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Indymac Bank, F.S.B v. Elizabeth Burnett

April 29, 2011


On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-35399-07.

Per curiam.


Argued January 26, 2011

Before Judges Fuentes, Ashrafi and Nugent.

Arguing that she did not receive notice of the adjourned date of the sheriff's sale of her home, defendant Elizabeth Burnett appeals from an order of the Chancery Division denying her application to set aside the sale. We affirm.

Defendant lives in Belmar, New Jersey, with her elderly and infirm mother and grandmother. In December 2006, defendant refinanced the mortgage loan on her home. She executed a mortgage for funds sufficient to pay off her existing mortgage of $378,703.57 and to leave her a cash balance of $19,346.95, which defendant used to pay off a car loan and make improvements to the property. Subsequently, defendant defaulted on the monthly payments due on the refinanced mortgage loan.

Plaintiff IndyMac Bank, F.S.B., which came to own the mortgage and note, filed a complaint in foreclosure on December 19, 2007. Defendant did not file an answer or otherwise appear in response to the foreclosure complaint and, a final judgment of foreclosure was entered on July 14, 2008, in the amount of $450,628.11. Defendant did not appeal the foreclosure judgment or otherwise move for relief at that time. According to defendant, in the summer of 2008, she began efforts to obtain modification of her loan agreement so that she might keep her home.

On September 17, 2008, the Monmouth County Sheriff sent defendant a notice by certified mail, return receipt requested, informing her that the property was scheduled for a sheriff's sale on September 29, 2008. The notice was returned as unclaimed by defendant, but defendant acknowledges she received notice of the pending sale by means of the notice posted at the property.

On September 24, 2008, defendant received a document on letterhead of IndyMac Bank Loan Modification Department indicating that plaintiff had agreed to enter into a forbearance agreement on the foreclosure. The terms included a payment schedule requiring that defendant make six payments over the next six months totaling more than $70,000, including a balloon payment of more than $50,000 due in February 2009. The proposal also stated that plaintiff might re-evaluate the payment terms if defendant were to give thirty days' notice that she could not make the balloon payment. In addition, the proposed agreement promised that "IndyMac Bank will suspend collections and/or foreclosure upon receipt of the signed agreement and the deposit," and it reserved to plaintiff the following remedies if defendant were to default on the payment schedule: the right to terminate this agreement, to demand immediate payment of all remaining arrangement [sic] and to resume collections and/or foreclosure at the point the servicing was previously suspended without further notice. If your loan is in foreclosure and you default under any terms or conditions of this agreement IndyMac Bank reserves the right to re-commence the foreclosure actions immediately with no further notice to you, your representatives or agents.

Defendant made three timely payments under the agreement. In response, plaintiff adjourned the scheduled sheriff's sale three times - first to December 8, 2008, next to December 15, 2008, and finally to March 2, 2009. Plaintiff contends it sent notices to defendant by regular mail regarding these adjournments, but defendant denies receiving the last two of the notices. The manner and sufficiency of plaintiff's notifying defendant of the adjourned dates for the sheriff's sale is at the heart of the dispute between the parties.

Defendant failed to make the fourth and any additional payments under the forbearance agreement. Instead, she retained a loan modification agency, which referred her to a law firm. An attorney from that firm contacted plaintiff on February 9, 2009, to advise that he would be representing defendant. By form letter dated February 16, 2009, plaintiff acknowledged the new modification agency's participation in the matter but otherwise made no representation as to the status of defendant's loan, the foreclosure judgment, or the sheriff's sale then scheduled for March 2, 2009.

On March 2, bad weather caused the closing of the sheriff's office, and the sale was adjourned by the sheriff's office to March 9, 2009. No further notice was sent to defendant regarding the weather-related adjournment. The sale occurred on March 9, and plaintiff purchased the property. A sheriff's deed was issued to plaintiff on March 20, 2009, and plaintiff recorded the deed on April 3, 2009.

Defendant contends that she first learned of the sale from a realtor on March 25, 2009. She retained her current attorney at that time and applied on April 6, 2009, to the Chancery Division to vacate the sale. She alleged failure of plaintiff to provide notice of the actual date of the sheriff's sale. On April 15, 2009, the Chancery Division entered an order to show cause with temporary restraints prohibiting plaintiff from selling or otherwise encumbering the property, and also prohibiting plaintiff from evicting defendant on the condition that she pay a monthly use and occupancy fee of $1,000 to plaintiff.

The court adjourned the return date of the order to show cause several times to facilitate potential modification of defendant's loan, but plaintiff and defendant could not reach an agreement. An evidentiary hearing was held in November 2009 on the question of whether proper notice had been provided to defendant of the adjournments. An attorney for plaintiff testified at the hearing regarding his firm's procedures in mailing notices of sheriff's sales and their adjournments. He testified it was standard procedure at his law ...

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