Nationstar v Public Administrator of Kings County, et al.; Antoine Ray, as heir to the estate of Gloria Scrubbs
Attorneys and Parties
Brief Summary
Mortgage foreclosure on a reverse mortgage; whether a former owner who conveyed all interest has standing to seek dismissal for abandonment under CPLR 3215(c) and whether the current titleholder may be substituted as a defendant.
Granted the defendant's motion to dismiss the foreclosure complaint as abandoned under CPLR 3215(c) [dismissal of abandoned claims when the plaintiff fails to take proceedings for entry of judgment within one year after a default], and denied substitution of B & H 1301 Holding Corp. for the defendant.
The grant of the defendant's CPLR 3215(c) motion dismissing the complaint as abandoned.
The defendant had previously conveyed all his interest in the property and, because the reverse mortgage was nonrecourse, no deficiency judgment could be sought; therefore he was not a necessary party and lacked standing to defend the action, including moving to dismiss under CPLR 3215(c).
Background
In 2007, the decedent, Gloria Inez Scrubbs, executed a note for $544,185 to BNY Mortgage Company, LLC, secured by a reverse mortgage on Brooklyn property. She died in 2013, allowing the lender to accelerate under the mortgage. In 2017, heir Antoine Ray and Felecia Ray deeded the property to B & H 1301 Holding Corp. (B&H), with the conveyance recorded in 2018. In 2019, Nationstar, as BNY's successor in interest, commenced foreclosure against Ray and others; Ray did not appear or answer. In 2023, Ray moved to dismiss for abandonment under CPLR 3215(c), and Nationstar cross-moved to substitute B&H for Ray and amend the caption. The loan documents contained a nonrecourse provision limiting recovery to the mortgaged property.
Lower Court Decision
The Supreme Court, Kings County, granted Ray's motion and dismissed the complaint as abandoned under CPLR 3215(c), and denied Nationstar's cross-motion to substitute B&H and amend the caption.
Appellate Division Reversal
Modified: Denied Ray's CPLR 3215(c) motion because, having conveyed all interest and with no possibility of a deficiency under the nonrecourse reverse mortgage, he was not a necessary party and lacked standing to defend. Affirmed: Denial of substitution, as Nationstar failed to adequately explain why it did not name B&H when it already held title prior to commencement.
Legal Significance
Confirms that a former owner who has made an absolute conveyance of all interest in the property is not a necessary party to a foreclosure absent a deficiency claim, and therefore lacks standing to seek CPLR 3215(c) relief. Also underscores that substitution of the current titleholder requires a satisfactory explanation for not having named that party initially.
In reverse mortgage foreclosures with nonrecourse provisions, a former owner who conveyed all interest cannot move to dismiss for abandonment under CPLR 3215(c). Plaintiffs must timely sue the titleholder of record; post-commencement substitution will be denied without a compelling explanation.