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Aurora Loan Services, LLC v. Bernice Toledo

October 18, 2011

AURORA LOAN SERVICES, LLC, PLAINTIFF-RESPONDENT,
v.
BERNICE TOLEDO, DEFENDANT-APPELLANT, AND MR. TOLEDO, HUSBAND OF BERNICE TOLEDO, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR LEHMAN BROTHERS BANK FSB; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR AURORA LOAN SERVICES LLC, DEFENDANTS.



On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. F-10005-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted September 26, 2011

Before Judges Alvarez and Skillman.

Defendant appeals from an order entered on August 31, 2010, which granted a summary judgment in this mortgage foreclosure action declaring that defendant's answer "sets forth no genuine issue as to any material fact challenged and that [plaintiff] is entitled to a judgment as a matter of law." There is no indication in the record before us that plaintiff ever secured a final judgment of foreclosure. Therefore, the appeal appears interlocutory. See Wells Fargo Bank, N.A. v. Garner, 416 N.J. Super. 520, 523-24 (App. Div. 2010). However, because defendant did not move to dismiss on that basis and the appeal has been pending for a substantial period of time, we grant leave to appeal as within time and address the merits. See R. 2:4-4(b)(2).

The record before us is rather sparse and disjointed. However, the following facts may be gleaned from that record.

Defendant owns a home in the Borough of Prospect Park. On July 24, 2006, defendant executed two promissory notes payable to Lehman Brothers Bank, the first for $320,000, which was payable on August 1, 2036, and the second for $60,000, which was payable on August 1, 2021. Both notes were secured by mortgages on defendant's home.

On September 1, 2006, plaintiff began servicing the notes on behalf of Lehman.

Sometime in 2008, defendant went into default in the payment of her obligations under the notes.

On January 30, 2009, plaintiff purportedly obtained an assignment of the $320,000 note from Lehman and the mortgage securing that note.*fn1 This assignment was signed by a person named Joann Rein, with the title of Vice-President of Mortgage Electronic Systems, Inc. (MERS). MERS was described in the assignment document as a "nominee for Lehman Brothers Bank." This document is discussed in greater detail later in the opinion.

On February 23, 2009, plaintiff filed this mortgage foreclosure action. The parties subsequently engaged in negotiations to resolve the matter. Those negotiations were unsuccessful and are not relevant to our disposition of this appeal.

Plaintiff filed a motion for summary judgment to strike defendant's answer on the ground there was no contested issue of fact material to plaintiff's right to foreclose upon defendant's property. In support of this motion, plaintiff relied primarily upon an affidavit by Laura McCann, one of its vice-presidents, and exhibits attached to that affidavit, which are discussed later in this opinion. Defendant submitted an answering certification.

After hearing oral argument, the trial court issued a brief written opinion and order granting plaintiff's motion. This appeal followed.

To have standing to foreclose a mortgage, a party generally must "own or control the underlying debt." Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011) (quoting Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch. Div. 2010)). If the debt is evidenced by a negotiable instrument, such as the promissory notes executed by defendant, the determination whether a party owns or controls the underlying debt "is governed by Article III of the Uniform Commercial Code (UCC), N.J.S.A. 12:3-101 to -605, in particular N.J.S.A. 12A:3-301." Ibid. Under this section of the UCC, the only parties entitled to enforce a negotiable instrument are "[1] the holder of the instrument, [2] a nonholder in possession of the instrument who has the rights of the holder, or [3] ...


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