In a friendship gone bad, Adam Leitman Bailey, P.C. was retained by clients (“Plaintiffs”) who had a Judgment of Foreclosure and Sale (“JFS”) that was over five years old. The Plaintiffs were not traditional lenders but rather were assigned the JFS and the underlying loan when their former friend (“Defendant”) requested a gigantic favor from them. The Defendant had a property that was in foreclosure and on the verge of auction. Defendant begged the Plaintiffs to purchase the underlying loan and judgment and to give him some time to either refinance the property and pay off the loan, or if Defendant was unable to get financing, he would sell the property in approximately 3 months and pay off Plaintiffs’ loan. Invoking their longtime friendship and medical hardships, Defendant plead with Plaintiffs to help him out and stop the auction. Plaintiffs agreed to help the Defendant which required Plaintiffs taking out a loan in a sum of $1.3 million that they used to purchase Defendant’s loan.
Plaintiffs believed that their friend, the Defendant, would do right by them but things quickly changed. Defendant came up with excuse after excuse as to why he could not refinance the property. When asked about his promise to sell if he could not refinance, Defendant again came up with a plethora of excuses as to why he did not want to sell. Furthermore, Defendant became so emboldened that he started demanding that Plaintiffs accept less money in satisfaction of the mortgage despite Plaintiffs enduring significant financial burdens including paying interest on the loan they had to take out to purchase Defendant’s loan.
By the time Plaintiffs came to Adam Leitman Bailey, P.C., over five years had gone by, and Plaintiffs never received any payment from the Defendant. Adam Leitman Bailey, P.C. advised Plaintiffs that the timeframe set forth in the JFS to conduct an auction had long passed, and a motion was required to extend the time to conduct an auction. However, given that so much time had passed, there was a real concern that a Judge may reduce interest for that time period.
Adam Leitman Bailey, P.C. prepared a comprehensive motion explaining exactly what caused the delays, and the how Plaintiffs were attempting to act in good faith.
The Court credited Adam Leitman Bailey, P.C.’s arguments and granted the motion. However, when it came time to actually schedule the auction, it was discovered that the referee recently passed away.
Adam Leitman Bailey, P.C. quickly moved by order to show cause to appoint a successor referee which the Court granted. Adam Leitman Bailey, P.C. immediately scheduled a foreclosure auction.
With Adam Leitman Bailey, P.C. behind Plaintiffs, Defendant could no longer try to take advantage of Plaintiffs. With the auction approaching, Defendant reached out seeking to pay off the loan. Defendant begged for Plaintiffs to cancel the foreclosure auction, but Plaintiffs refused unless Defendant made a good faith payment prior to the scheduled auction.
Without any other choice, Defendants made a payment in the amount of one million dollars prior to the auction. This payment was accepted, and the auction was postponed to allow Defendants additionally time to pay off the loan.
Strategically, the million-dollar payment was critical because based upon the amount due on the loan, and the value of the property, there was the likelihood that after auction Plaintiffs would have to seek a deficiency judgment and pursue enforcement of that deficiency judgment as against Defendant. However, with the million-dollar payment, the amount remaining on the loan was fully secured as against the property.
Ultimately, Defendant was able to secure refinancing on the property. Defendant made one final plea to Plaintiffs for a reduction of the loan, but Plaintiffs refused. Defendant knowing that Plaintiffs had the ability to reschedule the auction had no other choice but to fully satisfy the loan. Defendant made the final payment of over $1.5 million dollars, and Plaintiffs were finally able to close this unfortunate chapter of their life.
Danny Ramrattan, Esq. at Adam Leitman Bailey, P.C. secured this result for its client.