Sebrow v. Fairmont Funding, Ltd.
| Decision Date | 28 July 2011 |
| Docket Number | Motion Cal. Number 26,Index Number 15645 2010,Motion Seq. No. 2 |
| Citation | 2011 NY Slip Op 33271 |
| Parties | AVROHOM SEBROW, Plaintiff, v. FAIRMONT FUNDING, LTD., ET AL., Defendants. |
| Court | New York Supreme Court |
Upon the foregoing papers it is ordered that the motion is determined as follows:
Plaintiff commenced this action alleging that he entered into a contract for the purchase of real property known as 242 Beach 13th Street, Far Rockaway, New York, and sought a mortgage loan to finance the purchase. He obtained a mortgage loan on July 23, 2004 from defendant Fairmont in the principal amount of $315,000.00, plus interest, to finance the purchase. He alleges that in early July 2004 he had received a good faith estimate of settlement services (GFE) from defendant Fairmont, but that at the closing,Fairmont gave him a revised GFE dated July 22, 2004, which substantially increased the settlement costs. Plaintiff also alleges that neither GFE mentioned any payment of mortgage broker commissions, and no loan disclosures were provided to him. He further alleges that the HUD-1 settlement statement indicated that a "Broker Premium" had been paid outside the closing, and failed to indicate the amount. Plaintiff additionally alleges that defendant FNMA is claimed to be the assignee of the mortgage and note. In his complaint dated June 14, 2010, plaintiff asserts eleven causes of action, ten of which are asserted against defendant FNMA.1
Plaintiff served defendant FNMA with a copy of the supplemental summons and complaint by mail, pursuant to CPLR 312-a, and service was acknowledged by defendant FNMA on November 22, 2010. Counsel for defendant FNMA received a copy of the pleadings on December 2, 2010.
It is undisputed that the time for defendant FNMA to appear, answer or move in relation to the complaint has expired (see CPLR 312-a[b][2]). Defendant FNMA nevertheless moves for leave to extend its time to answer or otherwise move in relation to the complaint, and simultaneously, to dismiss the complaint in lieu of serving an answer.2
Defendant FNMA has established good cause for its delay in making its motion to dismiss, because its counsel needed to obtain the loan files to complete an analysis of the issues and to frame a proper motion, and plaintiff refused to afford it additional time to make the motion to dismiss. In addition, the relatively short delay was not willful since defendant FNMA also attempted to obtain an order granting it leave to extend its time to answer, move or otherwise respond to the complaint, which ex-parte application was declined. Defendant FNMA has a meritorious defense, and plaintiff will not be prejudiced by an extension of the time for defendant FNMA's motion to dismiss. Plaintiff did not move for a default judgment prior to defendant FNMA's motion, and has not cross movedfor such relief. Under such circumstances, that branch of the motion to extend defendant FNMA's time to make the motion to dismiss to February 25, 2011 is granted in an exercise of discretion (see CPLR 2004; see A & J Concrete Corp. v Arker, 54 NY2d 870 [1981]; see also Harley v United Services Auto. Assn., 191 AD2d 768 [1993]).
(Uzzle v Nunzie Court Homeowners Assn, Inc., 70 AD3d 928 [2010]).
The first seven causes of action asserted in the complaint against defendant FNMA are based upon alleged violations of Banking Law § 6-l. Defendant FNMA asserts that the version of Banking Law § 6-l, which was in effect at the time of plaintiff's entry into the mortgage loan, did not apply to the subject loan because the loan exceeded $300,000.00 in the principal amount.
The version of Banking Law § 6-l which was in effect (L 2002, c 626, § 4, eff. April 1, 2003) at the time of plaintiff's entryinto the mortgage loan (on or about July 23, 2004), did not apply to all loans. Rather, it applied to those loans for which application was made on or after the statute's effective date (see L 2002, c 626, § 4) and required the loan to be a "home loan" and, once within that category, the statute applied if the loan met the threshold of being considered a "high cost home loan"3 (see Bergman, B., Predatory Lending for All, 77-Sep NY State BJ 46 [2005]; see generally Keefe, K. and Hasper, E., New State Law Addresses Mortgage Foreclosure Crisis and Subprime Lending Abuses, Legal Services J, August 2008, at n 4; Ng v HSBC Mortg. Corp., 2010 WL 889256, 2010 US Dist LEXIS 40109 [ED NY March 10, 2010]). To have been a "home loan" within the meaning of that version of the statute, the principal could not exceed the lesser of the Fannie Mae conforming loan amount or $300,000.00 (see former Banking Law § 6-l[1][e][i] [B] [L 2002, ch 626, § 1]; Wells Fargo Bank, Nat. Assn v Rolon, 24 Misc 3d 1216(A) [2009]; Fremont Inv. & Loan v Laroc, 21 Misc 3d 1124[A] [2008]; Sutherland v Remax 2000, 20 Misc 3d 1131[A] [2008]; Alliance Mtge. Banking Corp. v Dobkin, 19 Misc 3d 1121[A] [2008]; DLJ Mortgage Capital, Inc. v Smith, 2007 Slip Op. 32745(U), 2007 NY Misc LEXIS 8988, 2007 WL 2814513 [Sup Ct Queens Co. 2007]; see also Bergman, B., Predatory Lending for All, 77-Sep NYSBJ 46 [2005], supra).
Contrary to the argument of plaintiff, the restrictions and prohibitions regarding lending practices found in the present version of Banking Law § 6-l may not be considered when evaluating whether the first seven causes of action state a claim (cf. Ng v HSBC Mortg. Corp., 2010 WL 889256, 2010 US Dist LEXIS 40109 [ED NY March 10, 2010]). The original version of Banking Law § 6-1 (L 2002, c 626) was specifically made applicable only to loans for which application was made on or after the law's effective date (October 3, 2002) (L 2002, c 626, § 4). The subsequent amendment to Banking Law § 6-l(1)(e)(i) (L 2007, c 552, § 1) defined a "home loan," as one that the principal amount of the loan "does not exceed the conforming loan size limit for a comparable dwelling as established from time to time by the federal national mortgage association." Such amendment, in effect, dropped consideration of whether the principal amount of the loan exceeded $300,000.00. Although it may be argued that such amendment was for the purpose of expanding the coverage of Banking Law § 6-l, the Legislature specifically limited the amendment's reach to those loans for whichapplication had been made on or after the amendment's effective date (October 14, 2007) (see L 2007, c 552, § 2).
Banking Law § 6-l(1)(e)(i) thereafter was further amended to define a "home loan" as one that the "principal amount of the loan at origination does not exceed the conforming loan size limit (including any applicable special limit for jumbo mortgages) for a comparable dwelling as established from time to time by the federal national mortgage association" (L 2009, c 507, § 12) (emphasis supplied) (the "jumbo mortgages" amendment). The Legislature did not specifically state the "jumbo mortgages" amendment was not made applicable to loans prior to the 2009 amendment's effective date (L 2009, c 507, § 25 [December 15, 2009]). Nevertheless, it also did not make any explicit provision for retroactivity of that amendment. Based upon this legislative history where the amendments to Banking Law § 6-l(1)(e)(i) were substantive, and enacted in increments over time, the Legislature intended that the respective statutory amendments to Banking Law § 6-l applied to loans based upon whichever amendment was in effect at the time of the loan application, and not retroactively.
Plaintiff argues that it is premature to determine whether the principal amount of the mortgage loan exceeded $300,000.00, citing defendant FNMA's admission that the "adjusted" original principal balance, when subtracting points and fees, was $307,808.75. Plaintiff contends...
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