Lender “Bad” Practices In Other Cases Meaningful?

In a word, “no” – at least as a matter of law.

Lenders and servicers have suffered in recent years being tarnished with the misdeeds of others, although dismayingly, candor requires that some untoward acts have been attributable to lenders and servicers themselves.  Those in the industry know the tales: unscrupulous brokers arranging for mortgages which could never be afforded; bait and switch tactics; robosigning; documents attested to by those without authority, among too many others.

Aside from the obvious, an additional problem with such events is the opportunity it presented to defaulting borrowers to paint all lenders with the evil brush.  And sometimes it worked, certainly to the extent that the omnipresence of such unfavorable publicity gave pause to courts’ assessments of charges of wrongdoing in any particular case.

More pointedly, a multitude of  borrowers would not hesitate to lard their dilatory opposition to foreclosure actions with chronicles of lender wrongdoing in other cases.  While from a borrower’s perspective it is an understandable tactic, a new case advises that it won’t work. [Citimortgage, Inc. v. Bustamnte, 107 A.D.3d 752, 968 N.Y.S.2d 513 (2d Dept. 2013).]

In attempting to vacate a default foreclosure judgment against him, one borrower argument presented allegations of improper practices by the foreclosing party’s agents in unrelated matters.  But, as the court found, the borrower failed to meet his burden of establishing fraud, misrepresentation or other misconduct on plaintiff’s part in this case to therefore warrant vacatur of the judgment.  Just to underscore the point that the gambit would not work, the court cited a number of cases for the proposition. [We typically do not list case law cites in these alerts, but because the principle is a compelling one, and because such authority is comforting, we note the court’s citations:  Onewest Bank, FSB v. Martinez, 101 A.D.3d 969, 970, 955 N.Y.S.2d 532; Deutsche Bank Natl. Trust Co. v. Hunter, 100 A.D.3d 810, 811, 954 N.Y.S.2d 181; Wells Fargo Bank N.A. v. Hornes, 94 A.D.3d 755, 942 N.Y.S.2d 129; Tribeca Lending Corp. v. Crawford, 79 A.D.3d 1018, 1020, 916 N.Y.S.2d 116).]

It will be pleasing to observe that borrower sagas of lender defalcations in the mortgage arena in general will continue to be rejected by the courts as a defense in an unrelated case.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.