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U.S. Bank National Association v. Thomas

March 23, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Somerset County, Docket No. F-39524-08.

Per curiam.


Submitted February 24, 2010

Before Judges Sabatino and J. N. Harris.

Defendants, Verna Thomas and Mosell Thomas, appeal the Chancery Division's February 27, 2009 order entering summary judgment against them in this mortgage foreclosure action.

Defendants are married to one another. The mortgaged premises in question was defendants' long-time residence in Franklin Township. On November 2, 2005, defendants refinanced their then-existing indebtedness on the property. As part of that refinancing, Eastern American Mortgage Company ("Eastern American") issued a loan for $340,000, payable over thirty years, with a fixed interest rate of 6.875 percent (7.176 annual percentage rate ("APR")). The monthly payments of principal and interest due under the associated promissory note were $2,233.56. Approximately $225,000 of the borrowed funds were used to pay off pre-existing debt, and, after closing costs were deducted, $102,226.67 was extended in cash. Apparently, some of those funds were utilized to purchase investment properties.

At the same time, defendants mutually executed a mortgage against the property in favor of the lender, Eastern American. The mortgage specified the lender's right to foreclose upon the property if, among other things, the monthly amounts due under the corresponding note were not timely paid. Defendants admit that the mortgage bears their true signatures.

The mortgage was duly recorded shortly after the November 2, 2005 closing on the refinancing. Eventually, the rights of Eastern American as mortgagee were assigned to plaintiff, U.S. Bank National Association, as Trustee for CSMC Mortgage-Backed Pass-Through Certificates, Series 2006-4.

Defendants made regular monthly payments under the note for approximately two and a half years. However, it is undisputed that as of August 17, 2008, two monthly payments were overdue and the note was in default. Consequently, plaintiff filed a complaint to foreclose on the mortgage in October 2008.

Defendants filed an answer, asserting several defenses. In particular, they claim that they were misled by the mortgage broker about the applicable interest rate when they entered into the refinancing transaction. Defendants claim that they had expected the lender, which had previously refinanced their home, to charge them a lower interest rate, rather than a higher one of 6.875 percent. Defendants further contend that they were overcharged for closing costs.

In addition, defendants point out that while the mortgage admittedly bears both of their signatures, only the wife, Verna Thomas, signed the note and the husband, Mosell Thomas, did not. Defendants also allege that the mortgage should be invalidated under the federal Truth in Lending Act ("TILA"), 15 U.S.C.A. §§ 1601-67f.

Plaintiff moved for summary judgment, which defendants countered with an unsworn response signed by Mosell Thomas raising the points in opposition that have already been described.

After considering the parties' submissions and the relevant transactional documents in light of the applicable law, the Chancery Division judge granted plaintiff's motion and referred the case to the Office of Foreclosure. Defendants now appeal, alleging that the trial court erred in granting summary judgment and thereby authorizing the foreclosure.

The right to foreclose is an equitable right inherent in a mortgage, triggered by a borrower's failure to comply with the terms and conditions of the associated loan. S.D. Walker, Inc. v. Brigantine Beach Hotel Corp., 44 N.J. Super. 193 (Ch. Div. 1957). To obtain relief in a mortgage foreclosure action, the mortgagee (or, as here, its successor in interest) must establish that (1) the mortgage and loan documents are valid; (2) the mortgage loan is in default; and (3) it has a contractual right to foreclose in light of the default. See, e.g., Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542, 545 (App. Div. 1994); Somerset Trust Co. v. Sternberg, 238 N.J. Super. 279, 283-84 (Ch. Div. 1989). The mortgagee has ...

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