NY Foreclosures—Former Homeowners Denied Stay of Ejectment Actions —Unclean Hands—Defendants Had Acted to "Delay, Impede and Impair Lender's Efforts to Foreclosure"

September 15, 2010

By: Scott Mollen

A former homeowner brought an order to show cause seeking to "enjoin certain ejectment proceedings." The lender had commenced a foreclosure action in 2006. A judgment of foreclosure and sale had been granted in Aug. 2007. Following four "serial bankruptcy petitions (two separate Chapter 13 petitions filed by each Defendant) and an Order to Show Cause…a public auction sale of the premises [had been] conducted [in Dec. 2009]." The lender was the sole bidder and had received title pursuant to a referee's deed in the foreclosure action. Thereafter, lender sought and obtained a writ of assistance, which was issued in February 2010. In April 2010, a defendant sought the subject stay, asserting that he was in negotiations with a bank representative and that he was too sick to move in 72 hours.

The court explained that "consummation of a public auction of a property in foreclosure extinguishes all equity of redemption." Since "judicial sympathy is not a recognized defense to an action claiming foreclosure of a mortgage…," the court assumed that the defendant was appealing to the "equity jurisdiction of this Court." However, the court found that the defendants had been "fully aware of the pendency of this action and that each of them affirmatively undertook acts that were calculated to delay, impede and impair Plaintiff in the exercise of its rights under the Note, Mortgage and Judgment of Foreclosure & Sale. In this endeavor, Defendants have been unfailingly successful. Indeed, the record is replete with ample proof that Defendants have lived in the home 'rent free' so to speak, for a period in excess of four years and further, that Plaintiff has been forced to bear the expense of both casualty insurance to protect its interest in the premises as well as the property taxes levied thereon by the Town…."

Given the defendants "unclean hands," the court held that "equity should not rightly intervene on their behalf." Accordingly, the court denied the defendants' motion, vacated a prior stay and granted the lender leave to continue its ejectment proceeding.

HSBC Bank USA NA v. Blum, New York Law Journal, June 22, 2010, p. 29, col. 1, Sup. Ct., Suffolk Co., Spinner, J.