| WM Specialty Mtge., LLC v Sparano |
| 2009 NY Slip Op 09465 [68 AD3d 987] |
| December 15, 2009 |
| Appellate Division, Second Department |
| WM Specialty Mortgage, LLC, Appellant, v RobertSparano et al., Respondents, et al., Defendant. |
—[*1] Elefante & Persanis, LLP, Scarsdale, N.Y. (Ralph J. Elefante and Tiffany Bauman ofcounsel), for respondents.
In an action to foreclose a mortgage, the plaintiff appeals from (1) an order of the SupremeCourt, Orange County (Owen, J.), dated October 2, 2007, which granted the renewed motion ofthe defendants Robert Sparano and Debra Sparano to vacate a judgment of foreclosure and saleof the same court entered November 20, 2006, and to set aside the foreclosure sale, and (2) anorder of the same court dated January 2, 2008, which denied its motion for leave to renew andreargue its opposition to the renewed motion.
Ordered that the appeal from so much of the order dated January 2, 2008, as denied thatbranch of the plaintiff's motion which was for leave to reargue is dismissed, as no appeal liesfrom an order denying reargument; and it is further,
Ordered that the appeal from so much of the order dated January 2, 2008, as denied thatbranch of the plaintiff's motion which was for leave to renew, is dismissed as academic in lightof our determination on the appeal from the order dated October 2, 2007; and it is further,
Ordered that the order dated October 2, 2007 is reversed, on the law, and the matter isremitted to the Supreme Court, Orange County, for a hearing to determine whether the defendantRobert Sparano received a "Notice of Right To Cancel" his mortgage in accordance with theFederal Truth-in-Lending-Act (15 USC § 1601 et seq.) and, if so, whether suchnotice was in compliance with the Federal Truth-in-Lending-Act, and thereafter for a newdetermination of the respondents' renewed motion; and it is further,
Ordered that one bill of costs is awarded to the plaintiff.
In September 2004 the defendant Robert Sparano (hereinafter Sparano) obtained a loan [*2]from Ameriquest Mortgage Company (hereinafter Ameriquest),which was secured by a mortgage on the subject property. Ameriquest subsequently assigned themortgage to the plaintiff. When Sparano defaulted on the loan, the plaintiff commenced thisaction in Supreme Court to foreclose on the property. While the action was pending, Ameriquestsent Sparano a letter, dated September 25, 2006, indicating that he may have a right to rescindthe mortgage transaction under the Federal Truth-in-Lending-Act (15 USC § 1601 etseq., hereinafter TILA) (see 15 USC § 1635 [a]) if Ameriquest never providedhim with a required form. This letter was sent pursuant to a court order in a class action lawsuitagainst Ameriquest in the Northern District of Illinois (see In re Ameriquest Mtge. Co.Mortgage Lending Practices Litig., 2006 WL 1525661, 2006 US Dist LEXIS 81498 [ND Ill2006]).
On October 20, 2006 the Supreme Court awarded the plaintiff a judgment of foreclosure andsale against, among others, Sparano and his wife, the defendant Debra Sparano (hereinaftertogether the respondents), which was entered on November 20, 2006. By letter dated November22, 2006 Sparano, through his attorney, elected to rescind his mortgage transaction pursuant toTILA, based on his claim that he never received a "Notice of Right To Cancel." An entityaffiliated with Ameriquest responded, indicating that Sparano could rescind the transaction if hetendered the remaining unpaid loan principal. Apparently, no funds were ever tendered bySparano.
The foreclosure sale was scheduled for April 25, 2007 but on the eve of the sale therespondents moved, by order to show cause, to vacate the judgment of foreclosure and sale. Inthe order to show cause, the Supreme Court temporarily stayed the foreclosure sale, pendingresolution of the motion; the court later denied the motion without prejudice to renew. Theforeclosure sale was rescheduled for July 10, 2007. On the eve of the rescheduled auction, therespondents renewed their motion to vacate the judgment of foreclosure and set aside theforeclosure sale. Although the affirmation submitted in support of the order to show causerequested that the court enjoin the sale, the order to show cause signed by the Supreme Court onJuly 9, 2007 contained no provision staying the impending foreclosure sale. On July 10, 2007 theproperty was auctioned, and the plaintiff was the successful bidder. In an order dated October 2,2007 the Supreme Court granted the respondents' renewed motion, vacated the judgment offoreclosure and sale, and set aside the foreclosure sale. We reverse.
The relevant provisions of TILA apply to consumer credit transactions where the lendertakes a security interest in the consumer's residence (see 15 USC § 1635). TILAgives the consumer an unconditional right to rescind the transaction within three days of (1) theconsummation of the transaction, or (2) the delivery of certain required disclosures andrescission forms to the consumer, whichever occurs later (see 15 USC § 1635 [a]).However, where the required information and forms have never been delivered to the borrower,the right to rescind is extended to three years after the date of the consummation of thetransaction (see 15 USC § 1635 [f]).
Here, Sparano elected to rescind the mortgage on the basis that he did not receive a "Noticeof Right To Cancel" at the closing. However, the plaintiff submitted evidence that suggestsSparano did receive a "Notice of Right To Cancel" at the closing, raising an issue of fact as towhether Sparano was entitled to rescind his mortgage pursuant to TILA.
In light of this issue of fact, which may be determinative of the parties' remainingcontentions, we remit the matter to the Supreme Court, Orange County, for a hearing todetermine whether Sparano received a "Notice of Right to Cancel" his mortgage in accordancewith TILA (15 USC § 1601 et seq.) and, if so, whether such notice was incompliance with TILA, and thereafter for a new determination of the respondents' renewedmotion.
In light of our determination, we do not reach any other issues. Mastro, J.P., Eng, Belen andHall, JJ., concur.