Opinion
DOCKET NO. A-2128-12T2
08-14-2014
U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR MASTR ASSET BACKED SECURITIES TRUST 2006-WMC2, Plaintiff-Respondent, v. FELISBERTO WALDEN CAMPOS and IRENA ABAYA-CAMPOS, Defendants-Appellants, and MR. ABAYA, husband of Irene C. Abaya, and TRUST COMPANY BANK OF NEW JERSEY, Defendants.
Joseph A. Chang & Associates, LLC, attorneys for appellants (Joseph A. Chang, of counsel and on the briefs; Jeffrey Zajac, on the briefs). Reed Smith LLP, attorneys for respondent (Henry F. Reichtner, of counsel and on the brief; Roy D. Prather, III, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Reisner and Ostrer. On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-15048-08. Joseph A. Chang & Associates, LLC, attorneys for appellants (Joseph A. Chang, of counsel and on the briefs; Jeffrey Zajac, on the briefs). Reed Smith LLP, attorneys for respondent (Henry F. Reichtner, of counsel and on the brief; Roy D. Prather, III, on the brief). PER CURIAM
Defendants Felisberto Walden Campos (F.W. Campos) and Irena Abaya-Campos (I.A. Campos) appeal from the trial court's September 7, 2012, order denying their motion to vacate a final judgment of foreclosure and from the court's November 30, 2012, order denying their motion for reconsideration. We affirm.
Defendants' notice of appeal referred only to the second order. Although their case information statement identified both orders, the appeal from the first order was still untimely. The notice of appeal was filed on January 15, 2013, 130 days after the initial order. While the time for appeal was tolled for sixty-three days while the reconsideration motion was pending, from September 28 to November 30, see Rule 2:4-3(e), the appeal was filed, post-tolling, sixty-seven days after entry of the first order. We nonetheless consider the appeal as from both orders.
We discern the following facts from the record. On February 21, 2006, F.W. Campos executed a thirty-year note in the amount of $610,000 in favor of WMC Mortgage Corp. The note was eventually endorsed in blank by the payee, although the date of endorsement is not stated. The note was secured by a mortgage executed by both defendants on their residential property, naming Mortgage Electronic Registration Systems, Inc. (MERS) as mortgagee and nominee for WMC. The transaction was a refinancing.
Defendants apparently satisfied a 2002 mortgage and note for $270,000.
F.W. Campos failed to make the payments due on January 1, 2008 and thereafter. On April 14, 2008, MERS executed an assignment of the mortgage to plaintiff US Bank, N.A., as trustee, for the MASTR Asset Backed Securities Trust (MABS Trust), which was recorded on June 10, 2008. On May 8, 2009, MERS executed a "Corrective Assignment of Mortgage," which was intended to replace an invalid notarization of signature. That second assignment was recorded on May 27, 2009.
Plaintiff filed its mortgage foreclosure complaint against defendants on April 15, 2008. After defendants failed to timely answer, plaintiff obtained entry of default on June 25, 2008, and provided notice to defendants pursuant to the New Jersey Fair Foreclosure Act. See N.J.S.A. 2A:50-58.
On July 21, 2008, I.A. Campos responded, stating she and her husband were seeking a loan modification and were told it would take thirty to sixty days to complete. On July 30, 2008, F.W. Campos filed a pro se answer to the complaint out of time. He asserted no defenses to the action. Rather, he acknowledged his debt, and his failure to pay. He discussed his personal financial difficulties beginning in 2006, and his efforts to secure a modification of the loan. He asked that the court not enter judgment "at this time." The Office of Foreclosure considered the matter uncontested.
In September 2008, US Bank sought entry of final judgment. Defendants responded with a letter to the court in which they "acknowledge[d] the amount owed," and reviewed their efforts to sell the house or modify the loan, and their financial hardship. They requested the court "stop the foreclosure proceedings and final judgment" pending their efforts. The court entered final judgment on March 31, 2009.
US Bank voluntarily adjourned multiple sheriff's sales scheduled between July 2009 and August 2010, while the parties explored a possible loan modification. After a modification agreement was not reached, the sale proceeded on October 5, 2010.
In November 2010, appearing through counsel for the first time, defendants sought an order vacating the sale and referring the matter to mediation. Defendants asserted that they had negotiated in good faith in seeking a modification but plaintiff had not; they denied receiving proper notice of the October 5, 2010 sale; and they claimed that notice of denial of participation in the Home Affordable Modification Program (HAMP) was "illusory" and ineffective. Defendants did not seek to vacate the default judgment, or interpose any defenses to the foreclosure complaint.
The record includes a copy of the notice of the October 5 sale but not proof of certified mailing or return receipt requested.
In January 2011, Judge Kenneth S. Levy granted defendants the relief sought. Mediation continued for over a year, but ultimately did not produce a resolution of the matter.
The parties dispute responsibility for the failure to reach an accord. Plaintiff's counsel certified that defendants failed to submit timely and current financial information, and their incomes were grossly insufficient to meet a target payment of thirty-one percent of gross income. Counsel noted that defendants' gross income — given F.W. Campos's unemployment — barely covered the property taxes. Defendants asserted that they provided sufficient information and plaintiff negotiated in bad faith.
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On May 21, 2012, defendants filed their motion seeking an order vacating the judgment and dismissing the complaint. Defendants essentially challenged plaintiff's standing to maintain the foreclosure action. Defendants provided a certification of a mortgage industry consultant who analyzed the three-party pooling and servicing agreement (PSA) for the MABS Trust involving US Bank as trustee, Wells Fargo Bank, N.A. as servicer, and Mortgage Asset Securitization Transactions, Inc., as depositor. The consultant concluded that the MABS Trust did not own the note, as it was not effectively transferred to the MABS Trust. She also challenged evidence that the mortgage was assigned on April 14, 2008, before the complaint was filed.
After oral argument and Judge Levy's request for supplemental filings, plaintiff provided a certification of a loan documentation official of Wells Fargo Bank, who stated that Wells Fargo possessed the original promissory note and mortgage on behalf of plaintiff since May 1, 2006. He provided a copy of a computer screen reflecting acquisition of the loan documents on that date.
Upon the subsequent return date, Judge Levy denied defendants' motion. He concluded that defendants had failed to present a meritorious defense to the foreclosure action. He rejected defendants' evidentiary challenges to the Wells Fargo official's certification, and concluded that plaintiff possessed the note. Judge Levy concluded that plaintiff's possession of the note was sufficient to confer standing. In any event, any lack of standing could ultimately be corrected, resulting only in additional delay. The court rejected arguments that the corrected assignment was ineffective, and the improper notarization of the first assignment barred foreclosure.
Judge Levy also denied defendants' motion for reconsideration. He rejected defendants' argument that vacating judgment was an appropriate remedy for plaintiff's alleged failure to provide sufficient reasons for denying a loan modification, specifically, an analysis of the property's net present value. After recounting the history of the loan, the default, and the foreclosure action, Judge Levy stated:
It's now well established that the party seeking to foreclos[e] must demonstrate it owns the note or controls the note evidencing the underlying debt. And in the absence of a showing of such ownership or control, the plaintiff lacks standing to proceed with the foreclosure and the complaint should be dismissed. The evidence submitted by the plaintiff clearly shows that the plaintiff is . . . entitled to enforce the instrument under the Uniform Commercial Code. . . . Here the note was initially made payable to WMC Mortgage Corp., but was subsequently endorsed in blank. This qualifies it as a bearer instrument, which can be transferred and negotiated by delivery of loan.
. . . But in this case we have a bearer instrument, which can be transferred and negotiated by delivery alone. Thus, the plaintiff was a holder of bearer paper before the time the complaint was filed and was able to enforce the note.
The Appellate Division has recently held that either possession of the note or an assignment of the mortgage that predates the complaint is sufficient to defeat a challenge to standing. That's Deutsche Bank v. Angeles[], 428 N.J. Super. 315 at 318, Appellate Division 2012. Here the plaintiff provides an assignment dated April 14, 2008, which predates the filing of a complaint. Therefore, the Court is satisfied the plaintiff did have standing the day before filing the instant foreclosure complaint.
There is also a recent decision in Deutsche Bank v. Russo, [429 N.J. Super. 91 (App. Div. 2012)]. The Appellate Division held a lack of standing does not constitute
a meritorious defense in the post-judgment context. The Russo panel held that standing is not a jurisdictional issue in our state. Thus, a judgment of paying by a party that lacks standing is not void within the meaning of Rule 4:50-1(d). Here final judgment was obtained March 11, 2009. Standing was not challenged until over four years after the filing of the complaint. The challenge was not jurisdictional and cannot stand as a reason to vacate default judgment at this point in time. Defendant[s'] Motion for Reconsideration is, therefore, denied.
On appeal, defendants argue that the trial court should have vacated the foreclosure judgment pursuant to Rule 4:50-1(c) ("fraud . . . misrepresentation, or other misconduct of an adverse party"); Rule 4:50-1(d) ("the judgment or order is void"); and Rule 4:50-1(f) ("any other reason justifying relief from the operation of the judgment or order"). Defendants argue that plaintiff lacked standing because it did not possess the note, and the mortgage assignment was not effectuated when alleged. They contend that plaintiff had unclean hands because it pursued loan modification and foreclosure at the same time. They also argue that judgment should be vacated based on alleged violations of federal Treasury directives pertaining to HAMP.
Our decision is guided by well-established principles. The decision whether to grant a motion to vacate a judgment is "left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion." Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993). See also US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (stating decision on motion to vacate default judgment "should not be reversed unless it results in a clear abuse of discretion"). At bottom, the decision whether to grant or deny a motion to vacate a judgment must be guided by equitable considerations. Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64, 68 (App. Div. 2009) (stating that "Rule 4:50 is instinct with equitable considerations"). We discern no basis to disturb Judge Levy's exercise of discretion.
Defendants were obliged to seek relief within a reasonable time, and, in the case of relief under Rule 4:50-1(c), no more than one year after entry of the judgment. See Rule 4:50-2. Unquestionably, the request for relief under subsection (c) was untimely. Moreover, defendants failed to justify waiting over three years after entry of judgment, and over eighteen months after retaining counsel, to seek relief. Efforts to secure a modification are no excuse. Guillaume, supra, 209 N.J. at 468-69. We note that in this case, defendants filed an answer, albeit out of time, but did not raise the standing defense. Even after counsel appeared in November 2010, there was no effort to vacate the judgment until more than a year-and-a-half later.
A plaintiff suffers prejudice from delay. Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012) (stating that "equity must be applied to plaintiffs as well as defendants"). Our courts have recognized that a technical objection to standing, even if well-founded, is often futile, because it is curable, resulting only in delay. Cf. Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 356 (Ch. Div. 2010). We have declined to disturb judgments of foreclosure based on standing challenges brought long after entry of judgment. Russo, supra, 429 N.J. Super. at 101; Angeles, supra, 428 N.J. Super. at 316, 320. There is no compelling basis to view this case differently.
As a threshold matter, the request for relief under Rule 4:50-1(d) is misplaced, because lack of standing does not render a judgment void. Russo, supra, 429 N.J. Super. at 101. Also, relief under subsection (f) "is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (internal quotation marks and citation omitted). It is limited to "situations in which, were it not applied, a grave injustice would occur." Ibid. (internal quotation marks and citation omitted). We appreciate defendants' personal financial hardships. However, defendants have failed to present such exceptional circumstances warranting relief from a judgment that is based on their undisputed default of their obligations under the note.
We also discern no merit to defendants' standing argument. "[E]ither possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." Angeles, supra, 428 N.J. Super. at 318. Plaintiff's possession of the note was adequately established through the certification of the Wells Fargo official. We are unpersuaded by defendants' evidentiary challenges to the evidence of possession. Also, although the notarization of the signature in the April 2008 mortgage assignment was questionable, the assignment was re-executed with a corrected notarization. In any event, notarization is a precondition to recording, N.J.S.A. 46:26A-3(a)(3), not enforceability. See EMC Mortgage Corp. v Chaudhri, 400 N.J. Super. 126, 141 (App. Div. 2008) (stating that mortgage assignment may be valid even if not recorded).
Defendants' remaining arguments lack sufficient merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION