Rebbe, Incorporated

Following the Nazi holocaust in Europe, many of the insular religious Jewish groups transplanted themselves to America so that they could (A) live; and (B) maintain their insularity.  But the world has changed, and it is very difficult to remain insular when you are based in a large city such as New York.  For one thing, if you borrow significant sums of money, you are subject to all of the lender's remedies if you default on the loan.

One of these groups is the followers of the Siget (or Sighet) chassidic dynasty, which consists of somewhat in excess of 300 individuals living in the Borough Park section of Brooklyn (which would be, at a maximum of maximums, 50 households, and probably closer to 40).  The group became an entity under New York's Religious Corporation Law, and is legally known as the Congregation Atzei Chaim of Siget.

In 2008, the Congregation, with due permission of the Court, took out a 10-year $499,000 mortgage loan, secured by their existing synagogue building located at 1511 50th Street in Brooklyn.  But times got difficult, and they fell behind in the loan payments -- far enough behind for the lender to bring a mortgage foreclosure action.

Due to the time, difficulty, and expense involved in foreclosing real property, mortgage lenders will go to great lengths to find alternatives to foreclosure.  The foreclosure action was apparently filed in late 2012, which indicates that the default probably occurred relatively early on in the life of the 10-year loan.

Valley National Bank, the mortgage holder, having lined up all of the required papers, moved for foreclosure.  The Congregation opposed the foreclosure judgment, claiming that the Congregation's leader, Rabbi Jacob Teitelbaum, the Siget Rebbe, who resides in the mortgaged premises, was not properly served with the required notice of the foreclosure action, and Rabbie Teitelbaum was the true owner of the property.  [As mentioned in a recent post, I have no problem with making mortgage holders run the gauntlet before they can foreclose on mortgaged properties, but, once the gauntlet has been run, the foreclosure right has been duly established and should be expedited.  If lenders could not enforce collection of their loans, then nobody would lend money at reasonable rates, and no person or business would be able to have a home.].  The Rebbe said that the Congregation was just his nominee, apparently a ploy to benefit from the touted advantages of incorporation. 

Nothing doing, said Judge Demarest to the Rebbe!  The mortgage was a commercial mortgage and not a residential mortgage.  The mortgage document specifically indicates that the premises would not include residential properties.  Rabbi Teitelbaum was not a signatory to the mortgage or its note.  And (for both the individual rights activists on the right side of the political spectrum and the advocates for the homeless on the left side of the political spectrum), merely depriving the Congregation (which, according to the Rebbe, is one and the same as the Rebbe himself) of ownership of the property would not in and of itself dispossess the Rebbe of his living quarters.

[Zooming in on the Street View of Google Maps, (which is reproduced in the Brooklyn Daily Eagle article), one can see that the building has three mailboxes by the front door.  There also is a balcony upon which is set up a beach chair of the type used by residential households.  The photo accompanying the article in the New York Law Journal indicates that an additional story has been added to the building subsequent to the Google Maps photo.].

The advantages of incorporation are widely touted in the classrooms, in attorney's and accountant's offices, and on the streets.  But if you are a corporation, then you do not enjoy the benefits of being a natural person.  These range from the famous Miranda Rights of warning upon arrest, to the right to personal notice of a mortgage foreclosure on your property.

English and Blindness

            When it comes to something like home ownership, it is quite appropriate to require those who would disentitle a home purchaser to jump through all of the hoops, grab all of the rings, and steer the go-kart through all of the hairpin turns to show their clear entitlement to a foreclosure judgment before evicting the homeowner.  Once this is accomplished, however, the lenders are entitled to their remedies for defaulted loans.

            Like so many on Long Island and elsewhere, Maria Navarro found herself unable to pay the mortgage loan on her home, and, notwithstanding the recent tweaks to the statutes and the court rules to level the playing field between homeowner and mortgage holder, Maria has now gotten a judgment of foreclosure slapped upon her.

            Seems that Maria failed to answer the complaint filed in the court by Onewest Bank, the holder of the mortgage on her home.  She belatedly obtained counsel (smart money says assigned counsel, i.e., taxpayers' treat), who asserted that Maria should be given leave to file a late answer, which would interpose various defenses, including the argument that her default in answering the complaint was on account of her inability to read or write English when she .

            Judge Whelan wasn't eating any of that up.  Hizzoner reasoned that just as blind individuals are obligated to take reasonable efforts to obtain competent help in ascertaining the meaning of legal document that affect them, so, too, are those who are illiterate in English.

            [Onewest Bank v. Navarro, 2013 N.Y. Misc. LEXIS 5656, 2013 NY Slip Op 52053(U)].

            One must wonder how Maria, with her handicapping inability to understand English, was able to find sufficient gainful employment to amass enough assets to be able to afford a home in the first place.

            Surely, the purveyor of the mortgage would have done a sufficient background check on Maria to ascertain and verify her earning capacity, and she never, ever would have been given a mortgage loan unless she had the demonstrated skills and acumen to obtain and maintain gainful employment.  And surely, her illiteracy in English would have prevented her from completing the loan application documents (Plural!  Very plural!).

            Mortgage lenders are very meticulous in making loans, so I really, really, cannot understand how she got the loan in the first place.

            [Oh, wait!  This blog posting needs a rework!   Never Mind!!!]

Robo-Signers

A few months ago, when I visited my local Citibank office to tender a payment on our mortgage, I was barraged by invitations from bank officers and employees to move my regular bank accounts to Citibank.

But I wasn't buying into it. I told them that my business with Citibank consists only of our residential mortgage, and a credit card, and that such was quite appropriate for our needs at this time.

They all touted the convenience of doing all of my banking under one roof. But if all my accounts are with the same banking institution, and if my bank is also my creditor, then I would run the risk of financial paralysis if I ever were to fall out of Citibank's good graces. One woman told me that I was envisioning something that was quite far fetched. But I, being about 20 years her senior, pulled rank and informed her that once upon a time, as a result of a misunderstanding on the part of my then bank, I had to spend lots of time and effort in successfully contesting a number of bounced check fees.

She then gave me the line about how Citibank is a full service bank. So I poignantly asked her why Americans should trust the banking industry. I then hastened to remind her that Citibank did not get to be a key recipient of the government bailout funds (from my tax money) because it was run in a prudent manner. She finally got off my case, brought my cash payment to the teller, and got me my receipt.

Now, it seems, what little confidence I had in the financial industry's good faith has been quite overestimated. The banks have been in such a mortgage foreclosure mania that they have now effectively admitted to hiring people to apply live pen signatures to moretgage foreclosure documents without knowing the particulars. And now, all of the state Attorneys General are on board the investigation.

I, for one, will not take the AGs all too seriously unless and until they begin some meaningful criminal prosecutions against the officers and directors in the banking industry who authorized the robo-signing.

Having strived, along with my wife, to remain current in the payment of our debts, I have extremely limited sympathy towards the residential homeowners who now face mortgage foreclosure. My wife and I have foregone or postponed many desired activities and acquisitions because the monies we would have expended towards them were necessary for the timely payment of our debts. We would have preferred to have more trips out of town (and out of country), home remodeling, jewelry, and the like, however, our creditors -- and our good word -- have been given and continue to be given priority.

Accordingly, those in mortgage foreclosure predicament mode only have my sympathies if their predicament came upon them through unforeseen circumstances, despite the exercise of reasonable prudence in their financial affairs.

But our real property system has been assailed. There are serious questions regarding the integrity of real property ownership in America. When the mortgage holders can evict people from their homes without following all of the due process requirements, and upon false statements, there now are serious questions regarding the integrity of real property ownership in America. This is a threat to our freedom.

And so, notwithstanding whether those who failed to pay their mortgages are or are not evicted from their homes, there needs to be some definitive, visible and meaningful consequences visited upon the individuals who occupy the upper levels of the mortgage industry hierarchies.

Two Judges Get It Right

When I first came across the story of the Suffolk County, NY judge who completely canceled the mortgage debt of a financially troubled homeowner, my initial instinct was to back up the bank. After all, my wife and I have made our own mortgage payments, and are wondering where our own free ride is in that regard. Where is the purchaser's responsibility here?

But now that I have read the actual judicial opinion, I'm with Judge Spinner all the way on this one. If the mortgageholder had only been hardnosed, then I would not feel so bad about the delinquent homeowner's feet being held to the fire. But here, the bank couldn't even give the Judge a straight answer as to just how much was outstanding, due and owing on the debt. This is abuse of the judicial process at its worst.

And so, the Judge has reduced that elusive figure to an even, round and definite figure: Zero!



And, westward a few miles in New York County, Judge York (no relation to the city or county) has put a whining loser in his place. It seems that Timothy Keefe, who couldn't stick it out with the first law school he attended (Hofstra), transferred to New York Law School, and then, after receiving a grade of "C" in a legal writing course, sued NYLS, demanding that NYLS change its grading system from letter grade to Pass/Fail.

It is oft stated that the lawyer who represents himself has a fool for a client. Keefe's foolish client was sent back to the showers.

And, having been involved in professional matters that also involve New York Law School, I would, all else being equal, tend to defer to the school's faculty in determining a grade for any student.



[A number of years ago, I went to court pro se, and I won the case for my foolish client. He has yet to pay me for it, though.].

The Citi Never Sleeps

Here are the first five paragraphs of a news item from this morning:

"NEW YORK – Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes — making Citi the latest big bank to announce sweeping efforts to try to curtail losses from souring mortgages.

Citi said late Monday it won't initiate a foreclosure or complete a foreclosure sale on any eligible borrower who seeks to stay in a home if it is the borrower's principal residence, the homeowner is working in good faith with Citi and has sufficient income to make affordable mortgage payments.

Citi said it is also working to expand the program to include mortgages the bank services but does not own.

Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are deemed as potentially needing assistance to keep current with their payments. This represents about one-third of all the mortgages that Citigroup owns, the bank said.

Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal, or increasing the term of the loan, steps known in the mortgage industry as a workout."


I'm sure that it will promote societal stability by keeping more people in their homes.


Query: How about people like me and my wife, who have at all times remained punctual and current in paying our mortgages to Citigroup? What sort of freebies do we get? Wouldn't we be better off defaulting, so that Citigroup can then reduce our mortgages too?

Just wondering!