| Aames Funding Corp. v Houston |
| 2011 NY Slip Op 05642 [85 AD3d 1070] |
| June 28, 2011 |
| Appellate Division, Second Department |
| Aames Funding Corporation, Respondent, v Leonard W.Houston, Appellant, et al., Defendants. |
—[*1] Hogan Lovells US, LLP, New York, N.Y. (Allison J. Schoenthal, Victoria McKenney, andJessica L. Ellsworth of counsel), for respondent.
In an action to foreclose a mortgage, the defendant Leonard W. Houston appeals from anorder of the Supreme Court, Orange County (Cohen, J.), dated October 21, 2010, which deniedhis motion to stay a foreclosure sale until a determination of his application for a residentialmortgage modification pursuant to the Home Affordable Mortgage Program.
Ordered that the order is reversed, on the law and in the exercise of discretion, with costs,and the appellant's motion is granted.
On August 15, 2006, a judgment of foreclosure and sale was entered against the appellantand in favor of the plaintiff. In January 2008 the Supreme Court granted a motion by the plaintiffto extend a notice of pendency for an additional three years. By letter dated December 10, 2009,the loan servicer, America's Servicing Company (hereinafter ASC), notified the defendantLeonard W. Houston (hereinafter the appellant) that he might be eligible for the federal HomeAffordable Mortgage Program (hereinafter HAMP). As a result, the appellant submitted anapplication to ASC. On March 24, 2010, the United States Department of the Treasury issuedSupplemental Directive 10-02, which stated, in pertinent part, that "[a] servicer may not refer anyloan to foreclosure or conduct a scheduled foreclosure sale unless anduntil . . . [t]he borrower is evaluated for HAMP and is determinedto be ineligible for the program."
By letter dated April 30, 2010, ASC notified the appellant that his loan was "currently underreview by [ASC's] Loss Mitigation Department for a loan modification," and that ASC "currently[had] all the necessary information." ASC informed the appellant that he would "be contactedwith the outcome of the review or if any additional information [was] needed." The appellantsent additional documents to ASC on July 2, 2010, and August 5, 2010. Meanwhile, the plaintiffpublished a notice of a foreclosure sale scheduled for August 26, 2010.
By order to show cause dated August 23, 2010, the appellant moved for an emergency stay ofthe foreclosure sale pending a determination on his application for a residential mortgagemodification pursuant to HAMP. The plaintiff opposed the appellant's application, and requestedan order "directing that the foreclosure sale take place immediately." The plaintiff argued that[*2]Supplemental Directive 10-2 was "no longer in effect and wassuperseded by the Making Home Affordable Handbook," and, therefore, that directive was "notcontrolling." By order dated October 21, 2010, the Supreme Court denied the appellant's motion,vacated all stays imposed by the court, and permitted the plaintiff to proceed with the foreclosuresale. We reverse.
The record establishes that ASC participated in the HAMP program and accepted theappellant's application for loan modification under the HAMP program. Under thecircumstances, the plaintiff should not have scheduled a foreclosure sale while the appellant'sloan modification application was pending (see In re Cruz v Hacienda Assoc., LLC, 446BR 1 [2011]). The plaintiff contends that the appellant is not entitled to a stay of the foreclosuresale because Supplemental Directive 10-2 was superseded by the Making Home AffordableProgram Handbook. However, Version 2.0 of the "Making Home Affordable ProgramHandbook," in effect at the time the order appealed from was issued, contained the samelanguage as Directive 10-2, to wit: "[a] servicer may not refer any loan to foreclosure or conducta scheduled foreclosure sale unless and until . . . [t]he borrower is evaluatedfor HAMP and is determined to be ineligible for the program" (at 28 [emphasis added]).Accordingly, the Supreme Court should have granted the appellant's motion to stay theforeclosure sale pending a determination of his application for a residential mortgagemodification pursuant to HAMP.
As we previously stated on a prior appeal in this matter, the appellant's contention that theplaintiff lacked standing to commence the foreclosure action is barred by the doctrine of law ofthe case (see Aames Funding Corp. vHouston, 57 AD3d 808 [2008]).
In light of our determination, we need not reach the appellant's remaining contentions.Dillon, J.P., Covello, Chambers and Roman, JJ., concur.