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Financial Freedom Senior Funding Corporation v. Annette C. Fischer

March 31, 2011


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5900-08.

Per curiam.


Argued December 14, 2010

Before Judges Graves, Messano, and Waugh.

Defendant Annette C. Fischer appeals the April 1, 2010 order of the Law Division denying her motion to set aside a default judgment entered on February 20, 2009. We affirm.


We discern the following facts and procedural history from the record on appeal.

In December 2006, Fischer applied to plaintiff Financial Freedom Senior Funding, Corp. (Financial Freedom),*fn1 for a reverse mortgage to pay off debts encumbering her residence in Short Hills. Financial Freedom authorized a reverse mortgage loan in the principal amount of $796,250. Fischer anticipated receiving $217,586.27 of the loan proceeds directly, which she intended to use as a means of support. Defendant First American Title Insurance Company (First American) was to provide the title insurance, and defendant Heritage Abstract Company (Heritage) was to be the closing agent. Fischer retained Deborah Factor, an attorney, to represent her at the closing.

On April 18, 2007, Dennis Bivona, Vice President of Sales for Heritage, informed Fischer that Financial Freedom approved the reverse mortgage and that Heritage had received the closing documents. The loan was scheduled to close on April 19, 2007.

A title search on Fischer's property conducted immediately prior to the closing revealed several liens, including a federal tax lien in the amount of $111,571.81. According to Fischer, she had not been aware of the tax lien. Bivona informed Fischer and Factor on the date of the closing that the federal tax lien had to be included in the loan statement, with the lien amount deducted from the loan proceeds and escrowed.

Fischer did not want to close on the loan if she "was not going to immediately receive the amount of $217,586.27 in net proceeds from [the] loan." However, Fischer also wanted the proceeds disbursed promptly to prevent a sheriff's sale of her residence scheduled for April 24, 2007. Nevertheless, Fischer cancelled the closing.

According to Fischer, Bivona called her back on April 19 and informed her that the federal tax lien would not be included in the loan documents or escrowed. Fischer "decided to continue with the loan transaction that day," based on her understanding that she would receive $217,586.27 as soon as the loan was funded.

The closing took place later on April 19, 2007, with Fischer and Bivona signing a Housing and Urban Development (HUD) statement that did not mention the federal tax lien. According to Fischer, she was on medication that made her drowsy at the time of the closing. Consequently, she claims that she did not notice that the HUD closing documents were dated April 18, 2007, the day prior to the actual closing.

Fischer claims that Bivona called her on April 20, and informed her that she would be required to pay off or escrow the federal tax lien as part of the loan transaction. According to Fischer, when she responded that she wanted to cancel the loan, Bivona asked her to refrain from doing so. Fischer further asserts that Bivona called her later that day and told her that the federal tax lien would not be escrowed, so she would receive the full amount of $217,586.27.

Factor also spoke with Bivona on April 20, and confirmed the conversation with a written letter of the same date. In the letter, Factor noted that Bivona had decided not to require an escrow for the federal tax lien, that it was not included on the HUD statement, and that her client intended to proceed with the loan as described in that statement.

Factor's letter further stated that the "loan should fund on Monday, April 23, 2007," and that it was "imperative" that she receive a check to cover the impending April 24 sheriff's sale. Factor listed the liens that were to be paid off by the loan, and concluded by stating that "under no circumstances is [Fischer] willing to place any additional funds into the escrow account" for the federal tax lien.

Fischer emailed Bivona on April 20 to confirm that she would receive the loan funds on April 23. Bivona replied in an email sent within minutes of Fischer's initial email. According to Fischer, she did not cancel the loan because of Bivona's email assuring her that there would be no escrow for the federal tax lien.

On April 23, Bivona called Fischer and informed her that Heritage would be holding back $111,571.81 in loan funds to cover the federal tax lien. Fischer alleges that she responded that she would cancel the loan, at which point she contends that Bivona informed her that her right to rescind the loan expired at midnight on April 21.

Heritage faxed a letter to Factor on April 23, informing her that Heritage required funds to be held in escrow for the federal tax lien. Factor replied, stating that satisfaction of the federal tax lien was not a condition of the loan and that

Fischer would not agree to an additional $112,000 in escrow to satisfy the lien. Factor also noted that she and Fischer anticipated having the loan funds by the following day, April 24, in order to prevent the sheriff's sale of Fischer's home.

Fischer refused to execute new escrow agreements provided by Heritage on April 23 because they contained provisions indemnifying Heritage and First American. According to Fischer's certification, she was then informed that Financial Freedom had already funded the loan and was ...

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