Financial Freedom SFC v Slinkosky
Annotate this CaseDecided on June 24, 2010
Supreme Court, Suffolk County
Financial Freedom SFC, Plaintiff,
against
William A. Slinkosky, Jr. a/k/a William A. Slinkosky, individually and as Administrator of the Estate of William A. Slinkosky a/k/a William Slinkosky, deceased, Carol A. Jagodzinski a/k/a Carol Ann Jagodzinski, as Heir to the Estate of William A. Slinkosky a/k/a William Slinkosky, deceased, United States of America Department of the Treasury Internal Revenue Service, New York State Department of Taxation and Finance, Secretary of Housing and Urban Development and "John Doe No.1" through "John Doe #10", the last 10 names being fictitious and unknown to plaintiff, the persons or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the verified complaint, Defendants.
11879/2009
Attorney for Plaintiff:
McCabe, Weisberg & Conway, P.C.
145 Huguenot Street, Suite 310
New Rochelle, NY 10801
Attorney for Defendants:
Alizio & Galfunt LLP
1551 Franklin Avenue
Mineola, NY 11501
William B. Rebolini, J.
The plaintiff commenced this action on March 26, 2009 to recover loan proceeds allegedly given pursuant to an agreement to obtain a Home Equity Conversion Mortgage loan on April 30, 2007 in return for a Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, on the home of William A. Slinkosky a/k/a William Slinkosky (William Slinkosky) and his wife Dorthea C. Slinkosky located at 8 Lydia Court, Lake Grove, New York 11755. At the time of agreement, husband and wife were allegedly 78 years old. Dorthea C. Slinkosky died on September 15, 2007 and William Slinkosky died on October 6, 2007. The plaintiff alleges that it advanced monthly funds to William Slinkosky totaling $297,344.08 and that upon his death, his estate failed to pay the note that came due as required under the terms of the note and mortgage and that the plaintiff sent a notice of default declaring all sums secured under the mortgage due and payable.
The defendants William A. Slinkosky, Jr. a/k/a William A. Slinkosky, individually and as administrator of the estate of William Slinkosky, deceased, and Carol A. Jagodzinski a/k/a Carol Ann Jagodzinski, as heir to the estate of William Slinkosky, deceased, (the estate representatives) answered asserting a first affirmative defense of unconscionability and unclean hands; such defense avers that plaintiff engaged in a predatory lending scheme by advising William Slinkosky to refinance the premises with a reverse mortgage when he had multiple, obvious, serious medical conditions that left him mentally and physically frail with only a few months to live. A second affirmative defense asserts unconscionability and unclean hands and avers that plaintiff obtained a loan origination fee of $7,255.80 when the maximum allowable fee was $5,627.90.
The plaintiff now moves for summary judgment against the estate representatives and for an order of reference and amendment of the caption. The plaintiff's submissions include the summons and complaint; the answer of the Estate representatives; a Federal Housing Administration (FHA) Adjustable Rate Home Equity Conversion First Mortgage in favor of the lender, Somerset Investors Corporation, DBA Somerset Mortgage Bankers (Somerset); an FHA Adjustable Rate Home Equity Conversion Second Mortgage in favor of the lender, the Secretary of Housing and Urban Development (HUD); and an FHA Adjustable Rate Second Note in favor of the lender HUD. All of said documents are dated April 30, 2007 and were executed by William Slinkosky and Dorthea C. Slinkosky.
A plaintiff seeking foreclosure must establish that it was the owner or holder of the note and mortgage at the time that it commenced the foreclosure action (see, Mortgage Elec. Registration Sys. v. Coakley, 41 AD3d 674 [2nd Dept., 2007]; Federal Natl. Mtge. Assn. v. [*2]Youkelsone, 303 AD2d 546 [2nd Dept., 2003]; see also, Wells Fargo Bank, N.A. v. Marchione, 69 AD3d 204 [2nd Dept., 2009]). A plaintiff may do so by demonstrating that it was the assignee of the mortgage and the underlying note or the assignee of the mortgage and by indorsement the holder of the note at the time that the action was commenced (see, Federal Natl. Mtge. Assn. v. Youkelsone, 303 AD2d at 546 [2nd Dept., 2003]; First Trust Natl. Assn v. Meisels, 234 AD2d 414 [ 2nd Dept., 1996]; Slutsky v. Blooming Grove Inn, Inc., 147 AD2d 208 [2nd Dept., 1989]).
In order to establish prima facie entitlement to summary judgment in a foreclosure action, a plaintiff must submit the mortgage and unpaid note, along with evidence of default (see, Capstone Business Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d 882[2nd Dept., 2010]). The burden then shifts to the defendant to demonstrate "the existence of a triable issue of fact as to a bona fide defense to the action, such as waiver, estoppel, bad faith, fraud, or oppressive or unconscionable conduct on the part of the plaintiff" (id. quoting Mahopac Natl. Bank v. Baisley, 244 AD2d 466 [2nd Dept., 1997], lv dismissed 91 NY2d 1003[1998]).
Here, the plaintiff appears to be seeking to foreclose the first mortgage but has failed to submit a copy of the first note, purportedly indicating the amount of the loan, or the related Home Equity Conversion Loan Agreement mentioned in the first mortgage. In addition, neither the affirmation of the plaintiff's attorney nor the affidavit of the officer of Financial Freedom Acquisitions, LLC, attorney in fact for the plaintiff, nor the complaint explain how the plaintiff is related to Somerset so as to establish standing, why there were two notes and two mortgages for this one HECM loan, whether Somerset was an FHA approved lender, whether the actual loan proceeds came from Somerset and/or HUD, and the manner of disbursement of the loan proceeds to the Slinkoskys in those six months until their deaths to total $297,344.08.
The estate representatives now cross-move for summary judgment dismissing the complaint based on the alleged unconscionable conduct in the transaction of the subject reverse mortgage loan. The estate representatives assert that the mortgage documents indicate that a loan origination fee of $7,255.80 was charged, which exceeds the maximum fee allowed under HUD guidelines.
In addition, the estate representatives assert that the majority of the proceeds of the loan were spent on repairs required by the Repair Rider that was part of the mortgage agreement following closing yet no funds were listed as being set aside for such repairs in the HUD Settlement Statement. The estate representatives also assert that they have been unable to obtain a copy of the Repair Rider. By affidavit dated October 13, 2009, William Slinkosky, Jr. states that, following the closing of the subject loan, at his father's request, he undertook the task of completing the repairs required by the Repair Rider and that he hired contractors and scheduled appointments for them to begin and complete repairs on the house. He lists those repairs as involving repairing the roof, replacing windows, replacing siding, replacing rafters, electrical work, replacing doors, replacing storm doors, and keeping the house up to value. He states that the majority of the proceeds of the loan to his father were spent on said repairs. Among the [*3]estate representatives' other submissions is a Loan Document Review Checklist of the plaintiff, the HUD Settlement Statement and Lender's Closing Instructions from the plaintiff.
In opposition to the cross-motion, plaintiff submits only the affirmation of its attorney who points out that the HUD guidelines 4235.1 (1-4A) and HUD mortgage letter 00-10 in effect at the time that the subject loan was made differed from current guidelines and statutes and did not cap fees at $6,000.00 as asserted by the estate representatives.
The Court notes that the Estate representatives are relying on 12 U.S.C. §1715z-20 (r) (Insurance of Home Equity Conversion Mortgages for Elderly Homeowners) concerning "limitation on origination fees" to support their argument of a cap of $6,000.00. However, subsection r of 12 U.S.C. §1715z-20 was enacted in 2008, after the subject loan agreements were executed. The HUD mortgagee letter 00-10 dated March 8, 2000 concerning revisions to the Home Equity Conversion Mortgages (HECMs) Program indicates an increase in the loan origination fee to cover the mortgage broker or loan correspondent fee and that the loan origination fee is capped and "limited to the greater of $2000 or 2 percent of the maximum claim amount on the reverse mortgage." HUD guidelines 4235.1 (1-4A) (2) defines the maximum claim amount as "the lesser of the appraised value of the property or the maximum mortgage amount for a one-family residence that HUD will insure in an area under Section 203 (b)(2) of the National Housing Act. The maximum claim amount is established when the Conditional Commitment is issued and represents the maximum amount HUD will pay on a claim for insurance benefits."
According to the plaintiff's attorney, the Slinkosky house was appraised at $375,000.00, two percent of which would be $7,500.00. He points out that the loan origination fee of $7,255.80 is less than the maximum permitted fee of $7,500.00. However, the plaintiff's attorney does not clearly indicate what "the maximum mortgage amount for a one-family residence that HUD will insure in an area under Section 203 (b)(2) of the National Housing Act" would have been, nor does he address the estate representatives' contentions concerning the Repair Rider or the lack of documentation of the amounts set aside for repairs.
Here, without complete copies of the loan and mortgage documentation, including a copy of the Repair Rider and related payment plan for repairs, the Court cannot properly determine either the motion or the cross-motion. Therefore, the instant motion and cross-motion are denied with leave to renew upon proper proof, including but not limited to a copy of all the papers submitted upon these cross motions, a copy of this order and the evidentiary proof specified herein.
Upon renewal, the plaintiff shall submit complete copies of all loan and mortgage documents relating to the subject transaction including the first note in favor of Somerset, the Home Equity Conversion Loan Agreement and any attached payment plan for repairs and the Repair Rider. In addition, the plaintiff shall submit a statement in affidavit form from someone with personal knowledge explaining: how the plaintiff is related to Somerset (on the issue of [*4]standing) and whether Somerset was an FHA approved lender; why two notes and two mortgages were executed on the same date on the subject property (one in favor of Somerset and one in favor of HUD) and which has priority; which entity actually provided the loan proceeds and which entity received the loan origination fee; whether the Slinkoskys received information pursuant to 12 USC §1715z-20 (former [d][2][B], [d][2][C] and [f]); and whether the plaintiff is seeking to foreclose a term or tenure reverse mortgage loan (see, Real Property Law §280-a [1]). Also, said statement from someone with personal knowledge should indicate; whether a portion of the loan proceeds were used to satisfy an existing mortgage; whether a portion of the loan proceeds were set aside for repairs; the actual monthly loan payments made to the Slinkoskys until the death of William Slinkosky; and the date of default. The estate representatives are to submit proof of repairs made with the loan proceeds.
Accordingly, it is
ORDERED that the motion by plaintiff (#001) pursuant to CPLR §3212 for summary judgment against the answering estate administrator and heir, to strike their answer for a default judgment against the remaining defendants; for the appointment of a referee to compute and for amendment of the caption is denied, without prejudice with leave to renew; and it is further
ORDERED that the cross-motion (#002) pursuant to CPLR §3212 by the
answering estate administrator and heir for summary judgment dismissing the complaint is
denied, without prejudice with leave to renew.
Dated:June, 2010
__________________________________
HON. WILLIAM B. REBOLINI, J.S.C.
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