New Jersey Appellate Court Affirms Trial Court's Decision Denying A Plaintiff/Mortgagor Summary Judgment In A Foreclosure Action
January, 2012
In Aurora Loan Services, LLC v. Toledo, et al., 2011 N.J. Super. Unpubl. LEXIS 2612 (N.J.A.D. 2011), the Superior Court of the State of New Jersey, Appellate Division, upheld a trial court's decision denying a plaintiff/mortgagor summary judgment in a mortgage foreclosure action. The Court concluded that Plaintiff/mortgage holder failed as a matter of law to submit admissible evidence which demonstrated that it was entitled to summary judgment and, accordingly, affirmed the trial court's decision denying the motion.
Defendants owned a home in the Borough of Prospect Park, New Jersey. On July 24, 2006, Defendants executed two promissory notes payable to Lehman Brothers Bank ("Lehman"), the first in the amount of three hundred twenty thousand dollars ($320,000.00), payable on August 1, 2036, and the second in the amount of sixty thousand dollars ($60,000.00), payable on August 1, 2021. Both promissory notes were secured by mortgages on Defendants' home. On September 1, 2006, Plaintiff began servicing the promissory notes on behalf of Lehman.
On January 30, 2009, Plaintiff purportedly obtained an assignment of the three hundred twenty thousand dollar ($320,000.00) promissory note and the mortgage securing said note from Lehman. On February 23, 2009, after Defendants failed to make payments in accordance with the terms and conditions set forth in the promissory notes, Plaintiff commenced a foreclosure proceeding.
The Court stated that to have standing to foreclose a mortgage, a party must generally own or control the underlying debt. Id.; see also Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 15 A. 3d 327 (N.J.A.D. 2011). However, the Court concluded that Plaintiff failed to proffer sufficient evidence in admissible form to demonstrate that it owned or controlled the mortgages at issue. Id.
Specifically, the Court determined that an Affidavit submitted by Plaintiff in support of the underlying motion, prepared by a vice-president of Plaintiff, failed to state under oath that Affiant had "personally confirmed" that the notes and mortgages submitted in support of the motion were copies of the originals in Plaintiff's files. Id. The Court determined that the Affidavit was also deficient in that it failed to state that Affiant conducted a "personal review" of Plaintiff's business records relating to the notes and mortgages at issue in the action. Id. The Court noted that the New Jersey Supreme Court recently reaffirmed the need for strict compliance with these requirements in mortgage foreclosure actions by adopting a new Court rule which specifically states that an Affidavit in support of a judgment in a mortgage foreclosure action must be based upon a personal review of business records of the plaintiff or the plaintiff's mortgage loan provider. Id.; see also R. 4:64-2(c)(2).
The Court further noted that the purported assignment of mortgages submitted in support of the motion was signed by a vice president of MERS, as nominee for Lehman Brothers, and was executed in the State of Nebraska. The Court found that the failure of Plaintiff to submit in support of the motion a Certification concerning the MERS representative's authority to execute the document rendered the document inadmissible in that it was not a self-authenticating document that can support an award of summary judgment. Id.; see also N.J.R.E. 901. Finally, the Court remanded the proceedings to determine if MERS was the nominee of Lehman as of the date of the assignment of mortgages as Lehman filed for bankruptcy prior to the date of the assignment and there was no evidence that any assignment by Lehman to MERS was reviewed and/or approved by a bankruptcy trustee.
Learning Point
In light of the exponential rise in foreclosure proceedings in the past three (3) years, it is imperative that documents submitted by lenders and/or their assignees in support of dispositive motions in foreclosure proceedings strictly comply with the standards set forth by the New Jersey Supreme Court. Accordingly, the documents should be accompanied by an Affidavit executed by a representative of the lender and/or their assignees that details the "personal review" of the lender and/or its assignees of the mortgages and promissory notes being foreclosed upon.
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