On appeal from the Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. F-1888-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: September 15, 2010
Before Judges Cuff and Fisher.
This is a mortgage foreclosure action. Nearly five months after the Sheriff's Sale, defendant Philip Berg filed a motion to vacate default, the default judgment, and the Sheriff's Sale, to void the deed, and to stay eviction. Defendant argued that plaintiff U.S. Bank National Association (U.S. Bank) lacked standing to file the complaint in foreclosure because it did not possess the note at the time it filed the complaint. Judge William Todd held that U.S. Bank need only gain possession of the note before entry of the judgment of foreclosure, and found that it had possession at that time. He, therefore, denied relief to defendant and also vacated the stay of eviction.
On appeal, defendant reiterates this argument. In doing so, he calls to our attention a recent unpublished decision*fn1 by Judge Todd which held that the mortgagee must be in possession of the note at the time it files its complaint in foreclosure in order to have standing. U.S. Bank responds that it held the note at the time it filed the complaint. Furthermore, it contends that the motion to vacate the series of defaults and Sheriff's Sale is untimely and would prejudice the innocent third party to whom U.S. Bank sold the property. We affirm.
On November 29, 2005, defendant filed for protection under Chapter 13 of the United States Bankruptcy Code, 11 U.S.C.A. §§ 1301-1330. At the time, he had defaulted on his obligations on a note and mortgage given by him on real property in Atlantic County. He listed the property that is the subject of this foreclosure action as part of his bankruptcy estate and noted U.S. Bank's servicer as a secured creditor. Defendant and U.S. Bank entered a settlement stipulation in which defendant acknowledged the debt, and that he had defaulted on his payment obligations under the mortgage loan and on his obligations assumed in the bankruptcy proceeding. Following defendant's further default of the settlement agreement, U.S. Bank obtained an order dated May 21, 2007, granting relief from the automatic stay.
On July 31, 2007, U.S. Bank filed a foreclosure complaint. Defendant filed a notice of appearance on October 16, 2007, in which he did not challenge U.S. Bank's standing; the filing was deemed a non-conforming answer. On November 14, 2007, U.S. Bank filed its certification in support of default, followed by its proofs in support of final judgment, which was entered on March 14, 2008.
Thereafter, U.S. Bank scheduled a Sheriff's Sale for May 8, 2008. After exercising his rights to two adjournments and an additional thirty days granted by U.S. Bank to allow defendant to satisfy the mortgage, the property was scheduled to be sold on July 10, 2008. On July 9, 2008, defendant applied to the court for a sixty-day stay; the court awarded a week stay of sale. After more requests by defendant for time to satisfy the loan, the Sheriff's Sale eventually proceeded on October 23, 2008. U.S. Bank purchased the property for the minimum bid of $100. Defendant failed to redeem the mortgage, the Sheriff issued a deed, and U.S. Bank recorded the deed on November 26, 2008. At no time did defendant challenge U.S. Bank's standing to initiate the foreclosure proceedings.
Thereafter, on March 17, 2009, nearly five months after the Sheriff's Sale, defendant filed a motion challenging U.S. Bank's standing to file the complaint. He sought vacation of default, default judgment and the Sheriff's Sale. He also sought to void the Sheriff's deed and to stay his eviction. Judge Todd denied all relief, including a stay of eviction. This court also denied a stay of eviction pending appeal. U.S. Bank advised us at oral argument that the property has been sold to a third party.
The issue of standing to initiate a mortgage foreclosure action has emerged as a "hot topic" in the wake of the sub-prime mortgage market collapse and the vast number of mortgage foreclosures filed nationwide. For example, a federal district court judge dismissed twenty-seven mortgage foreclosure cases because plaintiffs had failed to submit evidence of standing at the time they filed the complaints. In re Foreclosure Cases, 521 F. Supp. 2d 650 (N.D. Ohio 2007). The court also held that to demonstrate standing a mortgagee must demonstrate that it was the holder of the note and mortgage at the time the complaint is filed. Id. at 654-55. In New Jersey, no appellate opinion has addressed the issue. As noted, Judge Todd has recently issued an unreported opinion in which he opined that the mortgagee must have possession of the note at the time it files the complaint. Bank of New York, supra, slip op. at 36. A noted commentator writes that mere delivery of the note will suffice to establish standing. 30 New Jersey Practice, Law of Mortgages § 28.9, at 504 (Myron C. Weinstein) (2d ed. 2001). If the mortgage has been assigned, the assignment is not required to be recorded to be effective. Ibid. See also, 29 New Jersey Practice, Law of Mortgages § 11.3, at 792 (Myron C. Weinstein) (2d ed. 2001).
Here, however, we need not decide the standing issue for several reasons. First, the record demonstrates to our satisfaction that U.S. Bank possessed the note when it filed the complaint. Second, at various times and in various contexts, defendant acknowledged the validity of the note and mortgage.
Third, defendant did not move to vacate the judgment and sale within a reasonable time.
In its complaint, U.S. Bank stated that the mortgage had been assigned to it but not yet recorded. In its certification in opposition to defendant's motion to vacate the judgment and Sheriff's Sale, U.S. Bank reported that it acquired the note and mortgage on July 1, 2005. It filed that complaint on July 31, 2007. Furthermore, ...