Mortgage Elec. Registration Sys., Inc.

v Rambaran (2011 NY Slip Op 50966(U)) Page 1 of 4

[*1]
Mortgage Elec. Registration Sys., Inc. v Rambaran
2011 NY Slip Op 50966(U)

m
Decided on May 23, 2011
Supreme Court, Kings County

.co
Kramer, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law
§ 431.

ud
This opinion is uncorrected and will not be published in the printed Official
Reports.

Fra
Decided on May 23, 2011
Supreme Court, Kings County

Mortgage Electronic Registration Systems, Inc., as Nominee for

Freemont Investment & Loan, Plaintiffs,
ure
against

Sushma Rambaran, Seema Rambaran, Hemant Rambaran,

HSBC Bank USA, NA, as Indenture Trustee for the Registered
los

Noteholders of Renaissance Home Equity Loan Trust 2007-2

and Philip Baldeo, Defendants.
rec

23508/09
Fo

Plaintiff was represented by Bradley D. Wank, Esq., Delbello, Donnellan, Weingarten, Wise
& Wiederkehr, LLP, One North Lexington Ave., White Plains, NY 10601.

Defendant HSBCUSA, NA was represented by Eric Rosenberg, Esq., The Law Division of
op

Fidelity National Title Group., Inc., 350 Fifth Ave., NY, NY 10118.

Herbert Kramer, J.
St

Is a mortgagee a bona fide purchaser in the situation where apparent discrepancies

w.

existed between affidavits of zero-consideration, the HUD-1 form, and the closing checks?

This Court holds that a genuine issue of material fact exists as to whether the
ww

mortgagee was a bona fide purchaser due to the discrepancies in the closing documents.

Background

Plaintiff alleges that on or about April 10, 2005, title to the premises which is the

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_50966.htm 6/1/2011
Mortgage Elec. Registration Sys., Inc. v Rambaran (2011 NY Slip Op 50966(U)) Page 2 of 4

subject of this action (the Property) was transferred from defendant Hemant Rambaran
(Hemant) to himself and defendant Baldeo both at 50% ownership. On or about August 10,
2005, Baldeo and Hemant obtained a loan in the amount of $302,250.00 from Freemont

m
Investment and Loan (Freemont). In connection with the loan Baldeo and Hemant executed
a note and as collateral security executed a mortgage for Freemont. It is undisputed that the

.co
note and mortgage was not recorded. Furthermore, Freemont admits that it not currently in
possession of the mortgage documents. [*2]

Thereafter on March 30, 2007, Hemant executed a deed purportedly conveying all of

ud
his right title and interest to the premises to defendants Seema and Sushma, his daughters.
The deed was recorded on March 30, 2007. On March 30, 2007 Seema and Sushma
executed a note and mortgage for $423,750.00 secured by the Premises in favor of MERS as
nominee for Delta Funding Corporation (Delta). The mortgage was transferred from MERS

Fra
as nominee for Delta to HSBC.

Plaintiff alleges that Hemant's transfer to his daughters was fraudulent and that HSBC
was or should have been on notice of the fraudulent transfer and therefore Freemont's
ure
mortgage should have primacy. In support of this position plaintiff relies upon two affidavits
delivered at the March 30, 2007, closing in which Hemant states that he has received zero
consideration for the transfer of the premises, that the transfer was between family members
and two transfer tax documents which state that the consideration for the transfer was $0. In
los

contrast to those documents, the HUD-1 form states that Hemant received $296,000.00 in
consideration for the transfer. Lastly, plaintiff asserts that the checks issued at the closing
were endorsed to parties other than Hemant and his daughters, further casting a suspicious
light on the transfer.[FN1]
rec

Real Property Law

New York is a "race-notice" state as provided in NY RPL § 291: "A conveyance . .

Fo

.may be recorded. . .Every such conveyance not so recorded is void as against any person
who subsequently purchases or . . contracts to purchase...the same real property in good faith
and for valuable consideration, from the same vendor...and whose conveyance...or contract
op

is first duly recorded..." Essentially there are two basic aspects to the statute. First, one who
records will have priority over subsequent claimants, whether they have recorded or not.
Second, one who records, without notice of an unrecorded prior claimant, will also have
St

priority. See NY RPL § 291; Mortgage Liens in New York § 10:3 et. seq.

However, there are several exceptions carved out of this general rule. For example, a
w.

prior recorded mortgage would lose priority to an unrecorded mortgage if the mortgagee had
notice, actual or constructive of such a conveyance. If a purchaser has knowledge of any
fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with
ww

that he is about to purchase, he is presumed either to have made the inquiry, and ascertained
the extent of such prior right, or to have been guilty if a degree of negligence equally fatal to
his claim, to be considered a bona fide purchaser. Maiorano v. Garson, 886 N.Y.S.2d 190
[2d Dep't 2009] citing Williamson v. Brown, 15 NY 354, 362 (internal citations omitted).

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_50966.htm 6/1/2011
Mortgage Elec. Registration Sys., Inc. v Rambaran (2011 NY Slip Op 50966(U)) Page 3 of 4

Summary Judgement

On a summary judgment motion the court must view the evidence in the light most
favorable to the party opposing the motion, giving that party the benefit of every reasonable

m
inference and determine whether there are any triable issues of fact outstanding. Branham v.
Loews Orpheum Cinemas, Inc., 8 NY3d 931 [2007]. The court must determine if the [*3]

.co
moving party's papers justify holding as a matter of law that the "cause of action or defense
has no merit." Marine Midland Bank, N.A. v. Dino & Artie's Automatic Transmission Co.,
168 AD2d 610 [1990]. It is well established that summary judgment is a drastic remedy that
should not be granted where there is any doubt as to the existence of a material issue of fact

ud
or where the issue is arguable. Stillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395
[1957].

Fra
Initially, a summary judgment movant has burden to set forth evidentiary facts
sufficient to entitle that party to a judgment as a matter of law, tendering sufficient evidence
to eliminate any material issue of fact from the case, and that showing must be made by
producing evidentiary proof in admissible form. Santanastasio v. Doe, 301 AD2d 511
ure
[2003]. Generally, a party does not carry its burden in moving for summary judgment by
pointing to gaps in its opponent's proof, but must affirmatively demonstrate the merit of its
claim or defense. Dalton v. Educational Testing Service, 294 AD2d 462 [2002].

Discussion
los

The defendant, HSBC moves for dismissal on the grounds that the defendant's
purported lien was not recorded at the time that HSBC took a mortgage on the subject
property. HSBC asserts that it had no knowledge, actual or constructive of the purported lien
rec

and therefore a bona fide good faith purchasers/encumbrancers and that the mortgage which
they hold has priority.[FN2]

Plaintiff, in opposition to the motion contends that HSBC is not a bona fide purchaser
Fo

in good faith because, as discussed above, the closing documents associated with the transfer
of the property between Hemant and his daughters conflict. Plaintiff further asserts that the
contradiction between the documents raised HSBC's duty to inquire as to whether the
op

transfer was a fraudulent transfer designed to evade Hemant's creditors.This Court holds that
the discrepancies in the closing documents were sufficient to put HSBC on notice to further
inquire as to the bona fides of the transaction. No evidence has submitted that HSBC
St

engaged in any additional investigation in light of the discrepancies. Rather, it seems that
HSBC simply pushed the documents through without the critical eye which is required in
these transactions. Gone are the days in which closing documents are merely meant to be
w.

shuffled and stacked. A lending institution has an affirmative duty to inquire into the bona
fides of the documents, prior to taking mortgage [*4]on a property. If they fail in that duty
ww

their status as a bona fide purchaser is threatened. See, Southwell v. Middleton, 17 Misc 3d
1129(A) [Sup. Kings. 2007].[FN3]

Accordingly, the motion is denied.

This constitutes the decision and order of the court.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_50966.htm 6/1/2011
Mortgage Elec. Registration Sys., Inc. v Rambaran (2011 NY Slip Op 50966(U)) Page 4 of 4

J.S.C.
Footnotes

m
Footnote 1:Tom L. Moonis, Esq. Submitted an affirmation authenticating copies of checks
issued in connection with the 2007 closing, which involved Delta Finding (now held by
HSBC) and the Rambarans. The checks were issued to persons and entities including

.co
Sushma Rambaran, HKR Construction, Varsha Construction, and 81-83-85 Blake Avenue
LLC.

Footnote 2:HSBC submits the affidavit of Renee Hensley, the manager of Ocwen Loan
Servicing, LLC, the servicing agent for HSBC's loan to the Ramabrans. She asserts that

ud
"accompanying the other documents in the origination file for the Mortgage was a HUD-1
form, which is a standard form that is executed in connection with real estate sales and
mortgage transactions.. .The buyers/borrowers - in this case Sushma and Seema Rambaran -
execute the form, whcih contains an itemization of the loan and the disposition of the loan

Fra
proceeds that are being disbursed at or near the time the HUD-1 is executed. It is the usual
practice of Ocwen. . .to rely on those documents. . .the [HUD-1] indicates that, of the
$423,750 in loan proceeds. . .$296,000 were paid as consideration to H. Rambaran.' Ms.
Hensley's affidavit fails to discuss the contradictory affidavits of zero-consideration or the
closing checks issued to other entities.
ure
Footnote 3:Where the court held that discrepancies between the closing checks gave rise to
a duty to further investigate the transactions.
los

Return to Decision List

rec
Fo
St op
w.
ww

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_50966.htm 6/1/2011