On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. F-21408-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 6, 2011 -
Before Judges Fisher and Baxter.
Defendants Linda and Peter Halas appeal from a March 18, 2011 Chancery Division order denying their motion to vacate a default judgment of foreclosure. We agree with defendants' assertion that the judge mistakenly evaluated their motion under a subsection of Rule 4:50-1 that they had not advanced as a basis for relief, and in so doing, failed to address the grounds upon which they relied. We reverse and remand for further proceedings.
On July 21, 2006, defendants obtained a thirty-year home mortgage from Nations Home Mortgage Corporation. Due to illness and a reduction in their income, defendants were unable to make payments on the mortgage after January 2008. In June 2008, Nations assigned the mortgage to plaintiff Countrywide Home Loans, Inc. (Countrywide Loans). Plaintiff filed a foreclosure complaint against defendants on June 4, 2008. Although the date of service of the complaint on defendants is not part of the record on appeal, defendants acknowledge they were served with the June 4, 2008 summons and complaint shortly after it was filed. They did not file an answer.
On February 6, 2009, plaintiff filed an amended complaint changing the designation of plaintiff from Countrywide Home Loans, Inc. to Countrywide Home Loans Servicing, L.P. (Countrywide Servicing). The February 2009 amended complaint alleged that Countrywide Loans assigned the Halas mortgage on February 4, 2009 to Countrywide Servicing. Defendants failed to file an answer to the February 4, 2009 amended complaint.
On March 31, 2009, default was entered against defendants by the Clerk of the Superior Court. On May 21, 2009, plaintiff sent to defendants a notice to cure pursuant to a section of the New Jersey Fair Foreclosure Act, N.J.S.A. 2A:50-58, advising defendants of the procedures available to them to cure their default. Plaintiff also advised defendants of their right to participate in a mediation program sponsored by the Judiciary, and enclosed a notice describing that program. Defendants did not avail themselves of that opportunity.
Before the time when default judgment was ultimately entered, plaintiff filed a second amended complaint, which was identical to its original June 2008 complaint. The second amended complaint, like the June 2008 complaint, designated Countrywide Home Loans, Inc. as the owner of the Halas mortgage.
On October 7, 2009, plaintiff moved for the entry of judgment by default, asserting that more than six months had passed since the entry of default without defendants having moved to vacate the default. Defendants filed no opposition. Final judgment by default was issued a year later, in October 2010. On January 28, 2011, defendants filed the motion to vacate default judgment that is the subject of this appeal.
Because defendants' motion to vacate the default judgment was based almost entirely on plaintiff's treatment of defendants in connection with a forbearance agreement plaintiff proposed to defendants in July 2009, we shall describe the "Forbearance Agreement" before proceeding to a discussion of the grounds for relief defendants asserted in their motion.
The Forbearance Agreement specified that if defendants made monthly payments of $2150 for the six-month period between July 2009 and January 2010, plaintiff would "suspend any scheduled foreclosure sale" and would consider whether defendants were eligible for "loan modification." The Forbearance Agreement contained the following terms and conditions:
A. Foreclosure Activity. The Servicer will suspend any scheduled foreclosure sale, provided I continue to meet the obligations under this Agreement. If this Agreement terminates, however, then any pending foreclosure action will not be dismissed and may be immediately resumed from the point at which it was suspended, and no new notice of default . . . or similar notice will be necessary to ...