Consumer complaint received 2020-02-29
Product: Mortgage — Conventional home mortgage
Issue: Struggling to pay mortgage — 
Company: KEYCORP (NY)

I would like to provide additional documents to the CFPB and explain, based on both U.S. law and CFPB regulation, why Key Banks legal position, as expressed by its lawyer, XXXX XXXX, XXXX. of XXXX, XXXX, XXXX XXXX XXXX XXXX XXXX, is inconsistent with the CFPBs interpretation of federal regulation. XXXX, XXXX, XXXX XXXX XXXX XXXX XXXX is located at XXXX XXXX XXXX XXXX XXXX XXXX, XXXX, NY, XXXX. Key Bank has taken several legal positions during the foreclosure proceeding. It started out by representing that because my mother is deceased, there was no loan modification option available because successors in interest were not entitled to such remedy, and that Key Bank was not obligated to provide me a loan workout representative familiar with the situation who would have the authority to negotiate a loan workout pursuant to the CFPBs live contact regulation. Key Bank also argued that because my mother was deceased, the loan was not a home loan as that term is defined in New York State law, so that the protections of state law, such as the notices of RPA 1303, 1304 and 1306 and the mandatory settlement conference of CPLR 3408 did not apply. After many CFPB complaints, Key Bank mailed me a successor-in-interest form without cover letter in an envelope from Key Banks Executive Offices. Several months and CFPB complaints later, XXXX XXXX, XXXX, formerly of XXXX, XXXX, XXXX XXXX XXXX, XXXX mailed me four loan modification forms, two by return receipt postal mail, also without cover letter. These acts, commendably made by Key Bank to comply with CFPB regulation, is a reversal of its original position that did not comply with CFPB regulation. Mr. XXXX XXXX of XXXX, XXXX, XXXX XXXX XXXX XXXX XXXX, XXXX moved for summary judgment based on the argument that establishing that default and ownership of the loan is sufficient for summary judgment of foreclosure and, although he presented no evidence to contradict my verified affidavit setting forth facts that support tortious and contractual claims against Key Bank, only a list of tort equitable doctrines that appeared copied from a torts text book index, he argued that Acting Supreme Court Justice XXXX XXXX should grant summary judgment of them, too. Acting Supreme Court Justice XXXX   decision is based on several erroneous premises, that foreclosure is a matter of law, not equity, such that summary judgment might apply if there was no factual dispute, that a bank need only establish default and ownership of the loan to establish it may foreclose as a matter of law, that federal law and CFPB regulation are not relevant to the operation of state law, citing a NYS trial court case interpretation from Miscellaneous Reports that is neither binding on Acting Supreme Court Justice XXXX or any higher court, and that an estate of a decedent is not to be viewed as the borrower or resident to the property pursuant to state law, even though the bank readily recognizes the common law view that the estate has the obligation of the mortgage ( relevant for the RPA 1304 and RPA 1306 notices ) and what was a home loan of the decedent is not a home loan after the decedent dies even though a successor in interest resides there ( relevant for CPLR 3408 ). Acting Supreme Court Justice XXXX cited, Wells Fargo Bank, NA v Balk, 50 Misc. 3d 1205 ( A ( 20150 ), which is, again, a trial court case but in this case not even in the Third Department ( It is a Second Department case. ), that is neither precedent to his court or any higher court. Moreover, the relevant determinations from this case, that a banks notice obligations to both the estate and the New York State Department of Finance cease upon the death of the original borrower and that because the decedent is no longer resident in the property a courts scheduling of and a banks participation in a CPLR 3408 hearing is not required before a grant of foreclosure is permitted, cite to no cases, nor to the relevant sections of federal bank regulation, 12 CFR 1024.30 ( d ) and 12 CFR 1024.31, that make it quite clear that the CFPB deems these state trial court arguments to be bogus. Based on my research, the state law questions of whether an estate of a decedent obligated to pay the mortgage should not be viewed as the borrower for the purposes of RPA 1304 and RPA 1306 or whether the death of the resident decedent extinguishes a banks obligation to participate in a CPLR 3408 conference with a resident successor in interest before a judgment for foreclosure can be granted have not been addressed by either any department of the Appellate Division or the New York State Court of Appeals. Because I am no longer serving as the executor of the Estate of XXXX XXXX, Mr. XXXX has taken the new position that the successor-in-interest form was mailed to me only in my capacity as an executor, not as a beneficiary, so that I may not apply for a loan modification or speak to a loan workout representative familiar with the case in order to negotiate a loan workout. Even though Key Bank understandably views the loan made to my mother as binding on the estate, it refuses to consider the successor in interest to my deceased mother, her estate, to be entitled to the same statutory rights and equities associated with the property and mortgage associated with that property, or any resident successor in interest of the property, whether as an executor or a beneficiary, to be entitled to the notice requirement of RPA 1304 or the NYS Department of Financial Services to the notice requirement of RPA 1306 or the banks participation with one of its employees empowered to settle the foreclosure case at a CPLR 3408 settlement conference, where the bank must bargain in good faith. Key Banks legal position is erroneous, both in terms of federal law and regulation. It is also erroneous under New York State law. I am requesting that the CFPB compel Key Bank to make its legal representations consistent with CFPB regulations and interpretations and state law that does not conflict with federal law or CFPB regulation to the extent that such state law provides more consumer protection to the consumer, not less. I have just studied the concept of preemption of federal law over state law. Federal law preemption was first articulate by Supreme Court of the United States Chief Justice XXXX in McCulloch v. Maryland ( 1819 ),  based on the Supremacy Clause of the U.S. Constitution. Preemption is either explicit or implied. Implied preemption has two types : conflict or field. In this case, 12 USC 2616 constitutes explicit preemption, since it specifically preempts state law that conflicts except where the CFPB views that the state law provides greater protection to consumers, in which case the state law governs. Attached are the relevant regulations with supplementary comments : 12 CFR 1241.30 ( d ), 1241.31. CFPB regulation is explicit that a successor in interest includes the beneficiaries and the inter vivos trust ( the estate ) and that a successor in interest is the borrower. These regulations went into effect in XXXX, as a response to the XXXX trial court case in New York State that Acting Supreme Court Justice XXXX cited and perhaps several others, but, as I wrote, to the best of my research, no Appellate Division court or the New York State Court of Appeals have addressed these questions. Moreover, pursuant to state law alone, NYS Court of Appeals case decisions state that the successors in interest retain all rights and equities in property and that would include the rights and equities associated with my decedent mother. For RPA 1304 and 1306, that certainly would include the estate, since it is liable for the debt. As the executor of the estate before and during the inception of the foreclosure case, I did not receive the RPA 1304 notice and the NYS Department of Finance did not receive the RPA 1306 notice. Key Banks representative XXXX XXXX admits tKey Bank did not mail these notices in her affidavit. Key Bank sent me the successor-in-interest form and several months later, XXXX XXXX, XXXX. of XXXX, XXXX, XXXX, XXXX mailed me by first class mail and certified, return-receipt mail loan modification forms to XXXX XXXX XXXX where I, as a successor-in-interest executor and beneficiary, was resident, yet Key Bank and its attorney continue to claim that I am not entitled to the banks participation in a CPLR 3408 settlement conference before a grant of foreclosure judgment and, as a beneficiary successor in interest, I am not entitled to complete a loan modification application. Not only should summary judgment not have been granted against the estate, the estate is entitled to summary judgment to dismiss the foreclosure and the counterclaims re-instated, for which there will be a settlement or trial! New York State law requires the foreclosure plaintiff to pay for the legal fees and costs of the successful foreclosure defendant. Moreover, all of Key Banks legal expenses and costs would be voided, and there would be a hearing before a jury as to what interest should be allowed pending the foreclosure complaint ( CPLR 5001 ). I think we are talking about approximately {$40000.00} plus any of the defendant legal fees. We can fix this problem, even creating some sort of win-win deal where all parties profit, but we will need to converse. My negotiation with Mr. XXXX at the Court Assigned Settlement Program hearing that the appellate court justices ordered, consisted of this exchange : 1 ) XXXX XXXX : When I spoke to XXXX XXXX ( SVP, Manager of Consumer Collections and CFPB regulatory executive ( as required by the CFPB ) ), she expressed her interest that whatever agreement we make, that it resolve this problem completely. I agree with her. Is that something we can agree upon today? XXXX XXXX : Dont talk to my client. 2 ) XXXX   : I have asked a Key Bank call center representative if Key Bank preferred a cash settlement or wanted me to create a win-win business transaction that would allow Key Bank to profit from this experience. She claimed she did not have the authority to answer the question. Does Key Bank have a preference as to how we try to settle the case? XXXX : Neither. <various comments>. Well, were not going to do a business deal with you, if that is what you are asking. XXXX : I have reviewed similar cases to this one in damages reporters. Similar case settlements range from {$100000.00} to {$170000.00} for the general damages plus actual damages. There are actual damages in this case. Does the {$100000.00} to {$170000.00} for the settlement of the general damages plus the actual damages that I will need to calculate sound like a reasonable settlement to the case? XXXX : Youre gettin nothing! Mr. XXXX then said that because we were three years into the process, the county probably would start an in rem proceeding and subsequently giggled for a second or less. At this point, retired Supreme Court Justice XXXX XXXX ended the CASP hearing. Perhaps Key Bank would allow me to speak to its employee XXXX XXXX or any other employee it deems to have the authority to negotiate the workout? Perhaps Key Bank has hired the loan workout representative in XXXX, NY for the position that it advertised on XXXX. Please see the relevant attachment. Lastly, I found extant New York State Court of Appeals precedent, Wolff v. Mortgage Co., 470 NY 28 ( 1936 ), in  which the Court of Appeals determined that upon the filing of the foreclosure complaint, the foreclosing creditor becomes a receiver in fact and must make all property and school tax payments timely, with the balance accruing onto the mortgage debt, during the pendency of the foreclosure action. The Court of Appeals directed the parties to meet with the foreclosure referee for the purposes of making arrangement for the payment of the property and school taxes to the relevant governmental entities. Key Bank has refused to make these tax payments during the pendency of the action, although I have asked multiple times for it to do so and included as a counterclaim the interest and penalties the government entities have charged the estate during the foreclosure proceeding. Yesterday, I just received a response to my CFPB complaint, XXXX. I will respond briefly to the points Key Bank, because many of them are not consistent with CFPB regulation, as I explained above. I am responding from memory, so if what I write does not respond to a point that Key Bank made or if my reply is slightly unresponsive, please forgive me. Key Bank : Mr. XXXX is no longer the executor of the Estate of XXXX XXXX and does not have standing to speak for the Estate of XXXX XXXX. I filed a notice of appeal of the estate revocation for a case that is extant. I have moved for the Surrogate Court to grant a stay of its revocation order pursuant to CPLR 2102 upon terms it deems just. I will also move to intervene as a party, because just because Key Banks process server failed to serve me process at XXXX XXXX XXXX, is no reason to deny me my property interest as a beneficiary in an estate, an explicit successor in interest, as set forth by federal regulation, 12 CFR 1024.31. Key Bank : The rights of the decedent associated with a home loan end upon the death of the decedent, whether that be the notice rights associated with RPA 1304 for the list of local nonprofit foreclosure counselors, rights associated with being the borrower, and a resident owners entitlement to bank participation in a CPLR 3408 settlement conference that requires the parties to negotiate in good faith before a foreclosure judgment may be granted in New York State. Key Banks positions are incongruent with federal regulation that CFPB enforces. 12 CFR 1024.30 ( d ) is explicit that a confirmed successor in interest is the borrower and 12 CFR 1024.31 is explicit that successors in interest  include beneficiaries, heirs, tenants in the entirety, owners with title in their names from a decedent or the inter vivos trust ( the estate ). Key Bank : I have no right to a loan modification until the property is transferred out of estate name. This statement is also false. 12 CFR 1024.31, ( 2 ) of the interpretation notes explicitly rejects Key Banks position. Key Bank : I have had access to a Key Bank employee familiar with the case to discuss a loan workout the Civil Appeals Settlement Program hearing that the Appellate Division justices ordered. The live contact regulations require this access before the foreclosure complaint, not as a part of the New York State Appellate Division of the Supreme Courts case settlement program. Moreover, when I started to address my remarks to Ms. XXXX, Mr. XXXX, XXXX. interrupted me, leaned towards me and said, You talk to me! You talk to me! The discussion is set forth above. I do not believe Key Bank bargained in good faith, as it would be required to do in a CPLR 3408 settlement conference.