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U.S. Bank National Association v. Williams

August 25, 2010


On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-12113-07.

The opinion of the court was delivered by: Lihotz, J.A.D.



Argued June 8, 2010

Before Judges Parrillo, Lihotz and Ashrafi.*fn1

Defendant Mark M. Williams appeals from a Chancery Division order denying his motion to extend the redemption period following sheriff's sale of his property. Defendant asserts he was denied a meaningful opportunity to participate in New Jersey's residential mortgage Foreclosure Mediation Program (FMP) because he was unrepresented and was not assisted by a housing counselor during the mediation session. Additionally, defendant contends plaintiff U.S. Bank National Association breached an oral agreement to vacate the sheriff's sale and dismiss the foreclosure action.

Following consideration of the arguments in light of the record and applicable law, we conclude defendant was afforded the benefits of foreclosure mediation, including the assistance of a housing counselor, as contemplated by the FMP. Unfortunately, defendant was unable to demonstrate an ability to qualify for a mortgage modification or otherwise redeem the property. Consequently, the trial court's denial of his request to extend the right to redeem was not an abuse of discretion, and we affirm.

These are the relevant facts. In April 2002, defendant secured a purchase-money mortgage loan to finance the acquisition of his principal residence, a two-family property in Newark. On May 11, 2006, defendant refinanced the residential debt by executing a thirty-year adjustable rate note in the amount of $246,600. The note was secured by a mortgage on defendant's residence. Defendant applied a portion of the refinance receipts toward the purchase price of a multi-family investment property. To complete this acquisition, defendant borrowed additional funds from the same lender that had arranged the refinance. Both loans were assigned to plaintiff. Defendant defaulted on the residential loan early in 2007.

On May 10, 2007, plaintiff filed a complaint seeking to foreclose defendant's interest in his principal residence. Defendant did not file a responsive pleading and default was entered on August 27, 2007. Plaintiff forwarded to defendant the requisite notice and proposed entry of final judgment. Again, defendant did not respond. On December 24, 2007, the Chancery Division entered a final judgment of foreclosure awarding plaintiff the amount of $262,601, plus attorney's fees of $2,776.01, and ordered the sum be collected through sheriff's sale of defendant's residence. A sheriff's sale was scheduled for April 2, 2008.

Over the following months, the parties attempted to negotiate an arrangement to allow defendant to reinstate the mortgage obligation and avoid the forced sale of his residence. Defendant maintains "[i]n or about March 2008," he entered into a written forbearance agreement with plaintiff's representative, American Servicing Company (American). The agreement is not included in the record, as defendant claims he "requested a copy from the [s]ervicer, [and it] refused to provide [him] with one on the ground that the [s]ervicer was not legally obligated" to do so.

In his certification, filed in support of a motion to supplement the appellate record, defendant asserted the terms of forbearance required him to make six monthly payments of $2,390, at which time plaintiff would renegotiate the terms of the note secured by the mortgage and dismiss the foreclosure action. From March through July 2008, defendant made the first five payments without incident. When he attempted to make the sixth payment in August 2008, American demanded an additional $2,000 for attorney's fees incurred by plaintiff in the foreclosure action, which defendant was unable to pay. The August payment was not accepted by American, although it was later credited to defendant's account when resubmitted in September 2008.

Plaintiff does not concede a forbearance agreement was reached, although it acknowledges the parties attempted to negotiate a workout and that it adjourned the sheriff's sale each month beginning on April 2, 2008, until a final sale date was set for January 6, 2009. Thereafter, defendant exercised his statutory rights, pursuant to N.J.S.A. 2A:17-36, to adjourn the sheriff's sale on two occasions so that it was relisted for January 20, then February 3, 2009.

In an emergent motion filed in the Chancery Division, defendant challenged plaintiff's failure to honor the terms of the alleged forbearance agreement and sought to stay the sheriff's sale pending the parties' participation in the Judiciary's newly implemented FMP. The court granted defendant's motion, ordered the parties to attend mediation and stayed the sale until March 10, 2009. Further, the court "instructed [] defendant on the requirements of the program" and provided him with "a copy of the Foreclosure Mediation Financial Worksheet [(Worksheet)], the Individual Instructions and the New Jersey Foreclosure Mediation pamphlet." Mediation was set for February 26, 2009.

On the date of mediation, defendant's mortgage arrears totaled $52,816.33. Defendant attended the proceeding without the assistance of a housing counselor or an attorney. He appeared without completing the Worksheet or supplying supporting financial documentation. Consequently, plaintiff concluded defendant was unable to show he could afford to satisfy the payments on a modified, lower-interest loan. Mediation concluded without success.

By March 1, 2009, defendant hired a housing counselor and, with her assistance, provided the Worksheet and supporting paperwork to plaintiff. Plaintiff consented to reconsider defendant's request to negotiate a loan modification and adjourned the sheriff's sale to April 7, 2009. Following its review of defendant's financial documentation, plaintiff concluded defendant lacked the ability to afford a loan modification and satisfy the obligation. Defendant submitted additional documentation on April 3, 2009, and plaintiff again adjourned the sheriff's sale to June 2, 2009.

Finally, defendant moved to stay the June 2 sheriff's sale. Plaintiff argued its review of defendant's financial documentation "[a]s of June 2" showed defendant had "a $450 per month shortfall" and, it had "no ability to approve [] a loan modification." The court denied defendant's motion and allowed ...

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