United States District Court, Eastern District of New York
Sandra J. Feuerstein United States District Judge
On October 25, 2013, plaintiff Eastern Savings Bank, FSB (“Eastern” or “plaintiff”) commenced this diversity action against defendants Leonard J. Ferro (“Ferro”), RAB Performance Recoveries, LLC (“RAB”),  Da Silva Plastic and Reconstructive Surgery, PC (“Da Silva Surgery”), August Da Silva, MD (“Da Silva M.D.”),  and “John Doe #1 through John Doe #6” (collectively, “defendants”) pursuant to New York Real Property Actions and Proceedings Law, Section 1301 et seq., to foreclose on a one hundred sixty-five thousand dollar ($165, 000.00) mortgage encumbering the Property, as defined herein. Now before the Court is plaintiff’s unopposed motion for summary judgment against answering defendant Ferro pursuant to Federal Rule of Civil Procedure 56. [Docket Entry No. 29 (“Motion for Summary Judgment”)]. For the reasons that follow, plaintiff’s Motion for Summary Judgment is granted.
A. Factual Background
1. The Note and Mortgage On December 4, 2007, defendant Ferro and Leonard Ferro Sr., by Toni L. Poallo, Attorney-in-Fact, executed a Note in the principal amount of one hundred sixty-five thousand dollars ($165, 000.00) in favor of plaintiff (the “Note”). Pl. 56.1 Stmt. ¶ 2; [Docket Entry No. 29-4, Ex. A to Motion for Summary Judgment (the “Note”)]. The Note was secured by a mortgage (the “Mortgage”) executed the same day on real property located at 17 Dietz Street, Central Islip, New York, 11722 (the “Property”). Pl. 56.1 Stmt. ¶ 3; [Docket Entry No. 29-5, Ex. B to Motion for Summary Judgment (the “Mortgage”)]. On or about March 5, 2008, Leonard Ferro Sr. and defendant Ferro executed a Bargain and Sale Deed (the “Deed”) by which Leonard Ferro Sr. reserved a life estate in the Property with right of possession during the term of his natural life. Pl. 56.1 Stmt. ¶ 4; [Docket Entry No. 29-6, Ex. C to Motion for Summary Judgment (the “Deed”)]. Leonard Ferro Sr. passed away on or about June 12, 2008. Pl. 56.1 Stmt. ¶ 5; [Docket Entry No. 29-7, Ex. D to Motion for Summary Judgment]. Eastern remains the owner and holder of the Note, Mortgage and all other documents executed in conjunction with the loan. Brown Aff. ¶ 8.
The terms of the Note require defendant Ferro, as the borrower, to make monthly payments to plaintiff, the lender, of principal and interest on the first day of each month, beginning on February 1, 2008, and continuing on the first day of each month thereafter until the maturity date. Pl. 56.1 Stmt. ¶ 6; Note ¶ 3. The Note further provides that if Ferro fails to pay the full amount of each monthly payment on its due date, he will be in default (Pl. 56.1 Stmt. ¶ 6; Note ¶ 6) and the Note Holder may send Ferro a written notice explaining that if he does not pay the overdue amount by a certain date, the Note Holder may require him to immediately pay the full amount of principal which has not been paid and all interest owed on that amount. Pl. 56.1 Stmt. ¶ 8; the Note ¶ 6. The Mortgage also allows Eastern to require Ferro to immediately pay the entire amount due under the Note if Ferro fails to make a payment when due, Eastern sends Ferro a thirty (30) day notice of default, and Ferro fails to correct his default. Pl. 56.1 Stmt. ¶ 10; Mortgage, at 14-15.
The Mortgage further provides that Ferro will pay to plaintiff “all amounts necessary to pay for taxes, assessments, water charges, sewer rents and other similar charges, ground leasehold payments or rents (if any), hazard or property insurance covering the Property, flood insurance (if any), and any required Mortgage Insurance, or a Loss Reserve Amount as described in Section 10 in the place of Mortgage Insurance.” Pl. 56.1 Stmt. ¶ 11; Mortgage ¶ 3. The Mortgage allows plaintiff to “include these amounts as Escrow Items” and provides that the monthly payment paid by Ferro for Escrow Items “will be based on [plaintiff’s] estimate of the annual amount required” and will be made “on the same day that [his] Periodic Payments of principal and interest are due under the Note.” Id. An Initial Escrow Account Disclosure Statement setting forth the anticipated amounts of additional amounts for real estate taxes and insurance to be paid with principal and interest as part of the monthly mortgage payments was executed by defendant Ferro and Leonard Ferro Sr by Toni L. Poallo, Attorney-in-Fact, at or about the time the loan was executed. Pl. 56.1 Stmt. ¶ 12; Brown Aff. ¶ 58; [Docket Entry No. 29-24, Ex. U to Motion for Summary Judgment (“Escrow Disclosure”)]. Because the exact amount of the following year’s taxes is uncertain, the Escrow Disclosure states at the top that it is “an estimate of activity in your escrow accounting during the coming year based on payments anticipated to be made from your account.” Brown Aff. ¶ 58; Ferro Escrow Disclosure. Each year, plaintiff performs and sends to its borrowers, including Ferro, a detailed Escrow Analysis which sets forth and reconciles the prior year’s payments with the actual disbursement rate. Brown Aff. ¶ 60; [Docket Entry No. 29-25, Ex. V to Motion for Summary Judgment (“Escrow Analysis”)].
2. Ferro’s Default and Prior Foreclosure Actions
As a result of Ferro’s failure to make timely payments from July 2010 to October 2010, plaintiff commenced a foreclosure proceeding against Ferro on October 26, 2010 in the United States District Court for the Eastern District of New York under Civil Action No. 10-civ-4932 (the “First Foreclosure Action”). Pl. 56.1 Stmt. ¶ 13. Based upon payment made by Ferro on or about November 12, 2010, plaintiff voluntarily dismissed, without prejudice, the First Foreclosure Action. Pl. 56.1 Stmt. ¶ 13; Brown Aff. ¶ 16; [Case No. 10-civ-4932, Docket Entry. No. 4 (Order of Dismissal)]. Based upon Ferro’s failure to make timely payments beginning on December 1, 2010, plaintiff initiated a second foreclosure proceeding in the United States District Court for the Eastern District of New York under Civil Action No. 11-civ-5152 (the “Second Foreclosure Action”). Pl. 56.1 Stmt. ¶ 15.
3. The Forbearance Agreement and the Deferral Agreement
On or about December 9, 2011, Eastern and Ferro executed a Forbearance Agreement, as defined herein, which, inter alia, provided that Eastern would forbear from proceeding with the previously instituted foreclosure proceedings until August 31, 2012 so long as Ferro complied with the payment scheduled provide in the Forbearance Agreement, which required him to remit an initial payment of fifteen thousand dollars ($15, 000.00) on or before December 5, 2011 and then remit forbearance payments in the amount of two thousand four hundred twenty-five dollars ($2, 425.00), consisting of principal and interest in addition to escrow payment for property taxes and insurance as provided for in the Mortgage on the first day of each month beginning with January 2012 and continuing until and including August 2012. Pl. 56.1 Stmt. ¶¶ 16-17; Brown Aff. ¶¶ 19-20, 43; [Docket Entry No. 29-8, Ex. E to Motion for Summary Judgment (“Forbearance Agreement”) ¶ 2]. The Forbearance Agreement preserved Eastern’s “right to increase the amount of the forbearance payments due under [the Forbearance Agreement] in the event the escrow portion of the monthly payment increases.” Pl. 56.1 Stmt. ¶ 17; Forbearance Agreement ¶ 2.
In the Forbearance Agreement, Eastern agreed that if Ferro complied with the Forbearance Agreement it would dismiss any pending foreclosure action and defer any remaining past due amounts until the earlier of: (i) payment of the loan in full, (ii) acceleration of the debt, or (iii) default, or (iv) maturity of the loan. Brown Aff. ¶ 20; Forbearance Agreement ¶ 4. Pursuant to the Forbearance Agreement, Ferro acknowledged “that the loan [was] in default for December 1, 2010 and subsequent payments” (Forbearance Agreement ¶ 5) and agreed “not to contest, and…waive[d] any defenses, set-offs or counterclaims to any foreclosure proceeding except as to the non-existence of a default under [the Forbearance Agreement].” Pl. 56.1 Stmt. ¶ 18; Forbearance Agreement ¶ 8. Ferro complied with the Forbearance Agreement and the next monthly payment under the Mortgage due was for September 1, 2012. Brown Aff. ¶ 23.
On August 28, 2012, Eastern and Ferro executed a deferral agreement which set forth the amount of debt due and owing to be deferred in compliance with the Forbearance Agreement and set forth the next monthly payment due for September 1, 2012 in the amount of two thousand two hundred sixty dollars and forty-seven cents ($2, 260.47), which specifically included the escrow portion of the payment of seven hundred thirty-four dollars and twelve cents ($734.12). Pl. 56.1 Stmt. ¶ 19; Brown Aff. ¶ 24; [Docket Entry No. 29-9, Ex. F to Motion for Summary Judgment (“Deferral Agreement”)]. In the Deferral Agreement, Ferro acknowledged the amount he currently owed and that was being deferred, and “acknowledge[d] and agree[d] that there are no set-offs or defenses against the Note and Mortgage.” Pl. 56.1 Stmt. ¶ 20; Brown Aff. ¶ 25; Deferral Agreement ¶ 5.
Following the execution of the Forbearance Agreement and the Deferral Agreement, the Second Foreclosure action was voluntarily dismissed, without prejudice, on October 9, 2012. [Case No. ...