98 A.D.2d 767 | N.Y. App. Div. | 1983
— In a mortgage foreclosure action, defendant Dubor Associates appeals, as limited by its notice of appeal and its brief, from so much of an order of the Supreme Court, Kings County (Spodek, J.), entered December 2, 1980, as granted plaintiff’s motion to dismiss all the affirmative defenses and counterclaims interposed in Dubor Associates’ answer, as against plaintiff and granted summary judgment to plaintiff as against Dubor Associates. Order affirmed, insofar as appealed from, with costs. Plaintiff New York State Urban Development Corporation (UDC), a corporate government agency and public benefit corporation of this State (L 1968, ch 174, § 4), was established as part of a State program to encourage the private sector'to invest in, develop, construct, and operate low-income housing in blighted areas (L 1968, ch 174, § 2). As a means of accomplishing its statutory purpose, UDC would provide low-interest loans for 95% of a low-income housing project’s cost, secured by a nonrecourse mortgage. The private investor contributes the remaining 5% as its equity contribution. If foreclosure does not occur, potential tax benefits are available to the private investor and often served as a primary inducement for investing in the project. In May, 1979, UDC commenced this action to foreclose its consolidated mortgages, in the total amount of $30,054,000, on a 625-unit, low-income, residential project in Brooklyn known as Marcus Garvey Park Village (the project). The default was based upon the alleged failure of the mortgagor to pay installments of interest and lending agency’s charges dating back to June 1,1976, to pay real estate taxes, water rates and sewer rents, and to maintain the mortgaged premises in good condition and repair. Legal title to the project was vested in the mortgagor defendant Marcus Garvey Brownstone Houses, Inc. Marcus Garvey Brownstone Houses, Inc., a subsidiary of UDC and a general partner of defendant Dubor Associates, did not serve an answer in this action. Defendant Dubor Associates (Dubor), a limited partnership, is the equitable and beneficial owner of the mortgaged premises, having contributed funds equal to 5% of the actual project’s costs. The balance was provided by the UDC and was secured by the mortgages herein sought to be foreclosed. Under the terms of said mortgages, UDC’s only security for repayment of its loan is the project itself. The partners of Dubor are not personally liable for the mortgage debt since the mortgage instruments do not provide for recourse against Dubor. Dubor was made a party to the action essentially to bar any equity of redemption that it might claim. Dubor answered the complaint, admitted that some installments of interest and lending agency charges had