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Bank of New York as Trustee for the Certificate Holders CWALT 2004 26T1 v. Laks

422 N.J. Super. 201, 27 A.3d 1222 (App. Div. 2011)

FORECLOSURE; NOTICE — If, prior to entry of judgment, a borrower files an objection as to the adequacy of a foreclosure Notice of Intent, the remedy granted to the borrower will be dismissal of the complaint without prejudice, but if the borrower fails to raise such an objection, it will not be entitled to such relief after a final judgment has been entered.

Residential borrowers missed their mortgage loan payments, and the lender’s loan servicer sent them a Notice of Intention to foreclose. This mandatory pre-suit notice identified the loan servicer as acting on behalf of the lender. The lender was not identified. The later filed foreclosure action named a bank-trustee of a securitized mortgage loan trust as the foreclosing plaintiff. Nowhere on the Notice of Intention was the bank’s name or address shown as the lender. The borrowers argued that the Notice of Intention was defective because it did not state the bank’s name and address. They claimed that, as a result, the bank had not proven that it had standing to sue on the note. The bank moved to strike the answer and submitted a copy of the note. The lower court concluded that the Notice of Intention was adequate and that the bank had standing.

In their appeal, the borrowers argued that the Notice of Intention was deficient. The Appellate Division argued, holding that, “a Notice of Intention is deficient under N.J.S.A. 2A:50-56(c)(11) if it does not provide the name and address of the lender as defined in the Fair Mortgage Foreclosure Act.” It also held that the language of the statute is mandatory, and that there was no room for anything other than strict compliance that the lender be identified. The Court cited the language of N.J.S.A. 2A:50-55 for the definition of the term “Lender” as “any person, corporation, or other entity which makes or holds a residential mortgage, and any person, corporation or other entity to which such residential mortgage is assigned.”

Under the statutory definition of lender, the loan servicer did not qualify. It had not made the mortgage agreement with the borrowers nor did it hold the borrower’s mortgage. Therefore, it failed to meet the requirements of the statute.

Lastly, the Court addressed the appropriate relief in this kind of situation. If, prior to entry of judgment, a borrower files an objection as to the adequacy of the Notice of Intent, the remedy granted to the borrower will be the dismissal of the foreclosure complaint without prejudice. The lender will then need to send a new Notice of Intent before refiling the complaint. However, the borrower will not be entitled to relief if it fails to raise an objection to the adequacy of the Notice of Intent after a final judgment had been entered.


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