u.s. Bank National Association v. Videjus

8/7/2019 u.s. Bank National Association v. Videjus

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P R E S E N T :HON. ARTHUR M . SCHACK

JusticeU.S.BANK, NATIONAL ASSOC IATION, ASTRUSTEE FOR FIRST FRANKLIN FINANCIALMORTG AGE PASS T HROUGH CERTIFilCAiES,MORTG AGE LOAN TR UST 2006-FF 10,SERIES 2006-FF 10,

P1 aint ff,- against -

IVARS VIDEJUS, et. al.,Defendants.

At an IA S Term, Part 27 ofthe Suprem e Court of theState of Ne w York, held inand for the County ofKings, at the Courthouse,at Civic C enter, Brooklyn,New York, on the 29th dayof April 2008

DECISION & ORDERIndex No. 7 17 1/07

The following papers num bered 1 read on this motion: Papers Numbered:Proposed Order of Reference with AffidavitsE xhibits 1

Pla inti ffs application, upon the default of all defendants, for an order of reference

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for the premises located a t 39A Brighton IOthCourt, Brooklyn, New Y ork (Block 8701,Lot 80, County of Kings) is denied withoul prejudice. First, the affidavit of meritsubmitted in support of this application for a dcfault judgm ent is not by an officer of theplaintiff or someone with a valid power o f attorney from plaintiff. Second, the instantverified complaint is defective. It is not vcrified by an agent of the foreign corporateplaintiff, U.S. BANK, NATION AL ASSOC IATION, AS TRU STEE FO R FIRSTFRANKLIN FINANCIAL MORTGAGE LOAN TRUST 2006-FF 10, MORTGAGEPASS THROU GH C ERT IFICAT ES, SERIES 2006-FF 10 (U.S. BANK ), or by itsattorney. Leave is granted to plaintiff U.S.BANK renew its application for an order ofreference upon presentation to the Court of: compliance with the statutory requirementsof CPLR fj 32 15 ( f ) , with an affidavit of facts cxecuted by som eone wh o is an officer ofU.S. BANK or has a valid power of attorney from U.S.BANK ; and, an amendedverified complaint, verified by an officer of U.S. BANK or its attorney, in compliancewith CPLR fj 3020 (d). Third, the Court, upon renewal of this app lication for an order ofreference, requires a satisfactory exp1anatio:i i s io why the mortgagee, U.S.BANK,would have purchased the instant nonperfor rning mortgage loan from M ORT GAG EELECTRONIC REGISTR ATIONS SYSTEMS, INC. (MERS), as nominee of FIRSTFRANKLIN, A DIVISION OF NATIONAT, CITY BANK OF INDIA NA (FIRSTFRANKLIN).

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Defendant IVARS VIDEJUS borroweJ $680,000.00 fiom FIRST FRAN KLIN, onApril 26,20 06. Th e note and mortgage were recorded in the Office of the City Register,New Y ork City Departm ent of Finance on May 12 ,20 06 at City Register File Number(CRFN) 200600026723 1, by M ERS, the nominee o f FIRST FR AN KLIN for the purposeof recording the mortgage. M ER S assigned the note and mortgage to plaintiff U.S .BAN K on January 26,2 00 7, with the assignment recorded on February 22 ,20 07 at CRFN2007000101 131.

Plaintiffs moving papers for an order of reference fails to present an affidavitmade by the party, pursuant to CPLR fJ 3215 (f). The application contains an affidavitof merit by Bryan Kusich, Vice-president for Home Loans Service, Inc., servicingagent for U.S, Bank, National Association, as Trustee for First Franklin Financial

Mortgage Loan Trust 2006 FF- 10, Mortgage Pass Through Certificates, Series 2006-FFlO, the Plaintiff in the within action. For reasons unknown to the Court, plaintiff U.S.BANK has failed to provide any power of attorney authorizing Home Loan Services, Inc.to go forward with the instant foreclosure action. Therefore, the proposed order ofreference must be denied without prejudice. Leave is granted to plaintiff U.S. BANK tocomply with CP LR fJ 3215 (f) by providing an affidavit made by the pa rty, whether byan officer of U.S. Bank o r someo ne with a valid power of attorney from U.S. BANK.

Next, pla int iff s verified complaint contailis a verification by B ryan Kusich, arepresentative of the servicing agent. This is defective. Plaintiff must file an amended

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verified complaint that meets the requirements of CPLR 0 3020 (d), w ith a verification byeither an officer of U.S. BANK or U.S. BANKS attorney.

Further, accord ing to the affidavit of Mr. Kusich and the instant verifiedcomplaint, defendant VIDEJUS defaulted in his mortgage loan payments on October 1,2006. If this is true, why did US B ANK taLe the assignment o f this nonperforming loan117 days after the alleged default of defendant VID EJU S? The complaint show s that onthe date of the assignm ent, defendant VID EJUS owed $679 ,3 19.2 1 in principal and$23,255.40 in interest (at the annual rate of 8.50% for 147 days from September 1, 2006to January 26, 2007, the date of the assignment) for a total of $702,574.61 . Thecomplaint also asks for late charges, inspection fees, escrow advan ces and attorneys fees.The court needs to know if US BANK performed due diligence in purchasing thisnonperforming loan or was this a device for FIRST F RAN KLIN to shift its loss to thebondholders of pla int iffs mortgage loan trust collateralized debt obligations (C.D.O.).Paul Krugman, in his July 2 ,2 00 7 New York Times column, JustSay AAA, in writingabout the subprime m ortgage crisis, could have been alluding to FIR ST FRAN KLIN inthe instant case:

What do you get when you c r o s a Mafia don with a bond

salesman? A dealer in collateralized debt obligations ( c . D . 0 . ~ )-someone who makes you an offer you dont understand.-4www

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Seriously, its star ting to look as if C.D.O.s were to this decadeshousing bubble w hat Enron-style accounting was to the stock bubble ofthe 1990s. Both made investors think they were getting a much betterdeal than they really were. . . .

Yet the b anks making the 1o;ins werent stupid: they passed thebuck to other people. Subprime mortgages and other risky loans were

securities- hat is, banks issued bonds backed by hom e loans, ineffect handing off the risk to the bond buyers.In principle, securitization should reduce risk: even if a particular

loan goes bad, the loss is spread among many investors, none o f whomtakes a major hit. But with the collapse o rt h e $800 billion market inbonds backed by sub prime mortgages- he price of a basket o f thesebonds has lost almost 40 percent o f its value since January [2007]-its now clear that many investors who bc ug ht these securities didntrealize what they were getting into . . .

Now were looking at huge losses to investors who thought theywere playing it safe . . .

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But apparently n ot. And the houring bubble, like the stock bubblebefore it, is claiming a grow ing number o f innocent victims.

Discussic in-..--Real Property Ac tions and Proceediiigs Law (RPAP L) 5 1321 allows the Court in a

foreclosure action, upon the d efault of the defend ant or defendants admission o fmortgage payment arrears, to appoint a referee to compute the a mount due to theplaintiff. In the instant action, pl ai nt iff s application for an order of reference is apreliminary step to obtaining a default judgm ent of foreclosure and s ale. (Home Sav. OfAm., F.A. v G kanios, 230 AD2d 770 [2d Dept 19961).

Plaintiff has failed to meet the clear requirements of CP LR 9 3215 (0 for a defaultjudgment.

On any applicationfor j u d g m m t by default, the applicantshaIlfire proof o f service of the summ ons and the complaint, o ra summ ons and notice served pursuant to subdivision (b) of rule305 or subdivision (a) of rule 3 16 of this chapter, and proof ofthe fa cts constituting the claim, the dejault and the am ount dueby affidavit made by the party . . . Where a verified complaint hasbeen served, it may b e used as the affidavit of the facts constituting

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the claim and the am ount due; in such case, an affidavit as to thedefault shall be made by the party or the party's attorney. [Emphasisadded].

Plaintiff has failed to submit "proof of the facts" in "an affidavit made by the party." The"affidavit of facts'' is submitted by Bryan Kusich, Vice -presiden t for Home LoansService, Inc., "servicing agent" for U.S.BANK. Mr. Kusich must have, as pla inti ffsagent, a valid power o f attorney for that express purpose. Additionally, if a power ofattorney is presented to this Court and it rcfers to pooling and servicing agreemen ts, theCourt needs a properly offered copy o f the pooling and seryicing agreements, todetermine if the serv icing agent may procced on behalf of plaintiff. (Finnegan vSheahan, 269 AD2d 491 [2d Dept 20001; Hazim v Winter,234 AD2d 422 [2d Dept19961;EMC Mortg. C orp. v Batista, 15 Misc 3d 1143 (A) [Sup Ct, Kings C ounty 20071;Deutsche Bank Nat. T rust Co. v Lewis, 14 Misc 3d 1201 (A) [Sup Ct, Suffolk County20061).

Further, the instant verified complaint is defective. The verification is signed byBryan Kusich, who swears that "I am a reprc-sentiitiveof National City Home LoanServices, Inc., the servicing agent for U.S,Bank, National Association, as Trustee forFiorst Franklin Financial Mortgage Loan Trust 2006 FF-10, Mortgage Pass ThroughCertificates, Series 2006-FF 10, the Plaintiff in the within action." Mr. Kusich is not an

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_-Iofficer or an agent employed by plaintiff U.S .BANK. CPLR 9 3020 (d ) states that:(d) By whom verification ma de. Th e verification of a pleading shallbe made by the affidavit of the party . . . except: . . .3. if the party is a foreign Corporation . . . or if all the material allegationsof the pleading are within the personal knowledge or an agen t or theattorney, the verification may be made by such agent or attorney.

An officer of a foreign corporation, such as plaintiff U.S. BANK, is the agent forpurposes of verification o f the pleadings. (WilliamsonLaw Book Co. v Midland Nat.Holding Corp., 136 Misc 288 [Sup Ct, Monroe County 19301; Robinson v EcuadorDevelopment Co. , 32 Misc 106 [Sup Ct, Kings County 19001. In Blam v Netcher, 17AD3d 49 5, 49 6 [2d Dept 20051, the Court reversed a default judgm ent granted inSupreme Court, Nassau C ounty, holding that:

In support of her motion for leave to m ter judgm ent againstthe defendant upon her default in answering, the plaintiff failed toproffer either an affidavit o f the facts or a complaint verified by aparty with personal knowledge of the facts (3-eeCPLR 3215 (f):Goodman v New York City Health & Hosps. Corp. 2 AD3 d 58 1[2d Dept 20031; Drake v Drake, 296 AD2d 566 [2d Dept 20021;

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Parratta v Mc Allister, 283 AD2d 625 [2d Dept 200 11). According ly,the plaintiffs motion should have been denied, with leave to renew

on proper papers (see Henriquez v Purins, 245 AD2d 337, 338[2d Dept 19971).

(See Hazim v Winter,234 AD2 d 422 [2d Dept 19961;Finnegan v Sheahan, 269 AD2d 491[2d Dept 20001; De Vivo v Spargo, 287 AD2d 535 [2d Dept 20011; Peniston v Epstein, 10AD3d 450 [2d Dept 20041; Taebong Choi v JKS Dry Cleaning Eqip. Corp., 15 AD3d 566[2d Dept 20051; Matone v Sycamore Realty Corp., 3 1 AD 3d 721 [2d Dept 20061;Crimmins v Sagona Landscaping, Ltd ., 33 AD3d 580 [2d Dep t 20061). Plain tiff is grantedleave to file and serve an amended com plaint, wiih a proper verification

Finally, the Court requires an explanation from an officer o f plaintiff U.S .BANKwhy, in the middle of our national subprime mortgage financial crisis, would plaintiffU.S. BANK purchase, from MER S as nominee ol'FIRST F RAN KLIN , a nonperformingloan. Could it be that U.S. BANK and FIRST FRAN KLIN desired to assign to thebondholders of pla int iff s C.D.O . a nonperformin2 loan in excess of $700,000.00, ratherthan keep it on FIRST FR ANK LIN'S books?

ConclusionAccordingly, it isORD ERE D that the application of plaintiff, U.S.BANK, NATIONAL

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ASSOCIATION, AS TR USTEE FOR FIRST FRANKLIN FINANCIAL MOR TGAGELOAN TRU ST 2006-FF 10, MOR TGAGE PASS THROU GH CERTIFICATES, SERIES

2006-FF10, for an order of reference for the premises located at 39A B righton lo thCourt,Brooklyn, New York (Block 87 01, Lot 80, County of K ings) is denied without prejudice;and it is further

OR DE RED that leave is granted to plaintiff, U.S. BAN K, NA TION ALASSOCIATION, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST

2006-FF 10, MO RTGA GE PA SS THROU GJ 1 CERT IFICATES, SE RIES 2006-FF 10, torenew its application for an order o f reference for the premises located at 39A Brighton10* Court, Brooklyn, Ne w York (Block 8701, Lot 80, County of Kings), upon p resentationto the Court of: compliance with the statutory requirements o f CPL R 0 32 15 ( f ) , with anaffidavit of facts by someone with authority to execute such an affidavit; compliance withthe statutory requirements of C PLR 6 3020 (d), with an amended verified complaint,verified by pla int iff s attorney o r an officer of plaintiff; and, a satisfactory explanationfiom an officer of plaintiff U.S.BANK , NATIONA L ASSOCIATION, AS TRUSTEEFOR FIRST FRANKLIN M ORTGA GE LOAN TRUST 2006-FF 10, MORTG AGE PASSTHR OUG H CER TIFICATES , SERIES 20C,6-FJ'10, why plaintiff took the assignmen t onJanuary 26 ,200 7 o f the instant nonperforming loan from M ORTG AGE ELECT RON ICREGIST RATIO NS SYSTEMS, INC., as nominee of FIRST FRANK LIN, A DIVISIONOF NATIONAL CITY BANK OF INDIANA.

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--This constitutes the Dec ision and Order of the Court.

E N T E R0

HON. ARTHUR M. SCHACKJ. S . C.

HI)N. AIClitUR M.SCHACR J.S.C.

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u.s. Bank National Association v. Videjus

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