Did Bank Complaints Result in Transfer of Foreclosure Referee?

I have come into possession of a copy of an internal e-mail from a court attorney to a top official at the Office of Court Administration that paints an unsettling picture of bank influence in the handling of foreclosure cases in Brooklyn.

The e-mail was from Deborah Goldstein, a court attorney at the Supreme Court in Brooklyn, who for four years had been supervising conferences required by state law between banks and homeowners facing foreclosure. In her-email, Goldstein asked Judge Lawrence K. Marks, the number two official in charge of court administration throughout New York, to stop an imminent plan to move her to a pool of lawyers whose job is to help judges draft opinions.

In her e-mail, Goldstein advised Marks that Lawrence S. Knipel, the administrative judge in charge of civil cases at the Brooklyn court, was moving her out of her mini-courtroom after having received complaints “verbally made at a private meeting” with lawyers who represent banks at the settlement conferences, without providing her “any [of those] complaint(s) in writing or an opportunity to respond.”

Goldstein’s appeal was unavailing, and she was re-assigned to desk duties five days later on April 22, 2013.

I obtained a copy of Goldstein’s email to Marks from a confidential source, not Goldstein. When I advised Goldstein that I was in possession of the email, she asked me not to write about it and declined to be interviewed for this story.

 Goldstein’s account of her removal finds support in a number of circumstances that surrounded her reassignment. Some of the most telling were: During his first four months as administrative judge, Knipel unilaterally revised the rules for handling the settlement conferences to the dismay of many judges who were actually in charge of the cases. The revised rules seemed aimed at Goldstein and designed to curb some of her practices that drew criticism from the bank bar. And homeowners’ lawyers, and even some judges, were unaware of the rule changes amid signs that bank lawyers knew about them in advance.

Additionally, during the last two years, 14 judges have agreed with Goldstein’s recommendations that the banks failed to negotiate in good faith—sometimes in highly critical opinions. Also, Goldstein’s findings served as the predicate for two important decisions issued by the appeals court in Brooklyn last year.

Knipel: Goldstein’s had “nothing to do” with any meeting

Knipel in an interview said that Goldstein’s transfer had “nothing to do with a meeting with bank lawyers. We don’t allow litigants to request the assignment of law clerks. Absolutely, unequivocally not.”

Knipel recalled that shortly after becoming administrative judge for civil cases in January 2013, he met with both sides of the bar in many different types of civil cases handled in his court, including foreclosures.

He took issue with my characterization of the meetings as “meet and greet sessions,” and amplified that he heard a number of complaints at the meetings. “That’s a large part of my job,” he said, “when litigants are unhappy, we are the complaint department.”

He attributed Goldstein’s transfer to the needs of the court system. “During the last four years we have lost 108 positions,” and “are constantly shifting people to put them where it makes the most sense.”

Goldstein “followed the rules and did a good job before and she is doing a good job now,” he added. “She is very strong—one of our best writers.”

Goldstein was tough and exacting

Under New York’s statute,[1] which was enacted in 2008, and expanded a year later to require “good-faith” negotiations, Goldstein was one of a cadre of court attorneys and retired judges responsible for making recommendations to the judges in charge of foreclosure cases as to whether the good-faith obligation had been met.

The statute explicitly requires banks to negotiate in good faith to help homeowners “avoid losing” their homes. (I am using the word “banks” to include banks, which may have originated a loan, as well as any organization, including investment pools, which subsequently acquired a mortgage.)

The New York statute dovetails with the federal Home Affordable Mortgage Program (HAMP), which was developed as a part of the bank bailout to provide assistance to homeowners. The federal government developed a complex, and detailed, set of protocols that banks were required to use in determining whether a homeowner’s payment could be lowered. The HAMP rules were only mandatory if a bank agreed to participate in the program, and many did.

Homeowner lawyers and some judges describe Goldstein, who is in her early 40s, as deft at cutting through bank denials of modifications that didn’t add up, well-versed in the HAMP rules and exacting in requiring banks’ compliance with them. Bruce A. Richardson, a homeowner’s lawyer put it this way: “You’d have to wake up pretty early in the morning to put one over on her.” For 12 years before joining the court system, Goldstein had handled complex commercial cases at a top-notch law firm, Stroock & Stroock & Lavan.

Yolande I. Nicholson, the president of the New York Foreclosure Defense Bar, described Goldstein as “working very hard” to bring the two sides together to realize the statutory goal of according relief to homeowners facing foreclosure. “She held everyone’s feet to the fire but it became painfully obvious in many cases that banks did not want to participate meaningfully.”

Some homeowner’s lawyers acknowledge that Goldstein was quick to raise her voice and upbraid lawyers on either side. One judge called Goldstein, who wears her wavy brown hair several inches below her shoulders, “a spitfire.”

The banks, on the other hand, viewed Goldstein as exacting but in one direction—toward them. An example of the banks’ dim view of Goldstein’s handling of the conferences had a clear exposition in a “position statement” submitted by Hogan Lovells, a multinational firm that has handled many key appeals arising from foreclosure conferences.

The position statement was submitted in the case of EMC Mortgage Corp. v. Green,[2] which like many of the cases where Goldstein recommended finding the banks at fault, involved multiple adjournments and spanned lengthy time periods. There were 23 conference sessions over three years in EMC Mortgage. The position statement was submitted about a month after Goldstein had been transferred.

The position statement faulted both the homeowner’s repeated failure to submit financial information required by HAMP rules to process a modification application and Goldstein’s willingness to give them additional time to supply the needed documents.

The extensive delays, the statement maintained, were the result of the homeowner’s production of “only piecemeal financial information over the course of three years of conferences, ignoring both the Referee’s instructions and [the bank’s] requirements.”

Moreover, the position statement faulted Goldstein for ordering “review after review.” Those repeated reviews led to lengthy delays, which resulted in the case being held “hostage” because of a court rule prohibiting banks from moving forward with foreclosures until the negotiation process is completed. As result, the statement maintained, “the [homeowners] have not [made] any loan payments while the [bank] has been paying taxes and insurance on behalf of the [homeowner] to protect its security interest in the property.”

The statement also praised Knipel for removing Goldstein, stating:

“This case is a prime example of why the Administrative Judge wisely capped the number of settlement conferences at four, and why Referee Goldstein is no longer a referee.”

The EMC case, according to court records, was subsequently settled with the homeowners agreeing to leave their home in return for a cash payment in a “specified amount.”

Different picture of who is responsible for delays

A different picture of who bore responsibility for lengthy delays, however, is found in two key important decisions issued by the Appellate Division in Brooklyn and some of the trial opinions endorsing Goldstein’s recommendations. In U.S. Bank N.A. v. Sarmiento,[3] decided last July, the Second Department was also dealing with a case that stretched out over many (18) negotiating sessions and spanned many (16) months. But, in upholding the Sarmiento trial judge’s ruling, which had embraced Goldstein’s bad faith recommendation, the appeals court was working with a record that showed the bank’s review process had been slipshod.

Specifically, the record showed that the bank wrongly claimed that the homeowner did not live in his home. Then, another application was rejected because the homeowner had assets of $25,000, even though the homeowner had put the funds aside at Goldstein’s direction to make sure he would have funds available to pay a lower amount should mortgage relief be approved.

Similarly, in U.S. Bank N.A. v. Williams,[4] decided a few months later, the Second Department found “the record demonstrates that the foreclosing parties repeatedly represented to [Goldstein] and [the homeowner] that they were considering [the homeowner] for a HAMP loan modification and repeatedly demanded that [the homeowner] submit additional documentation in support of the application” even though the terms of the mortgage pool, which owned the mortgage, barred it from agreeing to any modification. The negotiations had continued for 13 months before the syndicate disclosed the legal restriction, the decision stated.

Likewise, two of the trial court opinions faulted the banks in stinging opinions.

In U.S. Bank v. Young,[5] Justice Laura L. Jacobson specifically praised Goldstein’s work and described the roadblocks that the bank’s lawyers placed in her way. “It is very clear to the Court,” Jacobson wrote last July, “that despite the directions and instructions communicated by the Special Referee [Goldstein],” the bank and/or its attorneys “did everything possible to evade and avoid those directions.”

In a similar vein, Brooklyn Justice Yvonne Lewis wrote in Wells Fargo Bank v. Ruggerio,[6] “it is painfully obvious to the court that the plaintiff has acted willfully and with express intent to subvert a statutory scheme established for the beneficial purpose of helping [homeowners] avoid the loss of their homes.”

Several judges and quite a few homeowners’ lawyers told me that through body language and dismissive comments, some bank lawyers telegraphed a lack of respect for Goldstein. An instance of such disrespect surfaced at a conference Goldstein handled on April 9, 2013 in the case of Aurora Loan v. Diakite.[7]

Bank lawyer Vikram Singh Vilkhu advised Goldstein that he was recording the negotiating session and then insulted her when she advised him that the recording was against court rules. Vilkhu proceeded to tell her “your notes of conferences are so woefully deficient that I wonder how you can write directives and reports” and that “you’re wasting my clients’ time with this nonsense,” according to the report Goldstein filed in the case. Vilkhu, who is with the firm Fein, Such & Crane, did not return messages seeking comment.

Context of Goldstein’s removal

Knipel removed Goldstein four months after becoming Administrative Judge. Even prior to that action, Knipel had moved quickly to revamp the rules that control the processing of settlement conferences. Several of the new rules Knipel issued in February 2013 seemed aimed directly at Goldstein.

One of the new rules specifically instructed referees to provide “a brief explanation” (emphasis in the original) whenever recommending that a judge enter a “bad faith” finding. Other new rules set a ceiling on the number of adjournments at four and opened a path for banks to bypass the referee “upon request.”

The new rules generated controversy among the homeowners’ bar and some judges. The leaders of the New York State Foreclosure Defense Bar sent a letter to Knipel on Feb. 19, protesting that they had been blindsided by the issuance of the new rules.

The letter recounted that, during the prior week, bank lawyers had “openly insisted upon application of the new procedural rules.” In an apparent reference to the new rule giving banks a carte blanche to remove a case from a referee “upon request,” the letter stated that there had been instances in which bank lawyers had “requested premature referrals to [trial judges] last week.”

In response to the homeowner bar’s letter, Knipel agreed to meet with a group of organizations representing homeowners on Feb. 21, and the next day, for the first time, provided the bar association with a set of the new rules, according to Nicholson, its president. On their face, the rules stated that they were effective as of Feb. 4, nearly three weeks earlier. On a related note, a judge handling foreclosures in Brooklyn reported being unaware of Knipel’s rules until learning of the homeowner bar’s protest letter.

A second letter, written by a coalition of 17 groups that represent homeowners, took specific issue with the emphasis in the new rule, limiting referees to a “brief explanation” of their reasons for recommending that a bank be sanctioned for failing to negotiate in good faith. In objecting to that restriction, the letter, dated May 16, 2013, stated that Goldstein was “known for issuing thorough reports and recommendations.”

On the other hand, Goldstein became aware of a meeting between the bank bar and Knipel when a bank lawyer mentioned it during a conference the day after the meeting took place. During the course of a conference on March 19, 2013, bank attorney Elizabeth Meyer-Aquino said that the day before “she attended a [banks’] bar meeting with AJ Knipel” in objecting to an aspect of the way Goldstein was handling the hearing. Goldstein recounted Meyer-Aquino’s remarks in the report she submitted in the case.

Meyer-Aquino at the time was working at Stein, Weiner & Roth but is no longer there. Howard H. Stein, a senior foreclosure partner at the firm, declined to comment on Goldstein’s account of Meyer’s remarks in US Bank v. Gonzalez.[8]

Judges Upset

Many members of an eight-judge group that had been involved in the running of the settlement conferences were upset with the new rules. Two judges described members as being “dismayed” that the group had “no awareness or involvement” in Knipel’s development of the new rules.

One judge told me that, in view of the extensive evidence of bank stalling, “the limiting of the conference process to four adjournments is effectively the same thing as having no conferences.” Another criticized the rule allowing the removal of a case from a referee “upon request” as “empowering the banks to bypass the entire negotiating process set up in the 2009 law.”

The depth of the group members’ displeasure is reflected in the lengths to which they went to try to revise the new rules. According to one judge, the group twice put a discussion of the issue on the agenda of monthly meetings of the Brooklyn branch of the Supreme Court justices’ association. Knipel attended both meetings and also once met separately with the members of the foreclosure group, the judge said.

At the monthly justices’ association meeting for June 2013, Knipel parried requests for reform but agreed to meet separately with the foreclosure group in July. At that meeting, Justice Carolyn E. Demarest, the group’s spokeswoman, presented Knipel with a form she had devised for referees to use in the writing of their reports, and Knipel agreed to use the new form.

But several months later, Knipel again attended the monthly meeting of the Brooklyn justices’ association, a judge present reported. When the question came up of what had happened with Demarest’s new form, Knipel said he had no recollection of agreeing to use it. Demarest then challenged Knipel’s recollection, and expressed her dismay, the judge said. Demarest, through her secretary, declined to comment.

I asked Knipel to comment upon the sequence of events culminating in the Demarest/Knipel exchange. His response was that little of that narrative struck him as being accurate.

He did acknowledge, however, that he recalled that Demarest had mentioned at a “term meeting” that she was drafting a new form because there was a wide disparity in the amount of details referees included in their reports. The civil side of the Brooklyn court convenes at a term meeting every month or two, Knipel explained.

That project was put on the back burner, Knipel added, after it was learned that OCA would be coming out with statewide rules for the handling of foreclosure conferences.

Tension between Goldstein’s transfer and Judges’ Rulings

My research into decisions, issued after Jan. 1, 2013 by Brooklyn judges in “good faith” cases, found that the bench there had consistently agreed with Goldstein’s recommendations. I found 16 cases in which 14 judges had agreed with her recommendation that a bank’s performance was subpar.[9] [10]

By comparison, I found only five cases in which judges reviewed three other referees’ recommendations that banks had not met their statutory obligation during the same time period.[11] In all 21 cases, judges upheld referees’ recommendations

that the banks had fallen short of good faith. The number of referees conferencing cases in Brooklyn usually fluctuated between four and five.

There is a substantial discrepancy between Knipel’s account of his interactions with the judge’s group and the account provided to me. The important point, though, is that two judges described serious discontent within the group over the substance of the rule changes and the manner in which they were issued. Further evidence of a schism within the court comes from the rulings of the fourteen judges approving Goldstein’s recommendations. Those endorsements also undercut any rationale that rule changes were needed to rein her in.

At a minimum, under those circumstances a fair question is raised: Why would Knipel have transferred Goldstein to suit the needs of the court even though, in his

words, her skills, particularly her writing skills, are “very strong?”

©DanielJWise2015

[1] Civil Practice Law and Rules 3408. The statute also requires homeowners to negotiate in good faith.

[2] Index No. 22862/09

[3] 121 AD3d 187

[4] 121 AD3d 1098

[5] Index No. 28686/09

[6] 39 Misc3d 1233(A) (2013)

[7] Index No. 17949/09

[8] Index No. 6283/11

[9] American Home Mortgage Servicing v. Bobbitt, Index No. 19093/08, Sherman J.; Deutsche Bank v. Hinds, Index No. 500398/12, Demarest J.; Deutsche Bank v. Izraelov, 40 Misc.3d 1238[A], Battaglia J.; JP Morgan Chase v. Butler, 40 Misc3d 1241(A), Schack J;; Wells Fargo Bank v. Ruggerio, 39 Misc.3d 1233[A], Lewis J.; US Bank National Association v. Green, Index. No. 9220/09, Kurtz J.; US Bank v. Thomas, 40 Misc3d 1241(A), Schmidt J.; US Bank v. Young, Index No. 28686/09, Jacobson, J.; Deutsche Bank v. Husband, Index No. 24521/08, Silber J.; OneWestBank v. Gardner, Index No. 26652/09, Graham J.; OneWestBank v. Toom, Index No. 25665/09, Solomon, J.; Mers v. Lieberman, Index No. 29970/09, Battaglia, J.; US Bank v. Garcia, Index No. 32313/09, Kurtz, J.; U.S. Bank v. Williams, Index No. 3685/10, Velasquez, J.; Bank of New York Mellon Trust v. Campbell, Index No. 12012/09, Spodek, JHO (with authority to decide); and Aurora Loan Services v. Diakite, 46 Misc 3d 1202(A), Edwards, J.

[10] In Mers v. Lieberman, see footnote 9 above, the judge found bad faith but on a different ground than Goldstein set forth in her report.

[11] The five judges accepting bad-faith recommendations were as follows: Justice Martin Solomon in U.S. Bank v. Smith, Index No. 34/2010 (Referee Dale Berson); Acting Justice Ann Pfau in U.S. Bank v. Zamor, Index No. 11342/11 (Referee Noreen Soto-Fier); Justice Wayne Saitta in U.S. Bank v. Vavallo, Index No. 31635/09 (Referee Berson); Justice Leon Ruchelsman in Bank of New York Mellon v. Cassarino, Index No. 7763/10 (JHO William Davis); and Justice Larry D. Martin in Citimortgage v. Sultan, Index No.23303/10 (Referee Soto-Fier).

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Courthouse Confidential: Tingling’s 1st Appointment was Suspended for Lapsed Registration

Also:

  • A likely Tingling Appointee Circulated a Set of Politically Incorrect Jokes
  • Court IG Opened Inquiry on Goodman; Reardon Put It to Rest
  • Heitler Bid to Extend Term as Administrative Judge doesn’t succeed; Top Contenders

 

Updated and Expanded Jan. 15, 2015

 FORMER MANHATTAN Justice Milton A. Tingling, who succeeded Norman Goodman as New York County Clerk on Jan. 1, has appointed as his counsel, Manuel Tavarez, who has been his law secretary since 2001. The appointment is confirmed by a change in the County Clerk’s Office public phone directory.

Tavarez, according to court records, was suspended by the Appellate Division in Manhattan in November 2013 for failing to keep his registration up to date for more than four years. About four months later, the suspension was ended when Tavarez paid $1,100 to cover the three payments he had missed, according to the Office of Court Administration. Currently, attorneys are required to pay registration fees of $375 every two years.

In response to a phone call to Tingling’s former chambers, his secretary, Mary E. Jenkins, said that Tavarez declined to be interviewed. Also according to the County Clerk phone list, Jenkins has been appointed as Tingling’s executive assistant.

Additionally, sources are reporting that Tingling has settled upon Nelson Capote, who is currently in charge of the pro se Help Center at the Manhattan Supreme Court, to fill one of the office’s top posts. It is unclear exactly what position Capote will assume, but sources say that Tingling brought Capote along with him to a luncheon last Thursday sponsored by the Managing Attorneys and Court Clerks Association.

Tingling’s plans for the office are still in flux, sources say. Under Goodman, the office had a number two position, which in its latest iteration was designated as the chief deputy county clerk. That position was filled for 28 years by James A. Rossetti. Rossetti, a lawyer* who was widely regarded as Goodman’s heir apparent, departed as a result of an OCA Inspector General’s investigation, which was opened after Tingling brought to the attention of top officials at 60 Centre Street racist and misogynistic postings in the County Clerk’s records room. (See WiseLawNY story dated Mar. 6, 2014 for details). Rossetti enjoyed wide support among the bar and many thought his forced departure, and the manner in which it was imposed, was unduly harsh.

For the time being it appears that Tingling is hewing to the format that Goodman used after Rossetti’s departure. Goodman’s counsel, Phyllis Mingione, had worked half-time until Rossetti’s departure, but took over some of his duties and became a full-time staff member. There were two deputies operating under Rossetti—one to handle the office’s jury functions and the other to oversee everything else. It is anticipated that Capote will be appointed to one of those posts.

While the ultimate parameters of Capote’s duties have not been publicly revealed, Tingling brought both Capote and Tavarez along with him to a luncheon sponsored by the Managing Attorneys and Court Clerks Association held earlier this week, according to a source. Each year in January, the association hold a luncheon dedicated to the New York County Clerk’s Office.

Politically Incorrect Jokes

 Like Tavarez, Capote will come to his new position with some baggage. In 2011, Capote shared with some staffers a set of clever, but politically incorrect, jokes, a copy of which has been furnished to me.

Here are a couple of the jokes, all of which consist of a question and answer:

  • “Q. Why aren’t there any Puerto Ricans on Star Trek? A. Because they aren’t going to work in the future either.”
  • “Q. What did the Chinese couple name their tan, curly-haired baby? A. Sum Ting Wong” [i.e. “something wrong” for those slow on the uptake].

Capote, who is of Cuban descent, even made light of his own heritage in one of the ten jokes—“Q. What’s the Cuban National Anthem? A. Row, Row, Row Your Boat.”

Capote did not return a message left with Jenkins, Tingling’s former secretary and now executive assistant. Efforts to reach him  over several days at the Help Center were unavailing.

Tingling did not respond to a request seeking comment.

*          *          *          *          *

Court IG Opened Inquiry on Goodman; Reardon Put It to Rest

I have learned that during the Inspector General’s investigation of Rossetti in the fall of 2013, investigators closely questioned Goodman in his office. A few months after Rossetti left in mid-December, 2013, the IG’s office opened a preliminary inquiry of Goodman.

Roy Reardon, a renowned lawyers’ lawyer aided Goodman in connection with the inquiry. Reardon is the chairman of the Disciplinary Committee, which oversees the conduct of lawyers practicing in Manhattan and the Bronx. He also served for many years on the executive committee and as head of the litigation department at Simpson Thacher & Bartlett where he is a partner.

According to my information, Reardon quickly succeeded in sidelining the investigation as lacking substance. Once the investigation was no longer a factor, many of Goodman’s strongest supporters in the bar, citing his age and frailty (he is 91 and sometimes uses a walker), persuaded him that the time had come for him to retire. Goodman, who for many years had maintained that he would have to be carried out of the office feet first, with misgivings, agreed to take their advice.

Also, court officials have designated an office at the courthouse, which Goodman may use as long as he wishes.

*          *          *          *          *

THE RACE TO SUCCEED HEITLER AS ADMINISTRATIVE JUDGE

 

Justice Sherry Klein Heitler, who has been the administrative judge (AJ) in charge of civil cases at the Manhattan Supreme Court since 2009, has lost a bid to stay in her post past age 70, according to courthouse sources.

Heitler, who turned 70 in 2014, had sought to remain in the AJ post for another year but was not granted a waiver of the court-system’s rule, which requires AJ’s to step down once they reach 70. The rule, however, has not been ironclad since 1992 when court administrators amended it to allow Burton Roberts, who was the model for Tom Wolfe’s novel “The Bonfire of the Vanities,” to extend his larger-than-life reign at the Bronx Supreme Court until he was 76.

Heitler did not return a phone call seeking comment.

The current handicapping at 60 Centre Street is that the two front-runners to replace Heitler are Justices George Silver and Jeffrey Oing. Justice Deborah Kaplan has also been interviewed the position, insiders said.

Oing, who has been in the Supreme Court since 2009, was appointed to the Commercial Division in 2011 and has backing from the commercial bar. Oing also has support from within the judiciary, having clerked for two former Supreme Court justices in Manhattan, Walter B. Tolub and Marilyn B. Diamond, and been on the court attorney staff at the Appellate Division in Manhattan for three years. He also served as supervising judge of the Civil Court in Manhattan for two years.

Silver enjoys the backing of the plaintiff torts bar. Both Oing and Silver had the backing of Assembly Speaker Sheldon Silver in their quests to win election to the bench, according to court sources.

Kaplan, who has been handling matrimonial cases exclusively since 2008, enjoys strong support from the matrimonial bar. She also has roots in OCA’s central administration, having worked for two different deputy chief administrative judges (now retired Justice Joseph J. Trafficante and Justice Juanita Bing Newton) from 1997 to 2001.

*CLARIFICATION: Rossetti is a lawyer but has never practiced in New York.

©DanielJWise2015

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Courthouse Confidential: Tingling Makes 1st High-Level Appointment as County Clerk

Former Manhattan Justice Milton A. Tingling, who succeeded Norman Goodman as New York County Clerk on Jan. 1, has appointed as his counsel, Manuel Tavarez, who has been his law secretary since 2001. The appointment is confirmed by a change in the County Clerk’s Office public phone directory.

It is unclear what will happen to the number two position in the office, which was handled by James A. Rossetti for 28 years until his forced departure in December 2013. Rossetti, a lawyer, departed as a result of an OCA Inspector General’s investigation, which was opened after Tingling brought to the attention of top court officials racist and misogynistic postings in the County Clerk’s records room (see WiseLawNY story dated Mar. 6, 2014 for details).

For the last year of Goodman’s 45-year tenure, Rossetti’s position as chief deputy county clerk remained unfilled. Instead, Goodman’s counsel, Phyllis Mingione, who had been working half-time, was made a full-time employee and took over some of Rossetti’s responsibilities.

Sources are reporting that Tingling has settled upon Nelson Capote, who is currently in charge of the pro se staff office at the Manhattan Supreme Court, to fill one of the office’s top posts. Under Goodman, Rossetti was the top deputy county clerk, and under him were two deputies, one in charge of jury operations and the other in charge of all other office functions. Whichever position Capote is transferred to, he will remain at the same pay level, Grade 30. Capote, who has been with the court system since 1987, earned a total of $134,000 in 2013, according to the website SeeThroughNY.

While the ultimate parameters of Capote’s duties have not been publicly revealed, Tingling brought both Capote and Tavarez along with him to the annual luncheon sponsored by the Managing Attorneys and Court Clerks Association held earlier this week, according to a source.

Politically Incorrect Jokes

Both Tavarez and Capote bring some baggage with them to the County Clerk’s Office. Tavarez was suspended in November 2013 by the Appellate Division for failing to keep his attorney registration current for more than four years, according to court records. The suspension was lifted three months later after he paid $1,100 to bring his registration up to date. It is not clear whether he was required to certify that he had completed his continuing legal education credits during that period.

In response to a  phone call to Tingling’s former chambers, his secretary, Mary E. Jenkins, responded to say that Tavarez declined to be interviewed. According to the County Clerk phone list, Jenkins has been appointed as Tingling’s executive assistant at the County Clerk’s Office.

Capote circulated a set of funny, but very politically incorrect, jokes to other staffers at 60 Centre Street, according to a copy I obtained of an e-mail he sent out in February 2011. Capote’s title for the jokes was “Oh What the Heck … Let’s Offend Everybody!” suggests that it is OK to make ethnically-charged jokes as long as the darts are sent off in a sufficient number of different directions. I leave to others to determine whether that is sufficient in a court system, which has long placed a premium on workplace diversity and tolerance.

Here are several examples of the jokes, all of which consist of a question and answer:

  • “Q. Why aren’t there any Puerto Ricans on Star Trek? A. Because they aren’t going to work in the future either.”
  • “Q. What did the Chinese couple name their tan, curly haired baby? A. Sum Ting Wong” [ i.e. “something wrong” for those slow on the uptake].

Capote, who is of Cuban descent, even made light of his own heritage in one of the ten jokes—“Q. What’s the Cuban National Anthem? A. Row, Row, Row Your Boat.”

Capote could not be reached for immediate comment.

©DanielJWise2015

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Did Manhattan DA Go Easy on Mogul Said to Have Procured Underage Woman for Prince Andrew?

UPDATED: 6:43 Jan. 6, 2015

The billionaire money manager accused of supplying underage girls to Prince Andrew, Queens Elizabeth’s second son, and to renowned defense attorney Alan Dershowitz was given inexplicably lenient treatment by the Manhattan District Attorney’s Office in a 2011 sex offender registration proceeding, according to the judge who presided over the case.

On Jan. 3, the New York Times reported the new filing in the federal court for the Southern District of Florida against Jeffrey E. Epstein, who was the subject of the New York registration proceeding.

According to the Times article, Buckingham Palace took the unusual step of issuing a statement that “any suggestion of impropriety with underage minors is categorically untrue.” Dershowitz also “categorically and unequivocally” denied the allegations and said he would file disbarment proceedings against the lawyer who filed the Florida lawsuit.

In the 2011 sex offender registration proceeding, Judge Ruth Pickholz took Manhattan prosecutor Jennifer Gaffney to task for recommending a Level 1 status for Epstein when the board established by New York’s Sex Offender Registration Act (SORA) recommended that he be classified in the most dangerous category, Level 3.

According to the court transcript of the Jan. 18, 2011 proceeding, Pickholz told Gaffney, in reference to the Level 1 recommendation, “I have never seen the prosecutor’s office do this. I have to tell you, I am shocked.”

When Epstein appealed his classification to the Appellate Division in Manhattan, the Manhattan office reversed its position and argued for an affirmance of Pickholz’ Level 3 classification. In a unanimous opinion, the First Department ruled that Pickholz had properly relied on a probable cause affidavit prepared by Florida law enforcement authorities.

The unsigned opinion described the affidavit as “extremely detailed” and including “sworn, tape recorded statements of the victims” which were corroborated by each other. The panel also noted the affidavit recounted statements against penal interest made by Epstein’s accomplice.

The appeals panel took note of the fact that the District Attorney’s office had taken a “different position” on appeal in rejecting Epstein’s claim that its position before Pickholz estopped it from arguing otherwise on the appeal. Epstein was sentenced to 18 months with liberal work release provisions and required to register as a sex offender in the 2008 Florida case, which involved a plea to procuring a single underage woman for purposes of prostitution.

New York Magazine has reported that Ace Greenberg, the high flying financier, jump started his financial career plucking him out of obscurity as a young man when he was teaching at Dalton School; that in 2002 he flew former President Bill Clinton in his private 727 jet to Africa to promote his foundation’s anti-AIDs efforts; that his patron and mentor was Leslie Wexner, founder of the Limited chain of women’s clothing stores; that he is close to socialite Ghislane Maxwell, the socialite daughter of deceased media magnate Robert Maxwell; and is a friend of Donald Trump.

According to news articles, Epstein’s primary home is a mansion with guesthouses in the U.S. Virgin Islands, and he also owns a villa in Palm Beach, Fla., and a 10,000 acre ranch in Santa Fe.

Epstein was required to register as a sex offender in order to travel to his “vacation” home in New York, which is a nine-story mansion just off Fifth Avenue overlooking the Frick Collection. As a Level 3 offender he is required to travel to New York every 90 days to renew his registration.

According to a New York Times article published in 2006, the police in Palm Beach questioned the procedures that the prosecution there used to charge Epstein with only pressing one underage victim into prostitution when there was evidence that he had repeated that conduct with other young girls. The article reported that the police chief in Palm Beach had accused the county prosecutor there of giving special treatment to Epstein and called for his removal from the case.

The Manhattan District Attorney’s Office, however, in its brief to the First Department attributed its error to “the mistaken notion that only sexual conduct for which defendant had been formally charged could be considered” in setting the Epstein’s sex offender level.”

©DanielJWise2015

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News Flash: Tingling Applies to Succeed Goodman

(UPDATED VERSION)

Manhattan Supreme Court Justice Milton A. Tingling has submitted an application to the Appellate Division in Manhattan to succeed Norman A. Goodman as New York County Clerk, according to three independent sources. The Appellate Division, First Department could take a vote on Goodman’s replacement as early as its next regularly scheduled conference this coming Monday,  Nov. 24.

Tingling had triggered a series of events that resulted in the forced departure of James A. Rossetti, who was Goodman’s top aide and heir apparent. (See WiseLawNY, March 6, 2014).

In late July 2013, Tingling brought a photo of a racist image that had been posted in public view in the County Clerk’s Office to Justice Sherri Klein Heitler, the administrative judge in charge of civil cases at the Supreme Court in Manhattan. Over the next six months, the court system’s Inspector General’s Office conducted an investigation, which found that Rossetti had failed to take swift action to remove the offensive images and had misled investigators.

Relying on those findings, Deputy Chief Adminsitrative Judge Fern A. Fisher, who is in charge of courts in New York City, suspended Rossetti for 90 days and informed him that, upon his return, his salary would be cut by $30,000 and that he would be barred from entering the Manhattan courthouse on official business. Faced with that stern punishment, Rossetti submitted his resignation.

With Rossetti out of the picture, the biggest question became, who would replace Goodman when he retired.  Goodman was 90 years old and had been County Clerk for 45 years when Rossetti resigned in December, 2013. Rossetti had been the number-two man in the office since 1985. In 2000, Rossetti was given the title of Chief Management Analyst and was paid an annual salary of $145,000 in 2013. Goodman’s annual salary is $174,000, the same as is paid to Supreme Court justices.

In the months following Rossetti’s resignation, there were rumors at the 60 Centre St. courthouse that Tingling had expressed an interest in Goodman’s position. When I asked him about the rumors in connection with the March 6 article, he sidestepped the question, and instead answered, on the record, “I am running for re-election. My sole objective is to be re-elected.” Tingling was elected to a second term last November.

Tingling did not return several calls placed to him late Thurday afternoon.

The New York Post reported in October that New York County’s democratic leader, Assemblyman Keith Wright, was eying the post but two sources said he has not submitted an application. By statute, the Appellate Division, First Department appoints the County Clerks in New York County and the Bronx.

A well placed source reports that 60 candidates have submitted applications to succeed Goodman, seven of whom have been interviewed by the First Department. In addition to Tingling, the source said, Bronx Justice Richard Lee Price and Mark Brantley, who is the New York County office’s administrator, are among those who have been interviewed. Both Price and Brantley declined to comment.

Evidence Cuts Two Ways

Tingling’s pursuit of the job brings into sharper relief an issue I tried to flesh out in the March 6 article. Was Tingling trying to rid the courthouse of an inflammatory racial image as his supporters contended? Or was he seeking to push aside the heir apparent to open a path for himself or someone else as Rossetti’s backers maintained?

OCA Inspector General Sherrill Spatz’s report remains out of public view. The only inkling of what it contains comes from unattributed sources in the New York Law Journal’s story published about Rossetti’s resignation (Dec. 18, 2013). The Law Journal reported that the investigation faulted Rossetti, as reported above, but also concluded that he had not been involved in displaying the offensive images.

From the narrative I was able to develop in the March article, it appeared that the members of District Council 37, the union which represents workers in the County Clerk’s records room, took photographs of the offensive posts and forwarded them to Tingling. An article in the District Council 37 newspaper, which was published in March, said as much. It noted that several workers had taken photos with their cellphones of “racist” images of “monkeys and apes” and had prompted the Inspector General’s investigation by complaining to “the union and state Supreme Court Justice Milton Tingling.”

Tingling then promptly informed his administrative judge, Heitler, about the inflammatory images on his cellphone. After summoning Tingling and Rossetti to her chambers, Heitler dispatched Rossetti to the records room, which is in the basement of the courthouse, to inspect the posted images. Rossetti reported back that he did not see any offensive images.

I was troubled that Rossetti was unable to find the offensive images. They were indeed inflammatory. One of the images contained a drawing from a children’s book of an ape and a bird with “Nigger be like” and “I love me a bitch bird” scrawled across it.

It is altogether plausible that a worker (the records room staff is mostly black) was so enraged by the images that they were ripped down during the brief interval between the forwarding of the photo to Tingling’s cell phone and Heitler’s sending Rossetti to inspect the record room wall.

On the other hand, a source with no ties to either Rossetti or Tingling told me that the racist images had been posted in public view “for quite some time,” possibly as long as a year. That leaves two questions lingering: Why had  the images  been allowed to remain on the wall so long? Why did the union and Tingling wait until late July 2013 to bring the issue to a head.

One thing is clear. Once the Inspector General’s report was complete, Fisher moved swiftly to punish Rossetti. She summoned him to her chambers on Friday, Dec. 13, 2013, and, without providing either Rossetti or his lawyer a copy of Spatz’s report, informed Rossetti of his punishment. She gave him until the following Monday at 5 p.m. to advise her of whether he would accept the punishment.

A court officer in plain clothes then escorted Rossetti three blocks down Centre Street from the Civil Court, where Fisher has her chambers, to the Supreme Court where Rossetti had his. The officer remained with Rossetti while he gathered his belongings and exited the courthouse.

Rossetti submitted his resignation on Dec. 16. ahead of the 5 p.m. deadline.

©DanielJWise(2014)

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News Flash: Tingling Seeking To Succeed Goodman

Manhattan Supreme Court Justice Milton A. Tingling has submitted an application to the Appellate Division in Manhattan to succeed Norman A. Goodman as New York County Clerk, according to three independent sources. The Appellate Division, First Department could take a vote on Goodman’s replacement as early as its next regularly scheduled conference  this coming Monday,  Nov. 24.

 

Questions about Goodman’s successor arose in the summer of 2013 when his heir apparent, First Deputy James A. Rossetti, was forced to step aside after the Office of Court Administration Inspector General’s Office concluded that he had not acted vigorously enough to insure that a racist image was taken down from a public wall of the office.

Goodman has held the post for the past 46 years, and Rossetti was the second in command for 28 years before he was forced to retire.

As I reported in March, Tingling brought the issue of the racist post to the attention of Justice Sherry Klein Heitler, the administrative judge of the Supreme Court in Manhattan (WiseLawNY, March 6, 2014). That started a process which six months later ended in Rossetti’ forced removal in December, 2013.

The New York Post reported in October that New York County’s democratic leader, Keith Wright, was eying the post but two of the sources said he had not submitted an application. By statute, the Appellate Division appoints the County Clerk in New York City.

Tingling could not be reached for immediate comment.

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News Flash: Tolling Upheld for ‘Good Faith’ Violations

On Wednesday, Oct. 29, the Appellate Division in Brooklyn, for the first time, ruled that the forfeiture of interest and attorney fees is an appropriate sanction for banks that fail to honor their statutory obligation to negotiate in good faith with homeowners facing foreclosure.

The Second Department’s unsigned unanimous decision in U.S. Bank N.A. v. Williams, 2014 NY Slip Op 07349, is the first from any appeals court in the state to approve a penalty for a bank’s failure to negotiate in good faith at mandatory settlement conferences. The conferences were first required in 2008 in the wake of the nation’s economic meltdown. Civil Practice Law and Rules Section 3408 was amended a year later to require banks to conduct their negotiations in good faith. The new section added in 2009—3408(f)— did not specify a remedy for a bank’s failure to negotiate in good faith.

Undeterred by a clear-cut remedy, the banks’ handling of the settlement conferences has been problematic. In the last two years, 30 judges throughout the state have found banks to have failed to negotiate in good faith, often finding that the negotiations have stretched out for a year or longer or that loan reductions were approved only to later be withdrawn or that banks often either lost homeowners’ documents or required that they be resubmitted because they had grown outdated as the negotiations had dragged on.

Another measure of the depth of problems New York homeowners have encountered is found in a motion the New York State Attorney General’s Office has pending to force Wells Fargo Bank to comply with processing deadlines for mortgage-relief applications set in a 2010 nationwide settlement. The Attorney General’s motion in U.S.A. v. Bank of America, 12-cv-361 (District of Columbia) cited 200 instances in which Wells Fargo had failed to meet the settlement’s processing deadlines in cases involving 97 New York families.

The facts in the Second Department’s case were quite typical of those cited in prior “bad faith” findings and the Attorney General’s motion. Homeowner Fay Williams attended 10 conference sessions that had stretched out for more than year before Referee Deborah Goldstein, who supervised the conference process. Ultimately, Goldstein recommended that U.S. Bank N.A. be found not to have negotiated in good faith and that sanctions be imposed.

Williams’ case was also typical in that her mortgage is now owned by a syndicate, which has formed a mortgage pool as security for bonds it had issued to raise capital. In the 30 bad faith cases surveyed,[1] often the holder of the mortgage was a syndicate like U.S. Bank. As was typical in those rulings, U.S. Bank waited until negotiations had sputtered for 13 months before advising either the homeowner or the referee that the legal documents forming the pool precluded it from altering either the interest or duration of the mortgages it owns.

In their ruling, the four Second Department judges dryly stated that, under those circumstances— which were reflected in many of the “bad faith” rulings—Brooklyn Justice Richard Velasquez “providently exercised” his discretion in requiring the syndicate to forfeit interest and attorney fees, which it would otherwise have been entitled to.

The panel—which consisted of Peter B. Skelos, Sheri S. Roman, Sylvia O. Hinds-Radix and Hector D. LaSalle—also refined Velasquez’ order and directed that fees and interest be tolled from the date of the initial conference in June, 2010 until the conferences resume under the panel’s mandate. That reflects a period, which has already extended for more than four years.

Prior to the posting of this article, Pamela Ann-Marie Walker, the attorney  who handled Williams’ case at the conference and trial levels through the Brooklyn Bar Association’s Volunteer Lawyers Project, was unable to provide an estimate of how much interest is currently at stake under the panel’s tolling order.

In the last two years, the Second Department has been edging toward the approval of a remedy for good faith violations. In 2013, a panel in the case of Wells Fargo Bank v. Meyers, 108 A.D.3d 9, approved the notion that judges have the authority to approve a remedy, just not the one ordered by the trial judge in that case (the trial judge’s order had required specific performance of a trial modification which the bank had subsequently withdrawn). The Court in Meyers held off endorsing any specific remedy but it listed a number of possibilities.

In July of this year, another panel in U.S. Bank v. Sarmiento, 2014 NY Slip Op 05533, let a order tolling interest and fees stand even though it expressly stated that a legal technicality prohibited it from deciding whether judges have the power to order tolling.

The length of the delay attributable to the bank’s bad faith and the amount of the mortgage debt in Sarmiento is roughly analogous to that in the Williams case. A. David Fuster, who represented the homeowner in Sarmiento, was quoted in the New York Law Journal (Aug. 4, 2014) as estimating that the tolled interest for his client amounted to approximately $300,000.

DanielJWise©

[1] [1] See Wise, “Panel Shifts Toward Remedy in Sarmiento, ”New York Law Journal, Aug. 29, 2014, page 6, footnote 1. Since Aug. 29, I have added six more rulings finding that banks failed to negotiate in good faith: MERS v. Lieberman, 29970/09, decided 9/12/14, (Battaglia, J. Brooklyn); US Bank NA v. Garcia, 32313/2009, decided 9/22/14, Kurtz, J. Brooklyn; and U.S. Bank v. Smith, 34/2010, decided July 5, 2013, Solomon, J. Brooklyn; U.S. Bank v. Williams, 3685/10, Velasquez, J. Brooklyn, decided Nov. 18, 2013; Wells Fargo v. Ayala, 19783/12, decided Aug. 20, 2014, Pineda-Kirwan, J., Queens; and LaSalle Bank v. Dono, 2014 NY Slip Op 24224, decided Aug. 12, 2014, Spinner J., Suffolk).

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Dan Wise’s Article in New York Law Journal on Import of Sarmiento

 

To: Readers of WiseLawNY

From: Dan Wise

Date: Sept. 3, 2014

 

On Friday Aug. 29, the New York Law Journal published my analysis that the Appellate Division, Second Department’s ruling in U.S Bank N.A. v. Sarmiento, 2014 NY Slip Op 05533, heralds an era of greater protection for homeowners facing foreclosure.

The outcome in Sarmiento was somewhat muddy. The Court did not disturb a Brooklyn judge’s order requiring a lender topossibly forfeit as much as $300,000 in interest and attorneys fees for failing to bargain in good faith with a homeowner at a mandatory, court-supervised settlement conference. Nor, however, did the Court affirm the judge’s order.

Nonetheless, the ruling reflects a significant shift in the Court’s approach to enforcement of a 2009 state law requiring lenders to negotiate in good faith over a reduction in a homeowner’s mortgage payments before moving forward with a foreclosure case.

That conclusion is supported by the tone, content and context of the Sarmiento ruling. The good-faith statute is silent on the question of remedies for violations, and a year ago the Second Department had issued a full-throated plea for guidance from the Legislature and the Judiciary. Nothing has changed in the last year.

During the five years since enactment, the Court had issued several rulings knocking down possible remedies but never put its imprimatur on a remedy. The Sarmiento case presented the first test of a remedy that was commensurate with bank misconduct—the forfeiture of interest and fees during periods in which lenders had failed to act in good faith.

During the intervening years, there has been a growing body of case law at the trial level in which judges have expressed extreme displeasure with lenders’ handling of the conferences, which have resulted in lengthy delays of two years or more. By my count, since the start of 2013, 21 judges in nine counties have found lenders to have violated the good-faith requirement.

My article appears on page 6 of the Aug. 29 Law Journal. Subscribers to the Law Journal can get direct electronic access to the article by logging in and clicking on this link: http://www.newyorklawjournal.com/id=1202668409276?

When non-Law Journal subscribers click on the above link, they will be asked to “register” for the Law Journal. Once you register, you should be taken directly to the article. Persons registering are allowed access to five Law Journal articles every 30 days before they will hit a paywall.

If you encounter problems, please send me an email, and I will try to straighten it out. There is a more complicated way that non-subscribing registrants can access the article.

 

 

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US Bank N.A. v. Sarmiento (2nd Dept. July 30, 2014)

 

 

 

US Bank N.A. v Sarmiento
2014 NY Slip Op 05533
Decided on July 30, 2014
Appellate Division, Second Department
Leventhal, 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 Official Reports.

 

 

WISELAWNY NOTE: The decision does not mention the name of the referee who handled this case. She was Deborah L. Goldstein.

 

Decided on July 30, 2014 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department
REINALDO E. RIVERA, J.P.
PETER B. SKELOS
JOHN M. LEVENTHAL
PLUMMER E. LOTT, JJ.

2012-03513
(Index No. 11124/09)

[*1]US Bank National Association, etc., appellant,vJose Sarmiento, respondent, et al., defendants.

 

APPEAL by the plaintiff, in an action to foreclose a mortgage, from so much of an order of the Supreme Court (Leon Ruchelsman, J.), dated December 19, 2011, and entered in Kings County, as, upon a finding that the plaintiff failed to negotiate in good faith during settlement conferences conducted pursuant to CPLR 3408, granted the motion of the defendant Jose Sarmiento to bar the plaintiff from collecting interest or fees that accrued on the subject loan since December 1, 2009, to bar the plaintiff from recovering from him any costs or attorneys’ fees it incurred in this action, and to direct the plaintiff to review the issue of whether the subject loan may be eligible for a loan modification pursuant to the Home Affordable Modification Program by employing correct information and without regard to interest or fees that have accrued on the subject loan since December 1, 2009.

 

Hogan Lovells US LLP, New York, N.Y. (David Dunn and Nathaniel E. Marmon of counsel), for appellant.

Fuster Law, P.C., Long Island City, N.Y. (J. A. Sanchez-Dorta of counsel), for respondent.

LEVENTHAL, J.

OPINION & ORDER

On appeal in this mortgage foreclosure action, the plaintiff contends that the Supreme Court erred in determining that it failed to negotiate in good faith during mandatory settlement conferences conducted pursuant to CPLR 3408, and that, in any event, the Supreme Court lacked the authority to impose any sanctions against it on the ground that it violated the “good faith” requirement of CPLR 3408(f). In addressing these contentions, we set forth the proper standard for determining whether a party acted in good faith pursuant to CPLR 3408(f). Further, we hold that the Supreme Court properly concluded that the plaintiff failed to negotiate in good faith and that the Supreme Court had the authority to sanction the plaintiff for that failure.

In May 2009, the plaintiff, as successor trustee to Bank of America, National Association (Successor by Merger to LaSalle Bank National Association), as trustee for Morgan Stanley Mortgage Loan Trust, 2007-2AX, commenced this action in the Supreme Court, Kings County, to foreclose a mortgage secured by residential property located in Brooklyn. In the complaint, the plaintiff alleged that the defendant homeowner, Jose Sarmiento, defaulted on the subject mortgage by failing to make the monthly payment due on October 1, 2008. The plaintiff elected to call due the entire amount secured by the mortgage, in the principal sum of $578,388.75, plus interest at an annual rate of 8.25%, accruing from September 1, 2008. Issue was joined by Sarmiento’s service of a pro se verified answer dated July 17, 2009, which was accompanied by a [*2]notice to produce documents.

In an affidavit, Sarmiento averred that, in May 2008, he lost much of his monthly income and that, as a consequence, he was unable to make his monthly mortgage payment due on October 1, 2008, and the payments due thereafter. In September 2008, Sarmiento contacted America’s Servicing Company (hereinafter ASC), the mortgage servicing agent of the lender, and a wholly owned subsidiary of Wells Fargo Bank, N.A. (hereinafter together ASC/Wells), in order to discuss a loan modification. Sarmiento was told that he did not qualify for a loan modification because he had insufficient income. In February 2009, Sarmiento found an additional tenant for the subject property, and began receiving monthly rental income in the sum of $4,652. According to Sarmiento, notwithstanding his augmented income, ASC/Wells repeatedly refused to modify his loan.

In September 2009, this matter was referred to a Court Attorney Referee for a mandatory settlement conference pursuant to CPLR 3408. Sarmiento initially appeared pro se at the settlement discussions, and later obtained pro bono counsel. ACS/Wells, through their counsel,[FN1] appeared at the settlement discussions on behalf of the plaintiff. From September 14, 2009, to January 14, 2011, 18 settlement conferences were held. What transpired during the settlement conferences is detailed in the report of the Court Attorney Referee, dated April 20, 2011.

The Court Attorney Referee’s Report

The report of the Court Attorney Referee set forth the following facts. On October 29, 2009, Sarmiento submitted to ACS/Wells a Home Affordable Mortgage Program (hereinafter HAMP) application [FN2]. On November 18, 2009, upon the request of ASC/Wells, Sarmiento submitted updated financial documents. According to the Court Attorney Referee, Sarmiento met the basic criteria for HAMP eligibility since: (1) the subject property was a one-to-four-family residence; (2) Sarmiento’s monthly mortgage payment of principal, interest, property tax, and insurance exceeded 31% of his gross monthly income; and (3) the principal balance of the loan was equal to or less than $729,750.

At a settlement conference held on November 30, 2009, ASC/Wells confirmed that it had received Sarmiento’s HAMP application and his updated financial documents, and represented that it would make a decision on the application within one week, even though it had 30 days to make that decision. Upon her review of Sarmiento’s income, the Court Attorney Referee directed him to set aside the sum of $2,000 per month beginning December 1, 2009, to demonstrate his good faith and his ability to make modified mortgage payments and, if necessary, to use as a down payment on a non-HAMP, traditional loan modification.

First HAMP Denial

By letter dated January 12, 2010, ASC/Wells denied Sarmiento’s HAMP application on the ground that he did not reside at the subject property as his primary residence. After Sarmiento asserted that there was no factual basis for ASC/Wells to have concluded that the property was not his primary residence, ASC/Wells conceded that Sarmiento resided at the property.

At a settlement conference conducted on February 2, 2010, ASC/Wells reported that Sarmiento’s HAMP application was complete and still under review. ASC/Wells asserted, however, that it required a broker’s price opinion (hereinafter BPO) to determine the value of the property, which was necessary before a Net Present Value (hereinafter NPV) test could be conducted under HAMP. The NPV test would determine whether a loan modification or a foreclosure sale was more lucrative to the mortgage lender/investor.

Second HAMP Denial

By letter dated April 2, 2010, ASC/Wells advised Sarmiento that his HAMP application was again denied, this time on the ground that an affordable monthly payment amount—equal to or less than 31% of gross monthly income—could not be reached. In an email message from ASC/Wells’s counsel to Sarmiento’s counsel, ASC/Wells stated that Sarmiento’s HAMP application was denied because of a monthly income deficit of $1,100. According to the [*3]Court Attorney Referee, “Servicer ASC/Wells was evaluating . . . Sarmiento for a [HAMP] modification using the wrong income figures, although the defense thoroughly documented the employment and rental income that . . . Sarmiento and his wife earned each month.” By letter dated April 7, 2010, Sarmiento’s counsel informed ASC/Wells of this error, and referred ASC/Wells to Sarmiento’s previously submitted pay stubs, bank statements, and rental agreements, which reflected a gross monthly income of $6,303. Sarmiento’s counsel further requested a denial notice with greater specificity than set forth in the denial letter of April 2, 2010. Pursuant to Sarmiento’s rights under HAMP, his counsel requested that ASC/Wells produce the inputs and data that ASC/Wells used in performing the NPV test.

In an email message dated April 9, 2010, ASC/Wells advised Sarmiento’s counsel that it had never conducted an NPV test on Sarmiento’s HAMP application because the file had not reached the NPV calculation phase, and that the denial was “due to [an inability to] reach an affordable payment.” By letter dated April 12, 2010, Sarmiento’s counsel reiterated his objections to the HAMP denials, and requested “that ASC/Wells comply with HAMP guidelines and complete its modification review.”

At a settlement conference held on April 13, 2010, and by letter dated April 22, 2010, Sarmiento requested a proper review of his HAMP application. According to the Court Attorney Referee, ASC/Wells replied that it “had misplaced income documentation” and that some other documentation had become “stale.” As a consequence of its characterization of the status of the documentation, ASC/Wells requested that Sarmiento submit a new HAMP application. The Court Attorney Referee instructed Sarmiento’s counsel to resubmit and update the HAMP application, and directed “ASC/Wells to escalate and expedite the HAMP review.” Sarmiento submitted an updated HAMP application to ASC/Wells on April 26, 2010.

Third HAMP Denial

At a settlement conference held on May 11, 2010, ASC/Wells reported that it had “escalated” review of Sarmiento’s HAMP application, and that such review was still incomplete. Two days later, however, ASC/Wells informed Sarmiento’s counsel, in an email message, that it was again denying his HAMP application “due to not being able to reach affordability.” The email message further stated the “this property is not affordable,” and requested Sarmiento’s counsel to “refer the borrower to our liquidations department for further foreclosure prevention options.” According to the Court Attorney Referee, the email message dated May 13, 2010, “failed and refused to demonstrate that Sarmiento was ineligible for a HAMP modification.”

By letter dated May 28, 2010, Sarmiento’s counsel requested more specific information about the denial, and again demanded the inputs and data that ASC/Wells used to conduct the NPV test in connection with Sarmiento’s HAMP application. ASC/Wells did not provide the requested information. The Court Attorney Referee observed that, “[a]lthough HAMP guidelines require production of the NPV inputs upon request so that borrowers can review the propriety of a denial and challenge the accuracy of the NPV inputs, Services ASC/Wells ignored[ ] the written requests [from Sarmiento’s counsel] for the data, and failed to produce the NPV values. Indeed, ASC/Wells failed to demonstrate that an NPV test had, in fact, been run.”

As set forth in the report of the Court Attorney Referee, on June 2, 2010, Sarmiento filed a formal complaint against ASC/Wells with the HAMP support center on the ground that ASC/Wells refused to properly assess his HAMP application. On June 8, 2010, the HAMP support center advised Sarmiento that ASC/Wells had denied his HAMP application because he had $25,000 in liquid assets, which exceeded the maximum limit. The report of the Court Attorney Referee noted, however, that the $25,000 reflected funds which she had previously directed Sarmiento to set aside.

Nevertheless, at a settlement conference held on July 1, 2010, ASC/Wells reported that Sarmiento’s HAMP application was “still under review,” and that this review would be completed no later than two weeks after that date. ASC/Wells added that the funds that Sarmiento set aside at the direction of the Court Attorney Referee would not affect his HAMP application. Sarmiento’s counsel made a third request for the inputs and data that ASC/Wells used in the NPV test; ASC/Wells replied that it “did not have the NPV inputs because the latest denial related to a non-HAMP modification.” The Court Attorney Referee adjourned the settlement conference until July 19, 2010, to await the results of ASC/Wells’s review of Sarmiento’s HAMP application.

At the settlement conference held on July 19, 2010, ASC/Wells reported that it had not completed its HAMP review. Moreover, consistent with the statement of the HAMP support [*4]center dated June 8, 2010, counsel for ASC/Wells reported that ASC/Wells had previously denied Sarmiento’s HAMP application because of “excess resources.” The Court Attorney Referee stated that, “[i]n light of the repeated delays, the baseless denials, and obvious mishandling of the loan file by both ASC/Wells and [counsel for ASC/Wells] before a HAMP review was even done, I directed an ASC/Wells representative with personal knowledge and settlement authority to appear in person at the next settlement conference.”

At the next settlement conference, which was held on September 14, 2010, Eliza Melendez of ASC/Wells appeared, and explained that “Sarmiento’s HAMP application was still under review and that a new BPO was required to value the [property] for the NPV test.” The Court Attorney Referee described Melendez as having limited knowledge of Sarmiento’s file, and no settlement authority. Sarmiento’s counsel asserted that ASC/Wells should waive at least nine months of accrued interest because of the “inexplicable delays” in ASC/Wells’s HAMP review. The Court Attorney Referee directed the vice president of ASC/Wells to personally appear at the next settlement conference.

The next settlement conference was held on September 28, 2010. At that time, Tracy Brooks, a Loan Administration Manager in the Home Preservation Department of ASC/Wells, personally appeared, and she reported that the HAMP review was incomplete because Sarmiento had not submitted certain documents. However, when Brooks accessed Sarmiento’s loan file on her personal laptop computer, she confirmed that the file was complete. Upon Brooks’s request, she was allowed to review the file overnight. The next day, Brooks reported that ASC/Wells needed a property tax bill and a copy of Sarmiento’s property insurance declaration page, and that she was expediting the HAMP review.

At the next settlement conference, which was held on October 5, 2010, ASC/Wells offered a traditional, non-HAMP loan modification, in which the annual percentage rate (hereinafter APR) was lowered from 8.25% to 4%. ASC/Wells explained that it “had not made a HAMP offer because it was still trying to figure out what to do’ about the informal escrow account that . . . Sarmiento had set aside at [the Court Attorney Referee’s] direction.”

Fourth HAMP Denial

Meanwhile, according to the Court Attorney Referee, “ASC/Wells sent . . . Sarmiento a denial letter [dated October 6, 2010], erroneously and preposterously stating that he was denied a HAMP modification because he was current on his mortgage loan and not at risk of default.

At a settlement conference held on October 12, 2010, ASC/Wells “reported for the first time that an NPV test had been run and that [Sarmiento] had failed,” meaning that a HAMP modification would not be more favorable to the plaintiff than a foreclosure sale. ASC/Wells provided none of the data or inputs it had used to conduct the NPV test, and reiterated its offer of a traditional, non-HAMP loan modification. Sarmiento rejected the non-HAMP loan modification as unaffordable.

A few weeks later, in an email message dated November 2, 2010, ASC/Wells provided some of the data and inputs it had used to conduct the NPV test. According to the Court Attorney Referee, this data showed that ASC/Wells conducted the NPV test in November 2010, which was 25 months after Sarmiento defaulted, and one year after ASC/Wells had initially denied Sarmiento’s HAMP application. The Court Attorney Referee calculated that, as a result of ASC/Wells’s delay, more than $40,000 in arrears accrued on the loan.

On November 5, 2010, ASC/Wells offered Sarmiento a second traditional, non-HAMP modification, in which the APR was initially dropped to 2%, but then increased to 4%. Sarmiento rejected that offer.

At a settlement conference held on January 14, 2011, ASC/Wells stated that it would make no further modification offers. ASC/Wells then retained Hogan Lovells, LLP (hereinafter Hogan) as cocounsel to Steven J. Baum, P.C., in anticipation of a hearing pursuant to CPLR 3408 before the Supreme Court to determine whether it had failed to negotiate in good faith. According to the Court Attorney Referee, at that conference, Hogan acknowledged that ASC/Wells had handled Sarmiento’s loan “poorly,” but stated that ASC/Wells could not “do anything for . . . Sarmiento because of excessive forbearance.”

No progress on a settlement was made in three subsequent settlement conferences. With the parties at an impasse, the Court Attorney Referee directed them to submit position statements for use in the preparation of the report. In her report, the Court Attorney Referee determined that the plaintiff and ACS/Wells had failed to negotiate a loan modification in good faith, [*5]and had not complied with HAMP guidelines. Thus, the Court Attorney Referee recommended, inter alia, that the Supreme Court conduct a hearing to determine whether sanctions should be imposed against the plaintiff and ASC/Wells and its counsel.

Sarmiento’s Motion for an Award of Sanctions

By notice of motion dated June 17, 2011, Sarmiento moved to bar the plaintiff from collecting interest or fees accrued on the subject loan from December 1, 2009, “to date,” to bar the plaintiff from collecting from him any attorney’s fee or costs incurred “to date” in this action, and to direct the plaintiff to review the subject loan for a HAMP modification using an unpaid principal balance that excluded interest, fees, and costs that had accrued from December 1, 2009, “to date.” In support of his motion, Sarmiento submitted, inter alia, his counsel’s affirmation, to which were appended, as exhibits, an affidavit from Sarmiento, excerpts from a handbook entitled “Making Home Affordable Handbook for Servicers of Non-GSE Mortgages,” letters and copies of email messages between ASC/Wells and Sarmiento that were sent during 2010, and a proposed order. In an affirmation, Sarmiento’s counsel argued that the conduct of ASC/Wells demonstrated an “egregious refusal to negotiate in good faith, including its repeated delays and baseless denials of Mr. Sarmiento’s request for a modification in violation of HAMP guidelines.”

The Plaintiff’s Opposition

In opposition to Sarmiento’s motion, the plaintiff submitted, inter alia, an affidavit from Kyle N. Campbell, Vice President of Loan Documentation for ASC/Wells.

Campbell averred as follows: on February 18, 2010, the plaintiff received all documents necessary to review Sarmiento’s HAMP application. By letter dated April 2, 2010, the application was denied because Sarmiento’s debt-to-income ratio exceeded HAMP limits, inasmuch as his monthly expenses were $7,823.64 and his monthly income was only $4,728.94. After receiving additional financial documents in late April 2010, the plaintiff again reviewed the loan file but, by letter dated May 13, 2010, Sarmiento’s HAMP application was again denied, as was the possibility of a traditional, non-HAMP loan modification, because his debt-to-income ratio remained excessive, specifically, he had monthly income of $3,839.91, and monthly expenses of $7,253.22.

In September 2010, the plaintiff offered Sarmiento a non-HAMP loan modification, lowering the APR of the loan from 8.25% to 4%. Sarmiento rejected that offer, as it was not made pursuant to HAMP. In response, the plaintiff made a second non-HAMP loan modification offer, in which the APR of the loan would be initially lowered to 2% and gradually increased to 4%. Sarmiento also rejected that offer. Campbell asserted that the plaintiff could not offer any further modifications because of Sarmiento’s “limited income and his delinquency in making any payments under the loan for more than two years.”

On August 2, 2011, the parties stipulated, among other things, that Sarmiento’s motion seeking, inter alia, to bar the plaintiff from collecting interest or fees that accrued on the subject loan since December 1, 2009, would be decided without an evidentiary hearing.

The Order Appealed From

Based upon the papers submitted, the Supreme Court, in the order appealed from, inter alia, granted Sarmiento’s motion to bar the plaintiff from collecting interest or fees that accrued on the subject loan since December 1, 2009, to bar the plaintiff from recovering any costs or attorneys’ fees it incurred in this action, and to direct the plaintiff to review the subject loan for a HAMP loan modification using correct information and without regard to interest or fees that have accrued on the subject loan since December 1, 2009. The Supreme Court determined that, while the plaintiff had failed to negotiate in good faith as required by CPLR 3408(f), Sarmiento had acted in good faith. The court determined that, while Sarmiento and his counsel acted quickly and had been in contact with the plaintiff and ASC/Wells, the plaintiff and ASC/Wells has failed to respond to Sarmiento’s “requests for very basic information” related to his HAMP application, and their counsel’s communications with Sarmiento had sown confusion, distress, and doubt by including, among other things, confusing and vague rejection notices and requests for duplicative documents. The court stated:

“To describe the Plaintiff’s attitude succinctly: it was happy to do equity when it brought the underlying action for foreclosure, but stubbornly refused to do equity when as a result of statute (CPLR 3408), it was forced to sit down at the negotiating table with the homeowner and attempt to work out a deal. Put otherwise, the only delay’ that is legal in a foreclosure action is the delay imposed by [*6]CPLR 3408, and good faith means participating honestly, cleanly, and mutually in that delay’ process. Otherwise, this Court may exercise its equitable powers to restrict any remedy otherwise available.”

The plaintiff appeals.

HAMP

The federal response to the mortgage foreclosure crisis included the creation of HAMP, which arose as part of the Emergency Economic Stabilization Act of 2008 (12 USC §§ 5201 et seq.) and the Helping Families Save Their Homes Act of 2009 (Pub L 111-22, § 1[a], 123 Stat 1632, 1632 [111th Cong, 1st Sess, May 20, 2009]) (see JP Morgan Chase Bank, N.A. v Ilardo, 36 Misc 3d 359, 366 [Sup Ct, Suffolk County]). HAMP is administered by the Federal National Mortgage Association (hereinafter Fannie Mae), as an agent of the United States Treasury Department (see id. at 366). The purpose of HAMP “is to provide relief to borrowers who have defaulted on their mortgage payments or who are likely to default by reducing mortgage payments to sustainable reduced levels, without discharging any of the underlying debt” (id.).

Fannie Mae entered into agreements with numerous home loan servicers, including Wells Fargo, pursuant to which the servicers “agreed to identify homeowners who were in default or would likely soon be in default on their mortgage payments, and to modify the loans of those eligible under the program” (Wigod v Wells Fargo Bank, N.A., 673 F3d 547, 556 [7th Cir]). HAMP provides lenders and loan servicers an incentive “to offer loan modifications to eligible homeowners” (Young v Wells Fargo Bank, N.A., 717 F3d 224, 228 [1st Cir]; see Edwards v Aurora Loan Servs., LLC, 791 F Supp 2d 144, 148 [D DC] [explaining that, under HAMP, the United States Treasury Department “pay(s) financial incentives to servicers and loan owners/investors that are sufficient to make a HAMP modification a better financial outcome than foreclosure for the servicer and investor”]).

When a borrower applies for a HAMP loan modification, the first step is to determine HAMP eligibility, which includes, among other things, consideration of whether the subject loan originated prior to January 1, 2009, the subject property is improved by a one-to-four-family house, the borrower resides in the house, and, prior to modification, the borrower’s monthly mortgage payment exceeded 31% of the borrower’s verified gross monthly income (see Making Home Affordable Handbook for Servicers of Non-GSE Mortgages vers 3.2, ch 2, § 1.1 [HAMP Eligibility Criteria]). If the initial HAMP eligibility criteria are met, upon the borrower’s submission to the servicer of the required financial information, the servicer must apply a “waterfall,” i.e., a multiple-step process that is to be applied in a particular sequence, one step at a time, which here involves a five-step review of the terms of the loan to determine whether modification of one or more of those terms might reduce the monthly mortgage payment to no more than 31% of the borrower’s gross monthly income. The five steps of the standard waterfall, in the order in which they are to be applied, are capitalization modification, interest rate reduction, term extension, principal forbearance, and principal forgiveness (see Making Home Affordable Handbook for Servicers of Non-GSE Mortgages vers 3.2, ch 2, § 6.3 [Standard Modification Waterfall]; see also Edwards v Aurora Loan Servs., LLC, 791 F Supp 2d at 149). Deviations from the standard waterfall are not precluded and, under certain circumstances, servicers may offer borrowers modifications more favorable than those required under HAMP (see Making Home Affordable Handbook for Servicers of Non-GSE Mortgages vers 3.2, ch 2, § 6.3.6 [Variation from Standard Modification Waterfall]).

Moreover, “[a]ll loans that meet HAMP eligibility criteria and are either deemed to be in imminent default or delinquent as to two or more payments must be evaluated using a standardized NPV test that compares the NPV result for a modification to the NPV result for no modification” (Making Home Affordable Handbook for Servicers of Non-GSE Mortgages vers 3.2, ch 2, § 7]; see Edwards v Aurora Loan Servs., LLC, 791 F Supp 2d at 149 [citations omitted]). Using the standard modification waterfall, if the NPV test result under the modification scenario is greater than the NPV test result without modification, the result is deemed “positive” and the servicer “must offer the [HAMP] modification” (Making Home Affordable Handbook for Servicers of Non-GSE Mortgages vers 3.2, ch 2, § 7]). If the opposite occurs, the result is deemed “negative,” and the servicer, with the express permission of the investor, has the discretion to offer the HAMP modification (id.). If, after a negative result, the servicer opts not to offer the borrower a modification, it “must send a Non-Approval Notice and consider the borrower for other foreclosure [*7]prevention options” (id.).

CPLR 3408(f) and Good Faith

We now turn from the federal response to the financial crisis, and address New York’s response to the 2008 mortgage crisis. New York’s response included the enactment of CPLR 3408, a remedial statute which required that, “in residential foreclosure actions involving the type of loans within the ambit of that section, in which the defendant was a resident of the subject property, the court would hold a mandatory conference for settlement discussions” (Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 17; see L 2008, ch 472; CPLR 3408).

In 2009, CPLR 3408 was amended by, among other things, requiring mandatory settlement conferences in mortgage foreclosure actions involving any home loan in which the defendant is a resident of the subject property—regardless of when the home loan was made—and requiring both the plaintiff and defendant to negotiate in “good faith” to reach a resolution of the action, including, if possible, a loan modification (L 2009, ch 507, § 9, amending CPLR 3408[a] and adding CPLR 3408[f]). The Chief Administrator of the Courts thereafter promulgated 22 NYCRR 202.12-a, a regulation setting forth the rules and procedures governing CPLR 3408 settlement conferences (see 22 NYCRR 202.12-a [directing the court to “ensure that each party fulfills its obligation to negotiate in good faith”]). “The purpose of the good faith requirement [in CPLR 3408] is to ensure that both plaintiff and defendant are prepared to participate in a meaningful effort at the settlement conference to reach resolution” (2009 Mem of Governor’s Program Bill, Bill Jacket, L 2009, ch 507, at 11). While the aspirational goal of negotiations pursuant to CPLR 3408 is that the parties “reach a mutually agreeable resolution to help the defendant avoid losing his or her home” (CPLR 3408[a]), the statute requires only that the parties enter into and conduct negotiations in good faith (see Wells Fargo Bank, N.A. v Van Dyke, 101 AD3d 638). In its present form, CPLR 3408 provides, in pertinent part, as follows:

“(a) In any residential foreclosure action involving a home loan . . . in which the defendant is a resident of the property subject to foreclosure, the court shall hold a mandatory conference . . . for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, including, but not limited to determining whether the parties can reach a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating the potential for a resolution in which payment schedules or amounts may be modified or other workout options may be agreed to, and for whatever other purposes the court deems appropriate.

“(f) Both the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible” (CPLR 3408[a], [f] [emphasis added]).

A review of the legislative history does not reveal any discussion of the “good faith” standard envisioned by the Legislature (see L 2009, ch 507).

On this appeal, the plaintiff essentially argues that a party to a mortgage foreclosure action can only be found to have violated the good-faith requirement of CPLR 3408(f) when that party has engaged in egregious conduct such as would be necessary to support a finding of “bad faith” under the common-law. The plaintiff maintains that it did not engage in any egregious conduct such as gross negligence or intentional misconduct and, therefore, it satisfied the good-faith requirement of CPLR 3408(f).

In the absence of a statutory definition of “good faith,” we must first determine whether a lack of good faith should be measured by the common-law standard of bad faith or by a plaintiff’s failure to comply with HAMP guidelines. No published decision appears to specifically define “good faith,” as that term is employed in CPLR 3408(f). In Wells Fargo Bank, N.A. v Van Dyke (101 AD3d at 638-639), the Appellate Division, First Department, rejected a plaintiff mortgagee’s argument that compliance with the good faith requirement of CPLR 3408 is established “merely by proving the absence of fraud or malice on the part of the lender,” and briefly addressed the issue of what constitutes “good faith” by noting that “[a]ny determination of good faith must be [*8]based on the totality of the circumstances” taking into account that CPLR 3408 is a remedial statute. However, the standard to apply in determining what constitutes a lack of good faith pursuant to CPLR 3408(f) is a matter of first impression in this Court (cf. IndyMac Bank, F.S.B. v Yano-Horoski, 78 AD3d 895, 896 [the plaintiff did not challenge “bad faith” determination on appeal, but only contested the sanction of cancellation of the debt]).

A review of various trial-level court decisions shows that courts have not required a showing of intentional misconduct, malice, or gross negligence when determining whether a party has failed to negotiate in good faith as required by CPLR 3408(f). For example, one court observed that good faith is a subjective concept, generally meaning honest, fair, and open dealings, and a “state of mind motivated by proper motive” (HSBC Bank USA v McKenna, 37 Misc 3d 885, 905 [Sup Ct, Kings County] [internal quotation marks omitted]). Unreasonable, arbitrary, or unconscionable conduct is inconsistent with the statutory purpose of good faith negotiations aimed at achieving a resolution (see id. at 908). Several trial-level courts have found that, where a plaintiff lost financial documents, sent confusing and contradictory communications, inexcusably delayed a modification decision, or denied requests for HAMP loan modifications without setting forth grounds, such conduct constituted a lack of good faith within the meaning of CPLR 3408(f) (see e.g. Wells Fargo Bank, N.A. v Ruggiero, 39 Misc 3d 1233[A], 2013 NY Slip Op 50871[U] [Sup Ct, Kings County] [finding it appropriate to sanction the plaintiff for its failure to act in good faith where the plaintiff, inter alia, provided conflicting information, refused to honor agreements, engaged in unexcused delay, imposed unexplained charges, made misrepresentations, and failed to deal honestly, fairly, and openly]; HSBC Bank USA v McKenna, 37 Misc 3d at 888, 898-899, 910 [accepting a referee’s recommendation that the plaintiff be found to have failed to act in good faith where the plaintiff rejected a proposed short sale at a sum the plaintiff had previously stated was its minimum sale amount and, in dicta, advising that, in determining whether the plaintiff failed to act in good faith in rejecting a short sale proposal, the factors to be considered included the outstanding debt, the likely market movement, and whether a short sale would result in a greater yield than a public foreclosure auction]; cf. Wells Fargo Bank, N.A. v Van Dyke, 101 AD3d 638 [the defendants did not establish lack of good faith by the plaintiff where the defendants did not submit evidence supporting their claimed rental income]; but see JP Morgan Chase Bank, N.A. v Ilardo, 36 Misc 3d at 366, 378-380 [the plaintiff’s conduct did not constitute a lack of good faith because an interim modification plan applied on a trial basis did not contractually obligate the plaintiff to provide a permanent HAMP loan modification to the defendants]). In addition, while we were not expressly called upon to decide the proper standard to apply in Wells Fargo Bank, N.A. v Myers (108 AD3d 9), in that case we determined that the record supported the Supreme Court’s finding that the mortgagee had failed to satisfy its obligation to negotiate in good faith without applying the common-law standard of bad faith.

The plaintiff nevertheless urges this Court to adopt the common-law standard of bad faith and hold that in determining whether a party failed to act in good faith during mandatory settlement negotiations pursuant to CPLR 3408, a court should consider only whether the party acted deliberately or recklessly in a manner that evinced gross disregard of, or conscious or knowing indifference to, another’s rights. This standard for bad faith conduct has been articulated in various contexts to determine issues such as whether an insurance carrier may be held liable for the alleged bad-faith failure to accept a settlement offer (see Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453-454 [to establish a prima facie case of bad faith, the plaintiff must establish that the insurer’s conduct constituted a “gross disregard of the insured’s interests—that is, a deliberate or reckless failure to place on equal footing the interests of its insureds with its own interests when considering a settlement offer”]); whether a “no-damage-for delay” clause in a contract may be enforced for delays allegedly actuated by bad faith (see Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, 384-385 [“no-damage-for delay” clause will not exempt a party from liability for willful or gross negligence, intentional wrongdoing, fraudulent or malicious conduct]); and whether allegedly stolen bonds were taken in bad faith (see Manufacturers & Traders Trust Co. v Sapowitch, 296 NY 226, 229 [bad faith is “nothing less than guilty knowledge or willful ignorance”]).

Were this Court to adopt the plaintiff’s proposed standard for determining whether a party failed to act in good faith, we would undermine the remedial purpose of CPLR 3408. The purpose of the statute is “to address the problem of mortgage foreclosures” by “help[ing] struggling homeowners without harming all consumers by inadvertently driving up the cost of credit or limiting the availability of legitimate credit” (Letter of Sen Farley, Bill Jacket, L 2008, ch 472, at 5), and [*9]”providing additional protections and foreclosure prevention opportunities for homeowners at risk of losing their homes” (Senate Introducer’s Mem in Support, Bill Jacket, L 2008, ch 472, at 7). To reiterate, “[t]he purpose of the good faith requirement [in CPLR 3408] is to ensure that both plaintiff and defendant are prepared to participate in a meaningful effort at the settlement conference to reach resolution” (2009 Mem of Governor’s Program Bill, Bill Jacket, L 2009, ch 507, at 11).

Therefore, we hold that the issue of whether a party failed to negotiate in “good faith” within the meaning of CPLR 3408(f) should be determined by considering whether the totality of the circumstances demonstrates that the party’s conduct did not constitute a meaningful effort at reaching a resolution. We reject the plaintiff’s contention that, in order to establish a party’s lack of good faith pursuant to CPLR 3408(f), there must be a showing of gross disregard of, or conscious or knowing indifference to, another’s rights. Such a determination would permit a party to obfuscate, delay, and prevent CPLR 3408 settlement negotiations by acting negligently, but just short of deliberately, e.g., by carelessly providing misinformation and contradictory responses to inquiries, and by losing documentation. Our determination is consistent with the purpose of the statute, which provides that parties must negotiate in “good faith” in an effort to resolve the action, and that such resolution could include, “if possible,” a loan modification (CPLR 3408[f]; see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 11, 18, 20, 23; Wells Fargo Bank, N.A. v Van Dyke, 101 AD3d 638 [the defendants did not demonstrate that the plaintiff failed to act in good faith because nothing in CPLR 3408 requires a plaintiff to make the exact settlement offer desired by the defendants]; HSBC Bank USA v McKenna, 37 Misc 3d 885 [Sup Ct, Kings County] [the plaintiff failed to act in good faith based upon, inter alia, a referee’s finding that the plaintiff rejected an all-cash short sale offer]).

Where a plaintiff fails to expeditiously review submitted financial information, sends inconsistent and contradictory communications, and denies requests for a loan modification without adequate grounds, or, conversely, where a defendant fails to provide requested financial information or provides incomplete or misleading financial information, such conduct could constitute the failure to negotiate in good faith to reach a mutually agreeable resolution.

In this case, the totality of the circumstances supports the Supreme Court’s determination that the plaintiff failed to act in good faith, as the plaintiff thwarted any reasonable opportunities to settle the action, thus contravening the purpose and intent of CPLR 3408. Sarmiento submitted his initial HAMP application on October 29, 2009, and provided updated financial documentation on November 18, 2009. Beginning on December 1, 2009, at the direction of the Court Attorney Referee, Sarmiento began placing $2,000 per month in an escrow fund, in part to demonstrate his ability to make modified monthly payments. On January 2, 2010, six weeks after receiving Sarmiento’s complete HAMP application, the plaintiff denied the application on the erroneous ground that the property was not Sarmiento’s primary residence.

Another month passed without a proper HAMP determination. On February 2, 2010, the plaintiff indicated that it needed a BPO to conduct an NPV test, a representation which suggested that Sarmiento’s HAMP application had satisfied the five-step waterfall test. Nevertheless, two months later, on April 2, 2010, the plaintiff again denied Sarmiento’s HAMP application, apparently for failing to satisfy the waterfall test since the plaintiff claimed that modification could not result in a monthly payment equal to or less than 31% of Sarmiento’s gross monthly income. However, the plaintiff apparently reached this conclusion using incorrect income data.

At the request of the Court Attorney Referee, Sarmiento submitted a second HAMP application on April 26, 2010. On May 13, 2010, the plaintiff denied the application, this time on the ground that the property was “not affordable.” The plaintiff ignored Sarmiento’s ensuing request for a more specific reason for denial and for the data that the plaintiff had used in conducting the NPV test.

On June 8, 2010, after Sarmiento sought the assistance of the HAMP support center, he was told that his HAMP application had been denied because of the escrow fund he had created at the direction of the Court Attorney Referee. This rationale, presumably relayed to the HAMP support center by the plaintiff, was a new ground for denial, and was inexplicable since the plaintiff was aware that the escrow fund existed at the direction of the Court Attorney Referee.

Nevertheless, despite the apparent denial of May 13, 2010, the plaintiff indicated, on July 1, 2010, that it was still reviewing Sarmiento’s HAMP application. Despite having indicated in February 2010 that it would soon conduct an NPV test, the plaintiff stated that no NPV test had yet been conducted. On July 19, 2010, the plaintiff indicated that the defendant’s HAMP application had been denied because of the creation and existence of the escrow fund.

Two months later, the plaintiff indicated that it again needed a BPO so that it could conduct an NPV test. Notably, the plaintiff had made an identical representation eight months earlier, and did not explain why it had not conducted the NPV test in February 2010. On October 5, 2010, the plaintiff offered Sarmiento a non-HAMP loan modification, while simultaneously indicating that his HAMP application was still under review. On the following day, the plaintiff again denied Sarmiento’s HAMP application, this time on the ground that he was current on his mortgage. The record demonstrates that it was not until October 12, 2010, nearly one year after Sarmiento made his initial HAMP application, that the plaintiff finally conducted an NPV test, which was negative.

Any one of the plaintiff’s various delays and miscommunications, considered in isolation, does not rise to the level of a lack of good faith. Viewing the plaintiff’s conduct in totality, however, we conclude that its conduct evinces a disregard for the settlement negotiation process that delayed and prevented any possible resolution of the action and, among other consequences, substantially increased the balance owed by Sarmiento on the subject loan. Although the plaintiff may ultimately be correct that Sarmiento is not entitled to a HAMP modification, the plaintiff’s conduct during the settlement negotiation process makes it impossible to discern such a fact, as the plaintiff created an atmosphere of disorder and confusion that rendered it impossible for Sarmiento or the Supreme Court to rely upon the veracity of the grounds for the plaintiff’s repeated denials of Sarmiento’s HAMP application.

Therefore, the totality of the circumstances supports the Supreme Court’s determination that the plaintiff failed to negotiate in good faith, in violation of CPLR 3408(f) (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 17).

Sanction

The plaintiff further argues that, even if it failed to act in good faith, the Supreme Court lacked the authority to sanction it absent express statutory or regulatory authority. In the plaintiff’s view, CPLR 3408(f) and 22 NYCRR 202.12-a(c)(4) require the parties to negotiate in good faith, but provide no mechanism to enforce that requirement. In order to address this particular contention, we must first look to our recent holding in Wells Fargo Bank, N.A. v Meyers (108 AD3d 9).

In Meyers, the plaintiff in a foreclosure action had, among other things, commenced the action even though its loan modification proposal was pending, denied a permanent loan modification based on the defendants’ purported debt-to-income ratio without submitting evidence of its calculations, and provided conflicting information regarding its denials of requests for a loan modification. This Court observed that, upon finding that foreclosing plaintiffs failed to negotiate in good faith pursuant to CPLR 3408(f), the trial-level courts have imposed a variety of sanctions, including barring them from collecting interest, legal fees, and expenses, imposing exemplary damages against them, staying the proceedings, imposing a monetary sanction pursuant to 22 NYCRR part 130, and vacating the judgment of foreclosure and sale and cancelling the note and mortgage (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 20-21). We noted that, save for our determination in IndyMac Bank, F.S.B. v Yano-Haroski (78 AD3d 895), in which we reversed the severe sanction of cancellation of the note and mortgage, based on the plaintiff’s failure to negotiate in good faith as required by CPLR 3408(f), this Court had not otherwise reviewed the propriety of other means of enforcing the good-faith negotiation requirement of CPLR 3408(f).

In Meyers, this Court determined that there was no basis to disturb the Supreme Court’s finding, made after a hearing, that the plaintiff failed to negotiate in good faith, in violation of CPLR 3408(f). While acknowledging that CPLR 3408(f) does not set forth a specific remedy for a party’s failure to negotiate in good faith (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 19; Hon. Mark C. Dillon, The Newly-Enacted CPLR 3408 for Easing the Mortgage Foreclosure Crisis: Very Good Steps, but not Legislatively Perfect, 30 Pace L Rev 855, 875 [Spring 2010]), this Court found that the particular remedy imposed by the Supreme Court—compelling the plaintiff to permanently abide by the terms of a HAMP trial loan modification—was “unauthorized and inappropriate” (Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 21). This Court did not rule on the possibility of other remedies for a violation of the good-faith negotiation requirement set forth in CPLR 3408(f) and cautioned that the courts may not rewrite the loan agreements into which the parties freely entered merely upon finding that one party failed to satisfy its obligation to negotiate in good faith pursuant to CPLR 3408(f) (see id.).

Contrary to the plaintiff’s contention, the Supreme Court did not lack authority to [*10]impose a sanction for the plaintiff’s failure to negotiate in good faith pursuant to CPLR 3408(f). This Court has specifically held that the Supreme Court has “authority to impose a sanction or remedy in the event it determined . . . that [a] plaintiff had failed to negotiate in good faith in the mandatory foreclosure settlement conferences” (Bank of Am. v Lucido, 114 AD3d 714, 715, citing Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 11). Although CPLR 3408 is silent as to the sanctions or remedies that may be employed for violation of the good faith negotiation requirement, “[i]n the absence of a specifically authorized sanction or remedy in the statutory scheme, the courts must employ appropriate, permissible, and authorized remedies, tailored to the circumstances of each given case” (Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 23).

Notably, unlike the borrower in Meyers (108 AD3d 9), Sarmiento specifically moved to impose the sanctions ultimately imposed by the Supreme Court, based upon the court’s finding that the plaintiff violated the good faith requirement of CPLR 3408(f). Therefore, the plaintiff was on notice that the Supreme Court would entertain such a remedy.

We also note that in contrast to Meyers, the plaintiff does not argue that the sanctions actually imposed in the instant case were excessive or improvident. Therefore, the propriety of the particular sanctions imposed herein is not before us. To the extent that the arguments raised in the plaintiff’s reply brief may be viewed as a challenge to the propriety of the sanction imposed by the Supreme Court in this case, these arguments are not properly before us since they are raised for the first time in a reply brief, to which Sarmiento had no opportunity to respond (see Monadnock Constr., Inc. v DiFama Concrete, Inc., 70 AD3d 906; Congel v Malfitano, 61 AD3d 809; Borbeck v Hercules Constr. Corp., 48 AD3d 498).

We are cognizant that, in a foreclosure action, “[t]he court’s role is limited to interpretation and enforcement of the terms agreed to by the parties, and the court may not rewrite the contract or impose additional terms which the parties failed to insert” (131 Heartland Blvd. Corp. v C.J. Jon Corp., 82 AD3d 1188, 1189; see Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9; Maser Consulting, P.A. v Viola Park Realty, LLC, 91 AD3d 836, 837). Thus, in fashioning a remedy for a violation of the good-faith negotiation requirement set forth in CPLR 3408(f), courts should be mindful not to rewrite the contract at issue or impose contractual terms which were not agreed to by the parties. As the nature of the sanction in this case is unchallenged, our determination herein should not be construed as a deviation from the above-stated principle.

Accordingly, the order is affirmed insofar as appealed from.

RIVERA, J.P., SKELOS and LOTT, JJ., concur.

ORDERED that the order is affirmed insofar as appealed from, with costs.

ENTER:

Aprilanne Agostino

Clerk of the Court

Footnotes

Footnote 1:. ACS/Wells was represented by the law firm of Steven J. Baum, P.C.

Footnote 2:. HAMP is a federal program that is intended to help homeowners avoid foreclosure “by modifying loans to a level that is affordable for borrowers now and sustainable over the long term” (https://www.hmpadmin.com/portal/programs/hamp.jsp, last accessed July 16, 2014).

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Stonewalled Foreclosure Conferences: Do Homeowners Have a Remedy at Hand?

 

In 2008-09, with home foreclosures skyrocketing in the wake of the economic meltdown[1], New York led the nation in developing measures to aid struggling homeowners. The state legislature enacted a law requiring that banks negotiate in “good faith” with homeowners at a mandatory court-supervised settlement conference within in sixty days of suing for foreclosure. The new law instructed the court system to issue rules granting the state’s judges “the necessary power and authority … to “ensur [e]” both side negotiate in good faith and that settlement conferences “not be unduly delayed or subject to willful dilatory tactics.”

Despite that sweeping authority, the good-faith law is silent on the question of remedy, and for the last five years, the requirement that banks negotiate in “good faith” with New York homeowners has been an obligation in search of a remedy. In a handful of rulings, the state’s appeals courts have only told the judges and referees responsible for supervising the settlement process what they could not do to compel banks to act in good faith.

With one exception, all of the appellate rulings have come out the Appellate Division, Second Department in Brooklyn, which hears appeals from the four counties with the highest number of pending foreclosures in the state: Nassau, Suffolk, Brooklyn and Queens. The sole other ruling was from the First Department, which sits in Manhattan.

Those rulings have rejected judges’ use of compulsory orders and punishing fines to force banks to reach a reasonable accommodation with homeowners or even to require them to make good on their offers to lower payment terms. Meanwhile, no appellate court has put its imprimatur on the most promising remedy that has been adopted by trial judges: the forfeiture of interest and other lender costs, including attorneys fees, which have mounted during delays caused by the absence of good-faith negotiations.

But, the issue is now coming to a head. At least two cases are pending—one in the First Department and one in the Second—squarely presenting the question of whether forfeiture, commonly referred to by lawyers as “tolling”)  is a viable remedy.

In the interim, the law books have become littered with cases, in which trial judges and referees have found that banks have failed to negotiate in good faith. Numerous opinions cite delays of up to two years and as many as 17 adjournments.

The causes have been manifold: banks had no representative present with authority to negotiate despite a clear statutory mandate to do so; bank representatives were unfamiliar with the cases and did not have critical documents related to homeowners’ loans; banks had backtracked on modification agreements even though homeowners had paid the lower amount for the three months required in many instances by federal guidelines—and often for many months more; and banks, only belatedly after months of negotiations, have advised homeowners and the courts that they were barred from negotiating any payment relief in situations where a mortgage has become part of a pool aggregated by an investment syndicate.

 

Two Pending Appeals

Both of the cases on appeal present those issues, which over and over again, have formed the basis of trial court rulings, finding the banks had not negotiated in good faith.

In the case pending in the Second Department [U.S. Bank National Association v. Green, 9220/09 (Kings County)], Brooklyn Justice Donald Scott Kurtz ordered the tolling of interest and related charges, confirming a referee’s finding that the mortgage holder, after ten months of back and forth, had denied the homeowner a modification even though the owner had successfully paid the lower amounts for three months.

At about the same time the holder, an investment syndicate, raised a new issue: it was forbidden from making any loan modification by the agreement it used to sell mortgage-backed securities.

To speed a resolution, the referee, who oversaw the settlement discussions, ordered syndicate officials, with personal knowledge of the pooling agreement, to attend the conference and produce associated documents. Nonetheless, the settlement process dragged on without resolution for another 19 months (bringing the total delay to more than two years) before the referee recommended to Kurtz that the syndicate be compelled to reinstate the 2010 trial modification. Kurtz in March 2013 ordered tolling but rejected the recommendation that the syndicate be ordered to re-activate its modification.

The case pending in the First Department also presents, in stark form, the same recurring problems that have hindered the settlement process.

As was the case in Green, the settlement process in Citibank v. Barclay (Bronx County) dragged on for 11 months without resolution,. During that time, the homeowner attended nine conference sessions, submitted six original applications for a loan modification and was on numerous occasions asked to submit additional documentation even though that information had previously been supplied. Also, similar to Green, the homeowner in Barclay had been engaged in the settlement process for nearly a year before being informed by Citibank that investor restrictions precluded it from modifying the mortgage.

Bronx Justice Robert E. Torres, the trial judge in Barclay, made specific findings related to several of those points. With regard to authority and knowledge, he noted that the bank’s loan adjuster had testified before the referee that she had personal authority to modify mortgages and that she had been personally involved with the homeowner’s loan modification for three years. But on cross-examination, he noted, she admitted that she was assigned to Barclay’s loan file shortly before the hearing and that she had been asked by the bank to “come in and …do a more in-depth detailed investigation of files.”

Torres also wrote that the bank’s “bit by bit requests at each conference only serve to unnecessarily delay the modification application process while racking up interest, fees and penalties to the [Bank’s] benefit and [Barclay’s] detriment.”

 

AG Office Cites Wells Fargo Violations

Lest there be any doubt about the extent of those problems, the New York State Attorney General’s Office has developed evidence that Wells Fargo Bank has committed close to 200 violations of standards developed to speed loan modifications. The standards are contained in a $25 billion settlement reached in 2010 between the nation’s attorneys general and five major banks, including Wells Fargo. The evidence, which consists of sworn declarations by advocates, together with supporting documentation, in cases involving 97 New York homeowners, has been offered by the state Attorney General’s Office in litigation seeking to force Wells Fargo to live up to the 2010 settlement, U.S.A. v. Bank of America, 12-cv-361 (District of Columbia). Read the Attorney General’s brief. The case has been briefed, and a decision is being awaited from U.S. Judge Rosemary M. Collyer.

Similarly, a report prepared by three legal services groups found a widespread failure of banks to have a representative with settlement authority and knowledge of the homeowner’s case present at settlement conferences. The three groups—JASA/Legal Services for the Elderly in Queens, Legal Services NYC and MFY Legal Services—sent observers to 252 settlement conferences conducted in the fall of 2013. The observers reported that in 80 percent of the cases the banks failed to have present representatives with the settlement authority and knowledge required by New York law. In 36 percent of the observed cases, no bank representative was present with the authority to settle as required by CPLR 3408(c) and in 44 percent of the cases the representative lacked sufficient information to permit a conference to proceed.

         Briefing in the Barclay case is nearly complete and is underway in Green. The two arguments have taken on outsized importance. Two months after Kurtz embraced tolling, but rejected mandating reinstatement of a withdrawn modification offer, the Second Department nixed specific performance in Wells Fargo Bank v. Meyers, 108 A.D3d. 9 (May, 2013). In Meyers, however, Justice Thomas A. Dickerson, who wrote for a unanimous panel, underscored the need for guidance from either the legislature or the court system as to what type of remedies should be imposed for violations of the good-faith requirement.

Further, earlier this year, a push by homeowners’ advocates for legislation spelling out remedies fell to the wayside as legislators limited their efforts to extending the mandate for settlement conferences  another five years to 2020.

 

Court System’s Unexercised Power

In Meyers, Dickerson pointedly drew attention to the court system’s failure to develop sanctions for “egregious behavior” by the banks or their counsel despite having been specifically authorized by the legislature to do so.

Dickerson quoted from a provision in legislation adopting the good-faith obligation which “expressly” provided that the rules to be promulgated by the Chief Administrator of the Courts to govern settlement conferences “may include granting additional authority [to the states’ judges] to sanction the egregious behavior of a counsel or party.” Read the statute.The court system’s authority to issue a specific sanction or remedy has not been exercised, he wrote.

Meyers, much like the two cases pending on appeal—Green and Barclay—presented issues of the recurring problems experienced by homeowners in the settlement process. In Meyers, the homeowner attended eight court appearances which stretched out over eight months; was offered a modification lowering his monthly mortgage payments by $700 and met those payments for at least seven months; and was advised by the bank—six months after it had proposed a modification—that investor restrictions precluded the changing of the loan’s terms.

Nonetheless, the Second Department rejected the use of specific performance (legal jargon for a compulsory order to reinstate a withdrawn modification) despite sympathetic facts. The homeowner was a New York City police officer, Paul Meyers, who had taken a second job and worked overtime to keep up with his mortgage payments. In 2009, Meyers fell behind in his payments when he lost his second job and the NYPD cut back on overtime. Further his wife, Michela, testified at a good-faith hearing before then-Suffolk Justice Patrick A. Sweeney that Wells Fargo employees told her that a modification could not be offered unless she and her husband defaulted on their payments; and they had followed that advice.

Sweeney, finding bad faith after conducting a three-day hearing, ordered Wells Fargo Bank to reinstate the September, 2009 modification offer and dismissed the foreclosure proceeding. But, the Second Department reversed, concluding that an offer of a trial modification is not a binding contract and to enforce it would violate the Contract Clause of the U.S. Constitution.

Some lawyers for homeowners, who have examined the trend of the Second Department’s post-Meyers decisions, have raised questions whether they will support a ruling upholding tolling as a viable remedy for good-faith violations. But, Karen Gargamelli, the lawyer with Common Cause NY who is handling the Barclay appeal in the First Department, called such an outcome “inconceivable.”

 

Recent Signs of Progress

Since Meyers was handed down, there have been some signs that progress has been made with respect to some of the problems that have bogged down the settlement process. First, the state Attorney General’s network, which consists  of 90 groups the office has funded to provide lay counseling and legal aid to homeowners, has helped one-third of the 28,000 clients it has worked with to obtain modifications or, at least, the possibility of a modification, according to Melissa Grace, a spokeswoman for the office.

Out of that universe, the Attorney General’s network represented 8,000 homeowners during the settlement process. No separate data was provided concerning the success of those clients in obtaining modifications. The network is funded with $60 million the Attorney General’s Office received from the 2010 nationwide settlement with five major banks.

Second, the court system in late June authorized administrative judges in Nassau, Suffolk and Brooklyn to receive direct referrals of cases from referees (bypassing the judge to whom the case has been assigned) to hear legal issues that they do not have the authority to resolve. Court sources suggest that since judges, but not referees, are empowered to order sanctions, that the change will speed rulings on disputes over whether banks are acting in good faith.[2] Read the memo.

Third, homeowner advocates report that Bank of America in April flew into New York about a dozen workout specialists, led by two bank vice presidents, who ended working on two days with close to 100 Nassau County homeowners facing foreclosure. Maria DeGennaro, an attorney with the Empire Justice Center who oversees the work of 13 homeowner advocacy groups on Long Island, stated that the Bank of America had taken initiative in asking the courts to set aside one day with all Bank of America cases on the conference calendar.

“The workout specialists provided something that is sorely missing in most conferences,” DeGennaro added, “real-time information about the status of modification requests, with the result that some cases were resolved on the spot.” The 13 Long Island-based groups are a part of the network of agencies funded by the New York State Attorney General’s Office to provide counseling and representation to homeowners struggling with their mortgages.

Unfortunately, there is little data available to assist the state’s appellate judges as they wrestle with the problem of shaping appropriate remedies when banks fail to act in good faith. The annual report issued by the court system provides little meaningful information other than the number of homeowners who are represented during the settlement process. According to the 2013 report, 54 percent of the families participating in settlement talks during that year had representation.

The Attorney General’s office has not yet compiled data on the number of homeowners who lost their homes during the settlement process, Ms. Grace said, because the conference process is dynamic and yields hundreds of possible outcomes.

 

©DanielJWise

 

 

[1] The number of foreclosures in 2009 jumped by nearly 80 percent for pre-meltdown levels to 47,664. In 2013, there were 33,773 foreclosure filings statewide.

[2] Memorandum written by First Deputy Administrative Judge Lawrence K. Marks, dated June 26, 2014. Trial Justice Martin Schulman will perform the “backup” function in Queens.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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