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[*1] 

Decided on May 23, 2011Supreme Court, Kings County 

23508/09

Plaintiff was represented by Bradley D. Wank, Esq., Delbello, Donnellan, Weingarten, Wise& Wiederkehr, LLP, One North Lexington Ave., White Plains, NY 10601.

Defendant HSBCUSA, NA was represented by Eric Rosenberg, Esq., The Law Division of Fidelity National Title Group., Inc., 350 Fifth Ave., NY, NY 10118.

Herbert Kramer, J.

Is a mortgagee a bona fide purchaser in the situation where apparent discrepancies

existed between affidavits of zero-consideration, the HUD-1 form, and the closing checks?

This Court holds that a genuine issue of material fact exists as to whether the

mortgagee was a bona fide purchaser due to the discrepancies in the closing documents.

 Background  

Plaintiff alleges that on or about April 10, 2005, title to the premises which is the

Mortgage Elec. Registration Sys., Inc. v Rambaran

2011 NY Slip Op 50966(U)

Decided on May 23, 2011

Supreme Court, Kings County

Kramer, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law§ 431.

This opinion is uncorrected and will not be published in the printed OfficialReports.

 

Mortgage Electronic Registration Systems, Inc., as Nominee for

Freemont Investment & Loan, Plaintiffs,

against

Sushma Rambaran, Seema Rambaran, Hemant Rambaran,

HSBC Bank USA, NA, as Indenture Trustee for the RegisteredNoteholders of Renaissance Home Equity Loan Trust 2007-2

and Philip Baldeo, Defendants.

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subject of this action (the Property) was transferred from defendant Hemant Rambaran

(Hemant) to himself and defendant Baldeo both at 50% ownership. On or about August 10,

2005, Baldeo and Hemant obtained a loan in the amount of $302,250.00 from Freemont

Investment and Loan (Freemont). In connection with the loan Baldeo and Hemant executed

a note and as collateral security executed a mortgage for Freemont. It is undisputed that the

note and mortgage was not recorded. Furthermore, Freemont admits that it not currently in

 possession of the mortgage documents. [*2] 

Thereafter on March 30, 2007, Hemant executed a deed purportedly conveying all of 

his right title and interest to the premises to defendants Seema and Sushma, his daughters.

The deed was recorded on March 30, 2007. On March 30, 2007 Seema and Sushma

executed a note and mortgage for $423,750.00 secured by the Premises in favor of MERS as

nominee for Delta Funding Corporation (Delta). The mortgage was transferred from MERSas nominee for Delta to HSBC.

Plaintiff alleges that Hemant's transfer to his daughters was fraudulent and that HSBC

was or should have been on notice of the fraudulent transfer and therefore Freemont's

mortgage should have primacy. In support of this position plaintiff relies upon two affidavits

delivered at the March 30, 2007, closing in which Hemant states that he has received zero

consideration for the transfer of the premises, that the transfer was between family members

and two transfer tax documents which state that the consideration for the transfer was $0. Incontrast to those documents, the HUD-1 form states that Hemant received $296,000.00 in

consideration for the transfer. Lastly, plaintiff asserts that the checks issued at the closing

were endorsed to parties other than Hemant and his daughters, further casting a suspicious

light on the transfer.[FN1] 

 Real Property Law  

 New York is a "race-notice" state as provided in NY RPL § 291: "A conveyance . .

.may be recorded. . .Every such conveyance not so recorded is void as against any person

who subsequently purchases or . . contracts to purchase...the same real property in good faith

and for valuable consideration, from the same vendor...and whose conveyance...or contract

is first duly recorded..." Essentially there are two basic aspects to the statute. First, one who

records will have priority over subsequent claimants, whether they have recorded or not.

Second, one who records, without notice of an unrecorded prior claimant, will also have

 priority. See NY RPL § 291; Mortgage Liens in New York § 10:3 et. seq.

However, there are several exceptions carved out of this general rule. For example, a

 prior recorded mortgage would lose priority to an unrecorded mortgage if the mortgagee had

notice, actual or constructive of such a conveyance. If a purchaser has knowledge of any

fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with

that he is about to purchase, he is presumed either to have made the inquiry, and ascertained

the extent of such prior right, or to have been guilty if a degree of negligence equally fatal to

his claim, to be considered a bona fide purchaser. Maiorano v. Garson, 886 N.Y.S.2d 190

[2d Dep't 2009] citing Williamson v. Brown, 15 NY 354, 362 (internal citations omitted).

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J.S.C.

Footnotes 

Footnote 1:Tom L. Moonis, Esq. Submitted an affirmation authenticating copies of checksissued in connection with the 2007 closing, which involved Delta Finding (now held by

HSBC) and the Rambarans. The checks were issued to persons and entities includingSushma Rambaran, HKR Construction, Varsha Construction, and 81-83-85 Blake AvenueLLC.

Footnote 2:HSBC submits the affidavit of Renee Hensley, the manager of Ocwen LoanServicing, LLC, the servicing agent for HSBC's loan to the Ramabrans. She asserts that"accompanying the other documents in the origination file for the Mortgage was a HUD-1form, which is a standard form that is executed in connection with real estate sales andmortgage transactions.. .The buyers/borrowers - in this case Sushma and Seema Rambaran -execute the form, whcih contains an itemization of the loan and the disposition of the loan

 proceeds that are being disbursed at or near the time the HUD-1 is executed. It is the usual practice of Ocwen. . .to rely on those documents. . .the [HUD-1] indicates that, of the$423,750 in loan proceeds. . .$296,000 were paid as consideration to H. Rambaran.' Ms.Hensley's affidavit fails to discuss the contradictory affidavits of zero-consideration or theclosing checks issued to other entities.

Footnote 3:Where the court held that discrepancies between the closing checks gave rise toa duty to further investigate the transactions.

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