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Silverman v. Household Finance Realty Corp. of New York

United States District Court, E.D. New York

August 5, 2013

RICHARD SILVERMAN and VICTORIA SILVERMAN, Plaintiffs,
v.
HOUSEHOLD FINANCE REALTY CORPORATION OF NEW YORK d/b/a HFC, HSBC FINANCE CORPORATION, successor in interest by acquisition to Household Finance Corporation, HSBC NORTH AMERICAN HOLDINGS, INC.,

Page 314

For Plaintiffs: Joseph A. Chang & Associates, LLC, By: Joseph D. Turano, Esq., Paterson, New Jersey.

For Household Finance Realty Corporation of New York, HSBC Finance Corporation and HSBC North America Holdings Inc., Defendants: Greenberg Traurig LLP, By: Eric N. Whitney, Esq., Seth M. Kruglak, Esq., New York, NY.

OPINION

Page 315

MEMORANDUM AND ORDER

LEONARD D. WEXLER, UNITED STATES DISTRICT JUDGE.

Plaintiffs Richard and Victoria Silverman (" Plaintiffs" or the " Silvermans" ) bring this action containing sixteen (16) claims alleging violations of the New York General Business Law, breach of contract, fraud, negligence and numerous other violations of real property and banking laws, in connection with a refinancing loan on their property. Defendants Household Finance Realty Corporation of New York d/b/a HFC (" HFC" ), HSBC Finance Corporation (" HSBC Finance" ) and HSBC North America Holdings Inc. (" HSBC America" ) (collectively, the " Defendants" )

Page 316

move to dismiss Plaintiffs' complaint pursuant to Federal Rules of Civil Procedure (" Fed.R.Civ.P." ), Rule 12(b)(6). For the reasons that follow, Defendants' motion is granted, and Plaintiffs are granted leave to amend their complaint to replead their breach of contract, fraud and fraud in the inducement claims.

BACKGROUND

I. Factual Background

According to the facts outlined in Plaintiffs' complaint, Plaintiffs Richard and Victoria Silverman (the " Silvermans" or " Plaintiffs" ) own a home at 58 Wells Road, Greenlawn, New York 11740. On February 25, 2008, they applied to refinance their home mortgage loan with HFC, which held the prior mortgage on the Silverman's home. Ultimately, HFC refinanced the Plaintiffs' loan, and consolidated it with the prior mortgage. On March 19, 2008, at the closing, Plaintiffs executed various mortgage note and related documents. Following the closing, HFC was acquired by HFBS Finance, which was then acquired by or merged with HSBC America.

In their complaint, Plaintiffs claim that when they executed the mortgage note, the debt to income ratio exceeded the level necessary for the loan to be affordable to them, that HFC mislead the Silvermans into thinking that the loan was affordable, and allowed the Silvermans to take on a loan they could not afford, thus damaging Plaintiffs. Plaintiffs further allege that Defendants engaged in " loan-flipping," provided a loan with no real benefit to Plaintiffs, and when the loan became too expensive to repay, encouraged Plaintiffs to pursue modification activities of default or partial default activities, knowing that such modifications would not be approved. Plaintiffs claim to be financially damaged and in danger of losing their home to foreclosure.

Plaintiffs' complaint was filed in Queens County Supreme Court on June 5, 2012, and was removed to this court on July 18, 2012. Defendants move to dismiss all claims in the complaint.

DISCUSSION

I. Legal Principles


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