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First Horizon Home Loan Corp. v. Brown

April 12, 2010

FIRST HORIZON HOME LOAN CORPORATION, PLAINTIFF-RESPONDENT,
v.
BRENDA E. BROWN, AND WILLIAM H. BROWN, DEFENDANTS-APPELLANTS, AND ESSEX COUNTY DIVISION OF WELFARE; BELMONT GLASS AND MIRROR COMPANY; ANTHONY T. OROPOLLO, M.D., HIS HEIRS, DEVISEES, ANY PERSONAL REPRESENTATIVES, AND HIS, THEIR OR ANY OF THEIR SUCCESSORS IN RIGHT, TITLE AND INTEREST; EDISON THERAPY, INC.; AGL MARKETING, INC., D/B/A EXQUISITE HOME PRODUCTS; AND STATE OF NEW JERSEY, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-19865-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 23, 2010

Before Judges Skillman and Gilroy.

Defendants Brenda Brown and William Brown appeal from the April 24, 2009 order that denied their motion for reconsideration of the February 9, 2009 order denying their motion seeking to vacate the September 4, 2007 judgment of foreclosure. We affirm.

On January 20, 2005, defendants executed a promissory note and mortgage in favor of plaintiff First Horizon Home Loan Corporation. The note was for a term of thirty years and required defendants to repay the principal, together with interest at an adjustable rate, by making monthly payments on the first day of each month commencing March 1, 2005. The mortgage encumbered property is in the Township of Montclair, Essex County. Both the note and mortgage contained a provision that permitted the note holder, on default, to accelerate the balance of principal and interest due under the note on a thirty-day notice to defendants.

On December 22, 2005, following defendants' default on the promissory note, plaintiff filed a complaint in foreclosure. On November 1, 2005, plaintiff assigned the loan documents to Mortgage Electronic Registration Systems, Inc. (MERS).*fn1

On March 2, 2006, plaintiff filed an amended complaint adding additional parties who may have had interests in the mortgaged property. On September 4, 2007, the court entered default judgment. On April 29, 2008, defendant Brenda Brown filed a Chapter 13 bankruptcy petition. The Bankruptcy Court dismissed the petition on December 18, 2008.

On January 7, 2009, defendants filed a motion seeking to vacate the judgment of foreclosure pursuant to Rule 4:50-1 contending that plaintiff, having previously assigned the loan documents to MERS, did not possess standing to prosecute the foreclosure action. Defendants contended that they only learned of that assignment on or about November 13, 2008, when Green Tree Servicing, Inc.,*fn2 filed a certification in support of its motion to vacate the automatic stay in the Chapter 13 bankruptcy proceeding. Plaintiff opposed the motion, contending that it was the beneficial owner of the mortgage note. In opposition to defendants' contention that plaintiff did not have standing to prosecute the foreclosure action, plaintiff asserted:

[T]he reason for this assignment is that the loan originator, plaintiff herein, prepared an assignment of mortgage in the event that the loan was sold and the servicing rights transferred. MERS never takes ownership interest in loans, but merely acts as the mortgagee of record in a nominee capacity for mortgage servicers in order to eliminate the need for assignments of mortgage and delays and confusion given frequent servicing changes. The service that MERS provides is akin to that of a registered agent. MERS alternatively keeps track of servicing transfers, except the service of process for MERS registered loans, and forwards such documents to the proper servicer.

On February 9, 2009, the trial court entered an order denying defendants' motion, determining that defendants "failed to show excusable neglect in not answering the complaint, and also failed to show existence of a meritorious defense." In rejecting defendants' argument that plaintiff lacked standing to prosecute the foreclosure action, the court stated: "Plaintiff has demonstrated that it was the beneficial owner with standing, and that MERS was a nominee. The lack of a complete assignment history in the complaint may not be asserted after-the-fact[,] as a reason to set aside an uncontested judgment."

On February 27, 2009, defendants filed a motion for reconsideration of the February 9, 2009 order, requesting that the court vacate the final judgment pursuant to Rule 4:50-1. The defendants contended that plaintiff lacked standing to prosecute the action and concealed the assignment of its interest in the loan documents to MERS. On April 24, 2009, the trial court entered an order supported by an oral decision denying defendants' motion. In denying the motion, the trial court reasoned:

The [c]court entered an order on February 9 of this year, which denied defendant's motion to vacate a default judgment and, in fact, to dismiss plaintiff's complaint. The main argument that is being made then and now is a lack of standing on the part of the plaintiff, and defendant goes so far as to allege that the plaintiff perpetrated a fraud by misstating that it held the mortgage and note when, in fact, there had been an assignment to [MERS] prior to filing the foreclosure complaint.

We're talking here about the same issues, the same arguments that were dealt with on the prior motion. I don't think that that is the proper way to go about bringing a [Rule] 4:50-1 motion. The [c]court did what it did in the order of February 9. I did my best in that order based on the record before me. I'm a human being. Sometimes, the Appellate Court finds reason to disagree with me. It's all part of our proffer, and I accept it, and that's why Ms. Brown had the right ...


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