06



Plaintiff was represented by Sheldon May & Assoc., PC, 255 Merrick Rd., Rockville Centre, NY 11570.

The defendant Everton Dudley was pro se.

Herbert Kramer, J.

This foreclosure action [FN1] which has a lengthy and tortured history has now come to an grinding halt. In the wake of a default in July of 2006, this matter went to foreclosure in July of 2007. Thereafter a number of sales were scheduled and cancelled as a result of bankruptcy filings and several pro se applications to the Court. In May of 2008, the parties entered into a [*2]forbearance agreement that was to have had a life of two years. It required a down payment of $10,000 which was made . However, after making one payment in August 2008, the defendant defaulted. At that time the arrearage totaled some $93,000. However, when the parties appeared in Court on the defendant's pro se order to show cause, the defendant, Glennis Stewart who apparently lives in the property, but does not own it, indicated that she was working as a teacher in the public school system and apparently was willing to undertake to pay this mortgage. Accordingly, in October of 2008, this Court directed the parties to conduct settlement negotiations and the parties indeed complied. Conferences were held on a once per month basis for nearly one year until the parties reached an impasse.

At the present time, the plaintiff has agreed to a modification that would lower the monthly payment to $3,000 per month and the defendant seeks to pay some $2,000 per month.

When confronted with this seemingly un-breachable gap, a law court would discontinue the negotiations and leave the parties to their remedies. However a court sitting in equity has other resources at its disposal.

As one Court noted nearly thirty five years ago, when we faced a similar foreclosure crisis, "[f]oreclosure courts need not woodenly perpetuate the national tragedy surrounding quick foreclosures . . . . but [rather should apply] a cardinal principle of equity jurisprudence that he who seeks equity must do equity. A plaintiff is equitably bound to do equity as a condition precedent to obtaining equitable relief." Federal National Mortgage Association v. Ricks, 83 Misc 2d 814, 822, 823 (Supreme Court Kings County, 1975). Indeed, in light of New York's election of remedies provision, CPLR §1301, it would appear that the plaintiff purposely sought the benefits of an action in equity rather than at law. See e.g., McSorely v. Spear, 13 AD3d 495(2d Dept. 2004).

This Court has two concerns which must be addressed in any efforts applied to break up this impasse.

First, as it has stated in earlier decisions, "[d]elays in the foreclosure context inevitably leave viable properties in a virtually ownerless limbo state and create the potential for a landscape filled with vacant, decaying edifices which could well invite further foreclosures and decreasing property values'." Mortgage Electronic Registration Systems Inc., v. Lizima, 15 Misc 3d 1118(A) (Supreme Court, Kings County, 2007). Indeed, the resolution of this litigation would have the immediate salutary effect of restoring the homeowner to his home and avoiding this result.

The second is this Court's longstanding concern with discriminatory lending practices. See M & T Mortgage v. Foy, 20 Misc 3d 274(Supreme Court, Kings County, 2008).

The instant mortgage was granted to a minority buyer for the purchase of property in a minority area and since it is an adjustable rate mortgage, it will eventually call for an interest rate that exceeds nine percent , thus creating a "rebuttable presumption of discriminatory practice." Id.

Accordingly, if the lender is so advised, it may freeze the maximum interest rate chargeable on this mortgage at 9% or in the alternative it will be granted a hearing at which it must initially demonstrate by a fair preponderance of the evidence that the mortgage was not the product of unlawful discrimination." Id. If the plaintiff is unable to make this showing, then the foreclosure proceeding will be dismissed and the lender left to its remedies at law.

Moreover, since there has not been a new order of reference prepared in this matter for a [*3]number of years, pursuant to this Court's decision in Bardi v Morgan, 17 Misc 3d 927 (Supreme Court, Kings County, 2007) an amended and updated order of reference must be prepared. The plaintiff is to submit an order for same.

The next hurdle to cross is the actual resolution of the impasse, where plaintiff is willing to accept a monthly payment to $3,000 per month and the defendant seeks to pay some $2,000 per month. In this Court's view, and particularly in light of the checkered history of this litigation, the plaintiff is entitled to assurances that the defendant is going to be ready willing and able to maintain the payments under this mortgage. To that end, the defendant in order to avoid foreclosure must deposit $10,000 with the County Clerk within thirty days of the date of this decision and must, in addition, make payments of $2500 per month no later than the 15th day of each month pursuant to the new order of reference. If the defendants are delinquent in any payment under this agreement, the plaintiff may immediately enter an amended Judgment of Foreclosure and Sale under the amended and updated reference.

If the terms outlined above are not acceptable to the plaintiff, then they may make an application for a hearing before a Judicial Hearing Officer wherein they may establish that the defendant is readily capable of paying a greater monthly sum. Full financial disclosure is ordered in this regard. The parties will be prepared to present facts and arguments in support of their respective positions and in particular in support of the bank's position that the bank may take into consideration for purposes of establishing a payment schedule, the income earned by defendant, Gleniss Stewart whose name does not appear on the mortgage or apparently on the deed.

This constitutes the decision and order of the Court.

J.S.C. Footnotes

Footnote 1:The property sought to be foreclosed is located at 1333 East 104th Street. It is owned by a minority individual and located in a largely minority area. The note which is dated May 27th 2005 carried an initial rate of 6.4% with a change in the rate to take effect June of 2007 which could increase the rate to as much as 9.4%. Thereafter there would be an increase on each change date to a maximum of 12.4%. The defendant Everton Dudley defaulted in July of 2006 before the change in rate and after making approximately 14 payments.