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Friday, April 20, 2012

Court Cuts Homeowner's Debt, Says Bank's Lawyers Acted in 'Bad Faith'

Court Cuts Homeowner's Debt, Says Bank Acted in 'Bad Faith'
The New York Law Journal by Andrew Keshner  -  April 20, 2012

A state judge has nearly cut in half the amount of principal owed by a Long Island homeowner, ruling that a lender's conduct during almost three years of foreclosure proceedings was "wholly devoid of even so much as a scintilla of good faith."  Acting Supreme Court Justice Jeffrey Spinner in Suffolk County said Bank of America "deliberately acted in bad faith" while prosecuting the foreclosure over 34 months and ordered the bank to pay $200,000 in damages to the homeowner, John Lucido. The award will be put toward the $493,219 principal Lucido owes on his mortgage.  The April 16 ruling also blocked the bank from seeking to collect fees against Lucido, who is acting pro se, except for the principal balance owed.  Spinner chastised the bank for maintaining that the pooling and servicing agreement governing the terms of Lucido's mortgage prohibited any principal reductions. But when the document was produced, almost six months after the court's request, an attorney for the bank acknowledged there was no "absolute bar."

Through Bank of America's "repeated and persistent failure and refusal to comply with the lawful orders of the Court including those which directed production of documentation that was essential to address critical issues in the present matter, it has repeatedly caused to be put forth material misstatements of fact which appear to have been calculated to deceive the Court and has delayed these proceedings without good cause, thereby needlessly increasing the amount owed upon the mortgage debt, to say nothing of the needless waste of the Court's time and resources, as well as those of Defendant," Spinner wrote in Bank of America v. Lucido, 03769-2009.  Lucido, a one-time commercial mortgage broker, took out a $494,000 mortgage for his Rocky Point residence in March 2007 but later defaulted, with the principal amount remaining at $493,219.  The action was begun in 2009 and there were 18 settlement conferences scheduled in the case, complicated by delays like Lucido's illness at one point and the death of his wife.  In an early settlement conferences, Lucido raised the possibility of a principal reduction, pointing to Bank of America ads holding out that hope.

The bank, represented by Steven J. Baum P.C. at the time, first said it would weigh the principal reduction offer but later said it was not able to consider it under the terms of the pooling and servicing agreement, the judge said.  Spinner wrote that he had "serious and substantial questions" on whether the Baum firm, along with the bank, acted in good faith.  He requested the pooling and servicing agreement in July 2011, and received it in December, after the bank offered to produce "salient portions" of the document "despite the Court's clear and unambiguous order that the entire agreement be provided."  The document given to the judge excluded information on the mortgages included in the pooling and servicing agreement.  In January 2012, Davidson Fink replaced the Baum firm as Bank of America's attorney.  Edmond Foy, a per diem counsel for Pulvers, Pulvers & Thompson, which itself was of counsel to Davidson Fink, represented the bank at a Jan. 12 hearing on whether to impose sanctions for a lack of good faith.  At the hearing, Spinner asked Foy to cite a specific provision barring principal reductions altogether, according to a transcript.  "We have not found an absolute bar, a prohibition of forgiving or reducing. It is our position, and we submit to this Court, that there are circumstances that if occurring, which is also the signing off of the client, that a principal reduction could occur under certain circumstances," Foy replied.  In his decision, Spinner said that during the hearing when he asked about the bank's change in position, Foy tried to "deflect attention" from the bank, "instead intimating that the Court was, in effect, coercing a resolution."  The judge added, "It must be pointed out that in this matter as in all other foreclosure matters assigned to this Part, the Court has only attempted to fulfill its statutory responsibilities and has not, in any manner forced, coerced nor compelled any particular resolution."  Spinner observed that court rules under Uniform Rules for the Trial Courts 22 NYCRR §202.12-a required that he ensure both homeowners and lenders negotiate in good faith at the settlement conferences, pursuant to CPLR §3408(f).  "For this Court to do anything less would be a serious derogation of its statutory responsibilities and would do a great disservice to the public that it is obligated to serve," he wrote.  Neither Lucido, the homeowner, nor Foy, the attorney appearing during the January hearing, could be reached for comment.  Neither Bank of America nor Davidson Fink, the firm now representing the bank, responded to a request for comment.  In November 2009 in a separate case, Spinner vacated a judgment of foreclosure and canceled a mortgage, blasting the lender's "unconscionable, vexatious and opprobrious" conduct in IndyMac Bank v. Yano-Horoski, 2005-17926.  A year later, the Appellate Division, Second Department, reversed Spinner saying "the severe sanction…was not authorized by any statute or rule" (NYLJ, Nov. 23, 2009; Nov. 22, 2010).  Andrew Keshner can be contacted at


Anonymous said...

We need more judges like this judge.

Anonymous said...

Why, after the first instance of the bank not complying, was this case not thrown out and the attorneys sanctioned?

A slap on the wrist after years of frivolous litigation does nothing to stop the abuse. It's just a cost of doing business that they pass on to the 99%.

Anonymous said...

I have noticed that many of the reportings naming judges in decisions usual has the title of.. ACTING JUDGE... in front of it.
I also notice that the local media states the same thing..the problem is the media does not inform the public as to what that means and how that comes I am certain that most citizens believe that the judge sitting in their elected seat is being paid for that alloted elected title!

Anonymous said...

In Johnson county, Kansas this same corruption is going on Several of the judges that do foreclosures may be accepting bribes allegedly through inflated & fraudulent escrow shortages.the assignment of real estate was the only assignment on file from 2009by robo signers Crystal Moore & Brian Bly.

judge was aware of this because defendant gave the judge and attorney copy. American Home Mortgage produces new assignment of mortgages, two on the same day from Argent & Ameriquest to Deutsche Bank and Citi residential lending. Argent & Ameriquest were both out of business in 2011 from Argent & Ameriquest Mortgage Service produces fraudulent assignments to hide the only one on file at recorder of deeds. The plaintiff's attorney for Deutsche bank also produced fraudulent adjustable rate note.
defendant receive copy from the title company a few months before foreclosure petition. plaintiffs attorney produced an adjustable rate note with freshly stamped names of officers of Ameriquest & Argent Mortgage. The loan was never given by Ameriquest,Argent only then sold to Ameriquest later. The plaintiffs attorney used OLD power of attorney documents that were the poa's for the robo signed document from 2009. These were from 2008 & 2009 & were not notarized, file stamped certified. documents were for assignment made in 2009. shows the signers of the newly made assignment of mortgage documents signed by employees at American Home Mortgage Servicing, AHMSI was using ROBO documents to foreclose.

judge was aware of facts & still decided to foreclose. The major issue is when plaintiffs attorney gave their exhibits to defendants they stated came from Chicago TITLE THE SAME PLACE WHERE DEFENDANT HAD ASKED FOR DOCUMENTS IT WAS FOUND THAT PLAINTIFFS ATTORNEY SHOWED UP WITH (5) APPLICATIONS EXHIBITS. The defendant had only signed (1) loan application, not (4)two dated the same day the loan was to close.

Amazingly the judge saw this & defendants had claimed all along that the interest rate had been switched in court documents but had no real proof until plaintiffs exhibits showed first 3 loan stating a fixed rate loan & the last 2 applications showed the loan rep. on HUD statements had now switched places and became the broker.

The judge was aware of this, but sided with plaintiffs attorney who was found to have foreclosed on thousands of home in the area for years with allegedly fraudulent robo signed documents and forged documents to validate standing to foreclose.there was a loan modification with a fraudulent signature of defendant dated 30 days after loan had closed.

This information also came from the title company but was unknown to defendant. modification & a different loan number & amount unknown to defendant. Defendant never saw notary nor were they aware of the fraud because they never received original loan documents. The original broker said the documents would be mailed. Again this original broker gives documents to Argent loan rep and then switch is made from fixed rate loan to adjustable rate without borrowers knowledge.

Allegedly the notary at the title company & the loan representative at Argent were embezzling money. They had used defendants loan application switching the terms & personal info.Plaintiffs attorney gave documents to defendant to use in court against THEM. Allegedly plaintiffs attorney was so confidant of the outcome to foreclose they never looked at any of the documents before trial.

allegedly a more serious issue where the judge allegedly made an agreement before trial to foreclose no matter what evidence was presented even if it came from the plaintiff's attorney. Judge & plaintiff's attorney were made aware that a crime had been allegedly committed, but both chose to embrace idea to foreclose. The plaintiffs attorney writes up the documentation to find judgement for plaintiff and then gives it to the judge to foreclose affixing their signature.

Kate Dunkin said...

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what is a loan modification california said...

Loan modification has recently become the most viable method for homeowners to reach out for assistance from their lenders to avoid foreclosure.

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