Bankers Trust Co. v. Payne

188 Misc. 2d 726 (N.Y. Sup. Ct. Kings County 2001) ; Clearinghouse Number: 54343

Description

Mortgagor’s Defense Under HOEPA and Allegation of Fraud in Inducement of Loan Preclude Summary Judgment of Foreclosure

Abstract

Based on homeowner’s defenses of payment, fraud, and predatory lending, a New York court denied lender’s motions to reargue and renew a prior summary judgment motion in a foreclosure action. Defendant, an elderly man who had lived in his house for over twenty years, claimed that he took out a $50,000 loan after plaintiff lender and its servicing agent’s repeated solicitation. Defendant alleged that he received only a portion of the loan and that plaintiff told him that he would receive the remainder only if he took out an additional $25,000 loan; he took out the loan. Defendant alleged that he did not receive funds from the second loan for $75,000 and could not afford the $700-per-month payments but made payments for fear of losing his home. Lender sued to foreclose, but the court held that it did not make a prima facie case of homeowner’s default and could not prove payment of all loan funds to homeowner. The court found that defendant’s affidavit stating that he relied on plaintiff’s misrepresentations asserted a cognizable defense of fraud. The court held that defendant’s defense under the Home Ownership and Equity Protection Act of 1994 (HOEPA) precluded summary judgment for plaintiff. Defendant alleged that the loans at issue violated HOEPA because of their increased rate of interest upon default, their prepayment penalty, and their having been extended to defendant without regard to his repayment ability. Although plaintiff argued that the loan was not a mortgage under HOEPA and that defendant ratified the mortgage loan by making monthly payments, the court disagreed. Payments do not vitiate the HOEPA defense, the court held.

Additional Information

Attorney Information
Defendant represented by: Pamela Sah, South Brooklyn Legal Services, Foreclosure Prevention Project, 105 Court Street, Brooklyn, NY 11201, (718.246.3277)
Docket Date
2001-06-18 00:00:00+00:00
Attorney Email
pamelas@sbls.org

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