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RESOLUTION TRUST CORP. v. 12A ASSOCS.

January 31, 1992

RESOLUTION TRUST CORPORATION, as Conservator of Central Federal Savings Bank, successor in interest to Central Federal Savings, FSB, Plaintiff,
v.
12A ASSOCIATES, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK, NEW YORK CITY DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT, Defendant.



The opinion of the court was delivered by: ROBERT P. PATTERSON, JR.

 ROBERT P. PATTERSON, JR., U.S.D.J.

 The is on action of foreclosure brought by Resolution Trust Corporation ("RTC") against 12A Associates ("12A") for 12A's default on a mortgage Consolidation and Extension Agreement executed on July 21, 1987 (the "Agreement"). *fn1" On papers filed September 25, 1991, RTC moved for summary judgment. On November 7, 1991, this Court granted RTC's motion for summary judgment and ordered RTC to submit an affidavit with respect to amounts due and owing.

 On November 22, 1991, RTC filed its proposed judgment and affidavits in support thereof. By affidavit dated December 11, 1991, 12A opposed RTC's proposed judgment and disputed its allegations of amounts due and owing. On January 7, 1992, RTC submitted an affidavit in reply to 12A's position. On January 27, 1992, after inquiry from the Court about certain discrepancies in the amounts included in the proposed judgment, RTC filed a revised proposed judgment and supplemental affidavits in support of amounts due and owing.

 DISCUSSION

 Having examined RTC's proposed judgment and affidavits filed in support thereof, the Agreement, the Mortgage, and other relevant documents, the Court concludes that RTC's proposed judgment still contains several mistakes of fact and erroneous conclusions of law.

 1. ESCROW DEFICIENCY

 RTC's proposed judgment and supporting affidavits include an escrow deficiency in the amount of $ 26,305.66. This sum includes $ 7,089.98 in attorneys' fees and a $ 4,000 appraisal fee. The Mortgage, however, provides that the escrow fund exists to pay taxes, water and other charges and assessments levied against the premises, and insurance for fire and other hazards. Mortgage para. 5. Payment of legal fees or appraisal fees are not charges "levied against the premises" as are tax, water, and certain other assessments. Accordingly, payment from the escrow fund of such charges is deemed not appropriate, and the sum of $ 11,089.98 is stricken from the escrow deficiency.

 2. LATE CHARGES AND PENALTY INTEREST

 RTC's proposed judgments include charges of $ 964,431.60 for default penalty interest of 24% and of $ 25,073.34 for late charges of 1% on outstanding principal. Neither the Agreement nor the Mortgage indicates that the parties did intend that both penalty interest and late charges should apply after default. Accordingly, the late charges of $ 25,073.34 are stricken from the proposed judgment.

 3. DEFICIENCY JUDGMENT

 In its proposed judgment of November 22, 1991, RTC included a clause which permitted them to seek a deficiency judgment against the defendants. 12A objected to this request, referring to Rider 4 of the Agreement which states:

 The mortgagor shall have no personal obligation for payment pursuant to the mortgage obligation and the holder hereof agrees to look solely to the ...


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