High Quality
Open the downloaded document, and select print from the file menu (PDF reader required).
Emigrant Mtge. Co. Inc. v Corcione2010 NY Slip Op 20133Decided on April 16, 2010Supreme Court, Suffolk CountySpinner, J.Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.This opinion is uncorrected and subject to revision before publication in the printed OfficialReports.Decided on April 16, 2010Supreme Court, Suffolk CountyEmigrant Mortgage Co. Inc., Plaintiff againstAnthony J. Corcione and Jane Corcione, Defendants.2009-28917Joshua Deutsch, Esq.Deutsch & Schneider L.L.P.Attorneys for Plaintiff 79-37 Myrtle AvenueGlendale, New York 11385Sean C. Serpe, Esq.Serpe & Associates, P.C.Attorneys for Defendants450 Seventh AvenueNew York, New York 10123Jeffrey Arlen Spinner, J.On July 23, 2009 Plaintiff commenced this action claiming foreclosure of a mortgage by filingits Notice of Pendency and Summons and Complaint with the Clerk of Suffolk County. Themortgage at issue was given by Defendants to Plaintiff on July 5, 2007, in the principal amountof $ 302,500.00 and was recorded with the Clerk of Suffolk County in Liber 21580 of Mortgagesat Page 379. Said mortgage was given as collateral security for a simultaneously executedAdjustable Rate Note with interest at the initial rate of 11.625% and it constitutes a first lienupon premises known as 66 Circle Drive, East Northport, Town of Huntington, New York.On or about May 1, 2008, owing to a loss of employment, Defendants defaulted upon theirmonthly installment payments due to Plaintiff under the Adjustable Rate Note. According to
Defendants, they had, from the very time of default, assiduously attempted to arrive at anamicable resolution but were met with multiple and varying impediments erected by Plaintiff.They claim to have been ceaselessly trying since the default date, albeit without any success, toobtain a modification from Plaintiff, having proceeded on their own, thence through amodification facilitator and finally through counsel. Plaintiff baldly asserts that Defendants onlysought to resolve this matter subsequent to the commencement of the foreclosure action, aposition that is belied by the record. Though Plaintiff advances no explanation whatsoever forthe fourteen month hiatus between default and suit, its actions, when considered in light of all of the circumstances herein, lead inexorably to the conclusion that this gap in time wouldindubitably increase the amount of interest Plaintiff could exact from Defendants, hardly a nobleor good faith purpose.On or about August 3, 2009, initial process was servied upon Defendants and thereafter counselappeared and interposed a Verified Answer on their behalf. By Notice of Motion dated October14, 2009 (seq. 001) which was returnable October 28, 2009, Plaintiff applied to this Court for anOrder granting summary judgment pursuant to CPLR § 3212 and for the appointment of areferee to compute in accordance with RPAPL § 1321. Thereafter and on October 18, 2009, thefirst in what evolved into a series of Foreclosure Settlement Conferences was convened. Thesame was adjourned on no less than five occasions and was ultimately referred to theundersigned by Court Attorney Referee Adrienne Williams Esq., notwithstanding the vociferousand inexplicable objections of Plaintiff’s counsel. A conference was then held by the Court onMarch 16, 2010 and the entire proceeding was thereafter adjourned for all purposes to April 27,2010.A careful examination of all of the documentation submitted by Plaintiff, both on its motion andat the conference is, at the same time, both starkly revealing and greatly disturbing. While theAdjustable Rate Note contains an initial interest rate of 11.625%, it is subject to change onAugust 1, 2012 and on the first day of each succeeding August thereafter, until its stated maturitydate of August 1, 2037. The basis upon which the interest rate is computed is set forth at somelength within Paragraph 4 of the Adjustable Rate Note. Briefly stated, it provides that the holderwill determine the rate based upon the average weekly yield on securities issued by the UnitedStates Treasury as adjusted to a constant maturity of one year, to which it will then add 6.375%followed by a rounding of the same upward to the nearest one eighth of one percent. Appendedthereto (and likewise annexed to the recorded Mortgage) is a document entitled “Default InterestRate Rider” which, by its express terms, modifies the Adjustable Rate Note by [*2]providing foran upward increase in the rate of interest charged to 18% upon a default by the mortgagors. Thedefault interest rate is triggered by any one of the events of default as they are defined in theAdjustable Rate Note and Mortgage.Though not expressly stated, this Court, being fully aware of the customs and practices extant inthe mortgage lending industry (including loan origination, warehousing, brokerage, closing,settlement and transfer) must presume that the terms and conditions of the Adjustable Rate Note,Default Interest Rate Ride and Mortgage were the product of unequal bargaining power asbetween Plaintiff and Defendants. It is a virtual certainty that Defendants were not afforded theopportunity to freely bargain and negotiate in reaching the operative terms that are now subjectto this Court’s scrutiny. Since the instruments upon which Plaintiff demands enforcement have
obviously been promulgated by the lender to the borrowers and since the operative and bindingterms thereof are clearly not negotiable by the borrower, such instruments must be considered tobe in the nature of a contract of adhesion, which typically would be construed against the drafterthereof, Belt Painting Corp. v. TIG Insurance Company 100 NY2d 377 (2000).On March 16, 2010, in accordance with the provisions of CPLR § 3408, a mandatory foreclosuresettlement conference was convened before the Court. Present at that conference wereDefendants, their counsel Sean C. Serpe Esq., Millie Rivera as representative of Plaintiff andPlaintiff’s counsel Joshua Deutsch Esq. One of the items produced at that conference was adocument entitled “Loan Modification Agreement,” which had been propounded by Plaintiff’scounsel on or about February 23, 2010 and which required an acceptance thereof not later thanMarch 5, 2010 else the offer be revoked and the foreclosure action be continued. This Agreementwas intended to effectuate a cure of the arrears over time together with a myriad of otherprovisions. The amount or arrears to be cured was determined by Plaintiff to total $ 119,330.89with the sum of $ 84,606.45 to be recapitalized at the rate of 6%. Plaintiff proposed that if theAgreement were fully consummated, after 12 months it would “forgive” default interest of approximately $ 30,000.00.According to Plaintiff, the principal balance owed stands at $ 301,721.58 and the interest accruedbetween May 1, 2008 and March 1, 2010 has reached the not insubstantial sum of $ 95,154.65with a continuing per diem of $ 132.54 thereafter. According to both Ms. Rivera and AttorneyDeutsch, interest was computed at 16% per annum in accordance with the Default Interest RateRider described, supra (which, as previously noted, actually provides for default interest to becomputed at the rate of 18%, an inconsistency that remains unexplained). In addition to interest,Plaintiff also claimed the sum of $ 19,672.91 for “Other Charges” which Plaintiff declined toexplain to Defendants or their counsel. Upon questioning by the Court, it was revealed that theseso-called “Other Charges” consisted of some$ 1,100.00 in pre-action late charges, unsubstantiated tax and insurance advances of $ 10,000.00,check fees of $ 40.00, legal expenses of $ 3,380.00, unpaid legal expenses of $ 4,515.00 (totalclaimed legal expenses of $ 7,895.00), property inspection fees of $ 85.00, unpaid inspectionfees of $ 40.00 and appraisal fees of $ 350.00.The Court questions the entitlement of Plaintiff to claim legal fees, costs and accrued[*3]interest, (especially when computed at a confiscatory rate) inasmuch as not less than fourteenmonths of accruals were due to Plaintiff’s delay in responding to Defendants’ entreaties towardresolution. Plaintiff’s position appears to be facially unreasonable.Although not substantiated, Plaintiff asserts that it has advanced the sum of $ 10,000.00 for taxesand insurance. According to the Tax Collector of the Town of Huntington, the annual tax uponthe property at issue is $ 3,209.94, of which only the sum of $ 1,604.97 has been paid for thecurrent levy. According to public records, the taxes for the prior year were $ 2,709.61. Even so,the Affidavit of Joel Marcano, Plaintiff’s Assistant Treasurer, avers that as of September 16,2009, it had paid $ 6,662.51 for property taxes. These numbers simply do not add up and theamount demanded seems far too round.
Add a Comment