On appeal from the Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. F-7852-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Yannotti and Espinosa.
New Jersey Home Construction, Inc. (NJHC), appeals from an order entered by the trial court on October 9, 2009, setting aside a sheriff's sale at which NJHC acquire title to certain real property in Lumberton Township, Burlington County. For the reasons that follow, we affirm and remand for further proceedings.
Plaintiff Nationstar Mortgage, L.L.C. (Nationstar) commenced this action to foreclose on a mortgage issued to defendants George B. Jones and Edith R. Jones (the Joneses) in the amount of $348,386.50. The trial court entered a final judgment of foreclosure on April 1, 2009, and thereafter a writ of execution was issued. On July 16, 2009, the sheriff conducted a sale of the property. NJHC was the successful bidder. Its bid was for $132,300.
On July 23, 2009, plaintiff filed an order to show cause seeking to set aside the sale. In a certification submitted in support of that application, plaintiff's attorney, Michael S. Hanusek (Hanusek), stated the sale had proceeded by mistake. According to Hanusek, the Joneses were "under consideration" for participation in the Home Affordable Modification Program (HAMP), a federal assistance program to prevent foreclosures through loan modifications, promulgated pursuant to section 110 of the Emergency Economic Stabilization Act of 2008. 12 U.S.C.A. § 5201. Hanusek also stated that, under "relevant directives" of the federal Department of Treasury, the foreclosure sale should have been adjourned pending "such evaluation."
Hanusek stated that, because of a "miscommunication" between plaintiff and its foreclosure counsel, the sale was "inadvertently" not adjourned. He said that plaintiff sent an electronic message on the date of the sale requesting a postponement, but the message did not reach counsel in time to adjourn the sale. Hanusek also said that the Joneses were under consideration for participation in the HAMP program but they "did not appear nor take any action to protect their interests" at the sale.
Hanusek additionally stated that there was a clerical error by plaintiff's foreclosure counsel and a miscommunication between counsel and the bid service contractor who attended the sale. Hanusek said that the property had been appraised originally at $385,000, and its assessed value was $380,000. According to Hanusek, plaintiff had intended to bid $431,000 on the property, but due to a clerical error, plaintiff only bid up to $131,000. Hanusek stated, "[e]ven discounting the above appraised value to the high $200,000 range, the bid price is still less than [fifty percent] of the [p]roperty's value."
In support of its application, plaintiff also submitted a certification from Gary Maclin (Maclin), who described himself as a "[f]oreclosure [s]pecialist[.]" Maclin stated that, as of April 21, 2004, the appraised value of the property was $385,000. He further stated that the July 16, 2009, sale proceeded by mistake because the Joneses were under consideration for participation in the HAMP program and they were still being evaluated for that program.
NJHC opposed plaintiff's motion. In a certification filed on July 31, 2009, Donald Pollock, Jr. (Pollock), the principal of NJHC, stated that prior to the sheriff's sale, he had made "substantial efforts" to investigate the property. Pollock attended the sale and bid over the "upset price[,]" which is the price that plaintiff bid on the property. Pollock submitted the winning bid of $132,300 and thereafter deposited $30,000 with the sheriff.
Pollock stated that, until plaintiff filed its order to show cause, he had no knowledge there was any problem with the sale. Pollock asserted that the fact that the Joneses might be eligible for a loan modification was irrelevant. He said that there was no evidence the Joneses had applied for a loan modification. Pollock also said that the Joneses had listed the property for sale at $249,900, as indicated by a multiple listing service. Pollock stated that, "[o]bviously, [the Joneses] intend to move from the property and have no need for a loan modification."
Pollock additionally stated that he had contacted the realtor to inquire about the value of the property. According to Pollock, the Joneses were seeking to do a "short sale" of the property, and the realtor told him she thought she could "get it done for $200,000." Pollock said that, "[a] loan modification is not a short sale." Although Pollock did not make an offer for the property, the realtor sent him a contract for $200,000 and said the Joneses would require fourteen days to vacate.
Pollock asserted that, "[p]lainly the property is not worth $385,000 now." He noted that an appraisal from 2004 had no bearing on the value of the property in 2009, "after the financial crisis the country has suffered." He also said that "tax assessments often have little relation to the actual value of a property." Pollock stated that, if a sheriff's sale were ...