October 4, 2011
FREMONT INVESTMENT & LOAN, PLAINTIFF-RESPONDENT,
HAYDEN OTTO; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR FGC COMMERCIAL MORTGAGE FINANCE D/B/A FREMONT MORTGAGE; MAURICE FERARY; STATE OF NEW JERSEY; YONETTE A. CHANCE, DEFENDANTS, AND ANNETT OTTO-FERARY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-22380-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 27, 2011
Before Judges Simonelli and Hayden.
Defendant-appellant Annett Otto-Ferary appeals from the July 12, 2010 Chancery Part order, which denied her motion to vacate a final foreclosure judgment entered on June 6, 2008. We affirm.
The facts are straightforward. Appellant and her husband, defendant Maurice Ferary (Ferary), sought to purchase a home in Montclair. However, because they did not qualify for a loan, they decided to have appellant's brother, defendant Hayden Otto, purchase the property, sign a note and mortgage, and later transfer title to the property to them.
On February 17, 2006, Otto executed a note to FGC Commercial Mortgage Finance d/b/a Fremont Mortgage (Fremont Mortgage) to finance the purchase. That same day, Fremont Mortgage executed an assignment of the note to plaintiff Fremont Investment & Loan. Otto also executed a mortgage to Mortgage Electronic Registrations Systems, Inc. (MERS), as nominee for Fremont Mortgage. Otto only made two mortgage payments, and was in default as of June 1, 2006. On June 29, 2006, he transferred title to the property to appellant and Ferary.
Plaintiff filed a foreclosure complaint on December 1, 2006. Appellant, Ferary and Otto filed a pro se answer, alleging, in part, that plaintiff engaged in predatory lending practices, was not a holder in due course of the note and mortgage, and lacked standing to bring this action because it did not own or possess the note and mortgage.
Plaintiff filed a motion for summary judgment, which was unopposed. By order entered on June 18, 2007, the Chancery Part judge granted the motion, struck the answer, and remanded the matter to the Foreclosure Unit to proceed as an uncontested matter. Thereafter, on January 16, 2008, MERS assigned the mortgage to plaintiff.
The court entered final judgment on June 6, 2008. On October 14, 2008, the property was sold at Sheriff's sale. Following the expiration of an extension of the period for redemption, the Sheriff's deed passed to the purchaser on December 4, 2008, and was recorded on January 6, 2009.
On August 3, 2009, appellant filed a motion to vacate final judgment pursuant to Rule 4:50-1(a) ("mistake, inadvertence, surprise or excusable neglect"), (c) ("fraud") and (f) ("any other reason justifying relief from the operation of the judgment or order").*fn1 Appellant also argued that plaintiff was not a holder in due course of the note and mortgage, and lacked standing because it did not own or hold the note and mortgage at the time it filed the complaint. In opposition, plaintiff's vice-president submitted a certification certifying that the note was assigned to plaintiff on February 17, 2006. She attached a true copy of the assignment to the certification.
The judge found that appellant failed to present competent evidence establishing fraud, and failed to establish excusable neglect and exceptional circumstances. Addressing the standing issue, citing Federal Reserve Bank v. Welch, 122 N.J. Eq. 90 (Ch. 1937), the judge found, correctly, that ownership of the note establishes standing in foreclosure actions. He also found that although plaintiff did not actually possess the note, it was constructively transferred to plaintiff prior to the filing of the complaint through the assignment. He, thus, concluded that plaintiff had standing to file the complaint. By order entered on July 12, 2010, the judge denied the motion. This appeal followed. On appeal, appellant only challenges the judge's ruling on standing, raising the same contentions she raised below.
A plaintiff need not actually possess the original note in order to have standing to file a foreclosure complaint. Deutsche Bank Nat'l Trust Co. v. Mitchell, ___ N.J. Super. ___, ___ (App. Div. 2011) (slip op. at 17). A plaintiff can establish standing as an assignee if it presents an authenticated assignment of the note indicating that it was assigned the note before it filed the complaint. Ibid. Plaintiff presented an authenticated assignment of the note that pre-dates the filing of the complaint. Accordingly, plaintiff had standing to file the complaint in this matter.