M & T Mortgage Corp. v. Foy

Supreme Court, Kings County · Property

PropertyMortgage foreclosureDiscriminatory lendingEquityforeclosuremortgageequityreverse redlining

Facts

Major Jahn K. Foy owned property at 517 Rogers Avenue in Brooklyn, located in a minority neighborhood. While she was on active military duty, the plaintiff initiated foreclosure on a 30-year note and mortgage dated July 2000 carrying a 9.5% interest rate. The court's review of the record and additional research suggested that Foy might have been subjected to reverse redlining. Foy was again on active duty during these proceedings, and the matter was stayed pending continuation of the hearing.

Issue

In a foreclosure action involving a mortgage on property in a minority neighborhood with an interest rate exceeding nine percent, may the court presume discriminatory lending and require the foreclosing lender to prove the loan was not unlawfully discriminatory? Relatedly, should equity shift the burden of proof from the borrower to the lender in such circumstances?

Rule

A mortgage granted to a minority buyer for the purchase of property in a minority area that carries an interest rate exceeding nine percent creates a rebuttable presumption of discriminatory practice. In a foreclosure action on such a loan, the lender seeking equitable relief bears the burden of proving by a fair preponderance of the evidence that the mortgage was not the product of unlawful discrimination; the presumption may be rebutted by proof that the mortgage was given for nondiscriminatory economic reasons.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Pine Harbor Lending filed a foreclosure action in Kings County against Elena Ruiz, a Latina homeowner who bought a row house in a predominantly Black and Hispanic section of Brooklyn. Her 30-year purchase-money mortgage was made in 2003 at 9.4% interest.

At the foreclosure hearing, who should bear the burden on whether the loan was unlawfully discriminatory?

Explanation. The majority held that a mortgage to a minority buyer for property in a minority area with an interest rate exceeding nine percent creates a rebuttable presumption of discriminatory practice. Because foreclosure is equitable relief, the lender bears the burden to prove by a fair preponderance of the evidence that the mortgage was not the product of unlawful discrimination.