DID AD2 GET THE POINT?

In HSBC Mtge. Servs., Inc. v. Alphonso, when HSBC Mortgage Services Inc. filed suit to foreclose a mortgage, Point Holding Alpha, LLC claimed it had superior interest in the property because it recorded its mortgage, first.

On October 11, 2005, Kenyon Alphonso purchased a home from Chaim Parnes for $600,000, and, in exchange for a $480,000 loan, gave Encore Credit Corp. a mortgage on the property.

Several weeks later, on November 7, 2005, Alphonso sold the property to Point for only $20,000 and the latter recorded its deed on November 10, 2007.

Some eleven days later, on November 21, 2005, Alphonso's deed and mortgage with Encore were filed.

In June 2006, Encore assigned the mortgage to HSBC which filed a foreclosure case with the Kings County Supreme Court.

When Point claimed its interests superceded HSBC's, the Kings County Supreme Court found Point hadn't acquired the property as a "bona fide purchaser."

On appeal, the Appellate Division, Second Department, was of the view that, at the time Point acquired the property, a title search would have revealed Alphonso wasn't the record owner (Parnes was). And the fact it paid only $20,000 for a property which appraised for $600,000, didn't really help Point's position either.

Last, but not least, even though Point claimed to have taken the property subject to a mortgage, there was no evidence the company ever attempted to make any payments of that debt.

Which way do fingers point now?

To download a copy of the Appellate Division's decision, please use this link: HSBC v. Alphonso