Hsbc USA. v. Chernilas
| Decision Date | 13 October 2010 |
| Docket Number | MOTION SEQ. No. 3,INDEX NO.: 5183/08 |
| Citation | 2010 NY Slip Op 32878 |
| Parties | HSBC USA, NATIONAL ASSOCIATION AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-AF2, Plaintiff v. JOSEPH CHERNILAS, SHAUL HORAN, et al, Defendants |
| Court | New York Supreme Court |
The plaintiff, HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance Corporation Mortgage Pass-through Certificates Series 2006-AF2, (hereafter HSBC) moves this Court for Summary Judgment dismissing the Answer of the Defendant, Joseph Chernilas, (hereafter Chernilas), pursuant to CPLR §§ 3211 and 3212 and for permission to treat said Answer as a Limited Notice of Appearance. Further, HSBC moves for the appointment of a Referee to determine the amount due and to ascertain whether the premises may be sold in parcels and for permission to drop "John Doe" as a party as well as to delete the address of the plaintiff. HSBC requests that the caption of the action be amended to reflect such changes. The defendant opposes the Motion for Summary Judgment and Order of Reference.
This action is one to foreclose on a mortgage in the amount of $1,330, 000.00, held by the plaintiff on premises known as 22 Shore Park Road, Great Neck, New York. HSBC commenced the action on or about March 19, 2008 with the filing of the Summons and Complaint. The defendant served a Verified Answer, Affirmative Defense and Counter-claim dated May 23, 2008, to which the plaintiff replied on May 30, 2008. On June 16, 2008 the defendant made a request for production. Subsequently, on or about January 9, 2009 the plaintiff filed its first motion for summary judgment and an order of reference. The defendant cross-moved for a response to hisrequest for production. On April 28, 2009, the Court denied the plaintiffs motion and ordered it to respond to the defendant's discovery demand. The plaintiff has now filed the instant motion.
In order to establish a prima facie entitlement to summary judgment in a foreclosure action, a plaintiff must submit the mortgage and unpaid note, along with evidence of default. (US Bank National Association v Alvarez, 49 AD3d 711 [2nd Dept. 2008]). The burden then shifts to the defendant to demonstrate the existence of a triable issue of fact as to a bona fide defense to the action, such as waiver, estoppel, bad faith, fraud or oppressive or unconscionable conduct on the part of the plaintiff. (Nassau Trust Co. v Montrose Concrete Products Corp., 56 NY2d 175, 183 [1982]).
Here, by submitting the mortgage, unpaid note and affidavits by Jaime Walls, a default litigation specialist of the loan servicer, Wells Fargo Bank, N. A. detailing the default, the plaintiff has established a prima facie entitlement to summary judgment.
In order to preclude the granting of the plaintiff's motion, the burden now shifts to the defendant to establish that there is a triable issue of fact. The defendant asserts that the plaintiff cannot foreclose on the mortgage because he is permitted to, and has elected to, rescind the mortgage, pursuant to the federal Truth in Lending Act (TILA).
Congress enacted TILA in order to protect consumers and enable them to understand the ramifications of the extension of credit. The Federal Reserve Board (FRB), which administers TILA, has in turn, promulgated a comprehensive set of rules known as Regulation Z.
Independent of any asserted TILA violations that may have occurred, the Court must first consider whether or not Chernilas is a protected consumer, entitled to relief under TILA. Regulation Z defines "consumer" as follows:
Consumer means a cardholder or a natural person to whom consumer credit is offered or extended. However, for purposes of rescission under (12 CFR) §§ 226.15 and 226.23, the term also includes a natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person's ownership interest in the dwelling is or will be subject to the security interest.
12 CFR § 226.2(a)(l 1). See also, In re Crevier, (1987. CA9 Cal) 820 F2d 1553.
In the instant case, Chernilas, on October 19, 2007 executed a document transferring ownership of the mortgaged property from himself to Shaul Horan. The transfer was recorded at the Nassau County Clerk's office on November 14, 2007. As a result, when this foreclosure action was commenced, Chernilas was not the owner of the mortgaged property and no longer had a security interest in the dwelling. As such, as per the applicable TILA regulation, he is not entitled to exercise the right of rescission. The fact that on January 29, 2009, Shaul Horan executed a bargain and sale deed, transferring the mortgaged premises back to Chernilas, does not change this result. The secondtransfer occurred well after the March, 2008 commencement of the foreclosure action, and even after the filing of Chernila's answer.
In any case, even if the defendant was a protected consumer, as per the statute, he has not sustained his burden of demonstrating a triable issue of fact.
It is the defendant's contention that since the copies of the Notice of Right to Cancel, (NCR), prepared pursuant to TILA, did not disclose the date that the three day rescission period expired, the normal three day period is extended to three years.
12 C.F.R. § 226.1, requires creditors to disclose clearly and accurately all material terms of a credit transaction.
With respect to non-purchase-money mortgages on residential dwellingsthe type of credit transaction at issue here-the TILA confers upon the debtor a right to rescind within three days of the transaction's consummation or three days from the delivery of the material disclosures, whichever occurs later. See, 15 USC § 1635(a). The creditor also must clearly disclose this rescission right to the debtor. See, 12 CRF § 226.23(b)(1). Should a creditor fail to deliver any of the required material disclosures (including notice of the right to rescind), the debtor may rescind at any time up to three years following the consummation of the transaction. See id § 226.23(a)(3)...(Megitt v Indymac Bank, F.S.B., 547 F.Supp.2d 56 [USDC Mass.2008], quoting Palmer v Champion Mort, 465 F3d 24 [lstCir.2006]).
In the instant case, there is a conflict as to whether or not the defendant's representative, at the time of closing, received a rescission notice on which the actual date of rescission was filled in. The defendant claims that on the notice provided to his representative the rescission date was left blank. The plaintiff claims that the rescission date was in fact written on the document. Both sides have submitted copies of the rescission notice that back up their claims. While ordinarily this would constitute an issue of fact that would preclude granting summary judgment to the plaintiff, the instant case can be decided on the law, making this issue of fact irrelevant.
This court concludes that here, as in Palmer and Megitt, even if...
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