Legal Aid Victory For Client In Bronx Foreclosure Case
WEDNESDAY, AUGUST 28, 2013

A Bronx State Supreme Court Justice has ordered that a Legal Aid client, who has experienced a two and one-half year ordeal trying to keep her home while 17 settlement conferences designed to help her avoid foreclosure failed to produce more affordable mortgage payment arrangements, be paid all interest costs, late fees and attorneys fees which accrued against her. Oda Friedheim, a Supervising Attorney for The Legal Aid Society's foreclosure defense program who represents Jumoke Shinaba in the case, told the New York Law Journal that the problems Ms. Shinaba encountered during the settlement hearing process "pretty well illustrated" the problems that many home owners experience in trying to get lenders to lower mortgage terms to avoid foreclosure.

Bronx Supreme Court Justice Robert Torres concluded in U.S. Bank, N.A. v. Shinaba, 381917-09, that the U.S. Bank National Association and the Bank of America (BOA) flouted the requirement in CPLR 3408(f) that the parties involved in state-mandated foreclosure conferences negotiate in good faith. Ms. Shinaba has been fighting to retain ownership of a two-family home in the Bronx on which she originally took out a $532,000 mortgage loan in March 2007. Once a full-time social worker and part-time car saleswoman, she lost both jobs by May 2009, though she resumed working as a social worker in April 2010.

Ms Friedheim told the Law Journal that Ms. Shinaba's mortgage called for per-day interest charges of $122. Judge Torres' order requiring the bank to pay those charges since October 22, 2010, would total $120,000 in interest alone. The Judge also directed the U.S. Bank and Bank of America to give Ms. Shinaba a definitive answer on her federal Home Affordable Modification Program (HAMP) application. If it is denied, the lender and loan servicer were ordered to give a "full and detailed explanation as to the reason for the denial."

Ms Friedheim said Ms. Shinaba has recently been offered a lower-cost mortgage with the option of immediately paying down some of the principle.




New York Law Journal
Foreclosure Negotiation Delays Said to Show Bad Faith
By Joel Stashenko
August 27, 2013

A judge has ordered that a woman be paid all interest costs, late fees and attorneys fees which accrued against her as her mortgage lender and loan servicer "egregiously" dragged out the settlement conferences designed to help her avoid foreclosure.

The U.S. Bank National Association and the Bank of America (BOA) flouted the requirement in CPLR 3408(f) that the parties involved in state-mandated foreclosure conferences negotiate in good faith, Bronx Supreme Court Justice Robert Torres (See Profile) concluded in U.S. Bank, N.A. v. Shinaba, 381917-09.

Instead Torres described how Jumoke Shinaba experienced a 2 1/2-year ordeal beginning in December 2009 as 17 settlement conferences failed to produce a more affordable mortgage payment arrangement acceptable to both sides.

Torres said U.S. Bank and the Bank of America gave conflicting information to Shinaba, repeatedly missed deadlines for responding to her applications, "unduly" delayed evaluating her request for a loan modification under the federal Home Affordable Modification Program (HAMP) and repeatedly failed to show up at settlement conferences with a counsel "fully authorized to dispose of the case," as required under CPLR 3408.

"In this particular case, the plaintiff [U.S. Bank] and BOA's dilatory, and dishonest, conduct is troubling," Torres wrote. "Shinaba has alleged facts that describe conduct that is not only a violation of HAMP, but is independently unjust."

Shinaba has been fighting to retain ownership of a two-family home in the Bronx on which she originally took out a $532,000 mortgage loan in March 2007.

Once a full-time social worker and part-time car saleswoman, Shinabe lost both jobs by May 2009, though she resumed working as a social worker in April 2010.

Unable to meet the $4,000-a-month mortgage payment, even with income from an upstairs tenant, Shinaba sought a HAMP in December 2009 from her first mortgagor, the First Franklin Financial Corp.

But Torres said that at about that time, U.S. Bank had taken over the note and the mortgage on Shinaba's home and commenced a foreclosure action against her along with the Bank of America as servicer of the mortgage.

Over the next two years, Torres' ruling related how Shinaba sought to apply for relief under the HAMP program, which was authorized by the Emergency Economic Stabilization Act of 2008, or through the later HAMP Principal Reduction Alternative program.

The judge said settlement meeting after settlement meeting were adjourned with U.S. Bank or the Bank of America saying the paperwork necessary to judge Shinaba's HAMP application was missing, needed updating or that the bank was not ready to decide if Shinaba qualified for mortgage modifications aided by the federal bailout.

Following six months of waiting for an answer on the HAMP application, Torres said a U.S. Bank representative "incredibly" claimed at a settlement conference in early 2012 that Shinaba's application had actually been denied in March 2011, though neither Shinaba's lawyer nor the court knew of the document notifying them of that purported decision.

Following six months of waiting for an answer on the HAMP application, Torres said a U.S. Bank representative "incredibly" claimed at a settlement conference in early 2012 that Shinaba's application had actually been denied in March 2011, though neither Shinaba's lawyer nor the court knew of the document notifying them of that purported decision.

Under pressure from the court, Shinaba's lender and loan servicer then came up with a modification proposal that she rejected. It would have extended the amortization period on the mortgage to 40 years while lowering monthly mortgage payments to less than $3,000 in the first four years, then raising them thereafter.

A counteroffer by Shinaba proposed to lower her monthly payments to $1,750 while allowing for a partial write-down of principal. It was rejected by U.S. Bank and the Bank of America in March 2012.

She sued soon afterward, claiming a violation of the "good faith" requirement of CPLR 3408. Torres said the requirement was imposed "to prevent one party to a mortgage contract from behaving in a manner that evades the spirit of the settlement conferences or denies the borrower the opportunity to reach a mutally acceptable solution."

Torres said the unwillingness of a lender to modify the terms of an existing mortgage so foreclosure can be avoided does not necessarily constitute a lack of good faith under CPLR 3408. A lender is not required to depart from the terms of a valid mortgage loan, he noted."However, the issue here is whether the plaintiff and BOA kept their promise…to negotiate in good faith," the judge wrote. "Once the parties agreed to participate in the scheduled settlement conferences, the plaintiff and BOA were obligated to deal 'honestly, fairly and openly' with Shinaba. They have failed in this regard."

Torres said courts, chiefly in Notey v. Darien Const. Corp., 41 NY2d 1055 (1977), have recognized that it is within a judge's discretion to assess remedies for a breach of the duty of good-faith in foreclosure actions.

To address the "long and unexcused delay at issue" in the Shinaba case, Torres directed U.S. Bank to pay her all interest costs on her mortgage, plus late fees and accrued attorney's fees since Oct. 22, 2010. That was the date by which Torres said Shinaba should have had an answer about her HAMP application.

Oda Friedheim, Shinaba's attorney, said her client's mortgage called for per-day interest charges of $122. Torres' order calling for the bank to pay those charges since Oct. 22, 2010, would total $120,000 in interest alone.

Friedheim said Shinaba was not charged any late fees but did appear to have been charged at least $3,000 for lawyers' fees by the banks' attorneys. The homeowner is assessed the costs of the plaintiffs' lawyers in the foreclosure settlement conference system.

The judge also directed the U.S. Bank and Bank of America to give Shinaba a definitive answer on the HAMP application. If it is denied, the lender and loan servicer were ordered to give a "full and detailed explanation as to the reason for the denial."

Friedheim said the problems Shinaba encountered during the settlement hearing process "pretty well illustrated" the problems that many home owners experienced in trying to get lenders to lower mortgage terms to avoid foreclosure.

Friedheim, of the Legal Aid Society of New York City, said Shinaba has recently been offered a lower-cost mortgage by Davidson Fink of Rochester, the law firm now representing the plaintiffs in her foreclosure case with the option of immediately paying down some of the principle.

Friedheim said it is unclear whether the offer was the result of the litigation over the failure to negotiate in good faith or a 2012 settlement that the Bank of America entered into with four other major loan servicers to provide property owners with relief from mortgages signed during the sub-prime mortgage crisis.

The firm Davidson Fink of Rochester began representing the plaintiffs when their first attorney, the firm of Steven J. Baum, closed in March 2012.