Secretary of the U.S. Department Housing and Urban Development v. Fray

Background

Stanley Fray and Alvera Fray executed an adjustable-rate note and mortgage in 2009 in the amount of $938,250. They also executed a second note and collateral mortgage in favor of the Secretary of the U.S. Department of Housing and Urban Development. The mortgage concerned property at 29 Woodland Place, White Plains, New York. The mortgage was later assigned to the department.

Alvera Fray died in 2019, followed by Stanley Fray later that year. Sherman A. Fray, their son, was appointed administrator of the estate in 2022. Under the note, the department could demand immediate payment in full after a borrower’s death if the property was not the principal residence of a surviving borrower. Because both borrowers had died, the department declared the full amount due. It sought only foreclosure and sale, not a deficiency judgment or attorney’s fees.

The department asserted that, as of November 4, 2024, $927,621.56 was due, consisting of unpaid principal, accrued interest, service charges, and mortgage insurance premiums. It also sought $902.11 in litigation costs and other expenses connected with the sale.

Procedural History and Summary-Judgment Standard

The department filed the complaint on June 17, 2024, and served Sherman A. Fray and the New York State Department of Taxation and Finance. Neither initially answered or appeared, and the Clerk entered defaults. Fray later appeared at a court hearing and requested more time to respond to the department’s summary-judgment motion. After receiving the motion papers and required notice, Fray filed a letter stating that he had no opposition. The New York State Department of Taxation and Finance never appeared.

Summary judgment is appropriate when the evidence shows no genuine dispute over a material fact and the moving party is entitled to judgment under the law. Even when a motion is unopposed, the court must independently examine the moving party’s evidence. The court treated properly supported facts in the department’s factual statement as admitted because Fray did not submit a response, while still requiring the department to meet its legal burden.

Foreclosure

To establish a right to foreclosure on summary judgment, a plaintiff generally must provide the mortgage, the unpaid note, and evidence of default. The department provided the note, mortgage, written assignments, and evidence that both borrowers had died. The court concluded that the note’s death-related payment provision established the alleged default and that Fray had presented no affirmative defense. The court therefore granted summary judgment on the department’s right to foreclose.

The court appointed Michael P. Amodio to conduct the foreclosure sale and found his requested $750 fee reasonable. The property is to be sold as one parcel. The court also granted the department’s request for recoverable litigation costs totaling $902.11, including the filing fee for the notice of pendency, title-search fees, and service-of-process fees, because the note allowed qualifying enforcement costs and the department provided supporting documentation. The court granted the request for other sale expenses, such as advertising and certain property charges, and granted post-judgment interest under federal law.

Amounts Due

The court did not determine the final amount owed. It referred the matter to Magistrate Judge Judith C. McCarthy to compute the amount due and prepare a report and recommendation. The department must submit a detailed calculation with supporting records.

The court found that the department had not provided enough documentation to verify the claimed unpaid principal of $523,763.09. It also could not verify the claimed $346,749.04 in accrued interest. Based on the information available, the court calculated approximately $73,836.90 in interest from September 6, 2019, through November 4, 2024, but noted that the department’s claimed amount was substantially higher and required explanation and supporting records. The department must also document the claimed mortgage insurance premiums, which depended on the loan balance over time.

The court found that the $5,640 in service charges could be recoverable if the department provides records showing that the borrowers did not pay those charges during the relevant period. Because the final principal balance had not been established, the court also could not calculate prejudgment interest and left that issue for the further proceedings before Magistrate Judge McCarthy.

Other Defendants and Disposition

The court dismissed John Does #1-5 and Jane Does #1-5 after the department stated that it had determined there were no additional such defendants.

The court denied the department’s request for a default judgment against the New York State Department of Taxation and Finance without prejudice to renewal. The department alleged that the state agency might hold a subordinate lien based on unpaid estate taxes, but it did not provide the basis for believing a lien existed, the amount of any lien, or documentary evidence of one. The department could renew the request by conducting a lien search or identifying other sufficient evidence or authority. If it found no such evidence, it could voluntarily dismiss the claims against that agency.

Judge Seibel’s order therefore granted in part and denied in part the department’s motion: summary judgment was granted as to the right to foreclose, additional evidence was required concerning damages, and default judgment against the New York State Department of Taxation and Finance was denied without prejudice to renewal.