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Bank of New York v. Maggio

A-2514-00T3 (N.J. Super. App. Div. 2002) (Unpublished)

FORECLOSURE; NOTICE —Where a mortgagor who promises to reside in a home within a given period after a loan closes fails to do so, it can not complain when the lender serves a foreclosure complaint, especially where the borrower has actual knowledge of the suit.

A bank was the assignee of a first mortgage. The property had originally belonged to the owner’s parents and served as the owner’s principal residence. The owner acquired title when his parents were having financial difficulties. The transfer from the parents to their son took place through an intermediary. On the same day the son received his deed, he executed a note and mortgage to a lender. That lender then assigned the note and mortgage to a mortgage holding company of which, in turn, assigned the note and mortgage to the bank. The mortgage required that the son occupy the property as his principal residence within sixty days of its date. After the mortgage went into default, the bank commenced a foreclosure action. It served the son by serving his mother at the property in question, which was also listed on the deed and the son’s address. No answer was filed and the bank obtained a default judgment. Prior to the sheriff’s sale, the son filed a motion to vacate the judgment on the ground that personal service had not been accomplished. On the return date of the motion, the lower court adjourned the sheriff’s sale to allow the bank and son to negotiate. The order issued by the lower court stated “if the matter is not settled [the son] shall file supplemental proofs and an application for a further adjournment of sale by” a given date. No such request for a further adjournment was made, and the bank acquired the property at the sheriff’s sale. A hearing was held after the sheriff’s sale and the son’s attorney asked the lower court “for more time because [his client] had ‘an investor’ who was expected to provide the necessary financing.” The lower court rejected the son’s motion because it did not feel that the son had a meritorious defense to the foreclosure action. It “concluded that the manner of service was ‘reasonably calculated’ to give [the son] notice of the foreclosure action because (1) the deed gave the address of the property as his address; (2) [the son] was required to reside in the premises within sixty days of the execution of the mortgage and had not done so; and (3) service of process was ultimately made on [the son’s company].” Specifically, the lower court found that the son “clearly had no intention of living in the house with his parents when he signed the mortgage and ‘really created his own [service] problems here and made it effectively impossible for the bank to serve him with process.’” Nonetheless, the lower court agreed to give the son “very limited relief” in light of the son’s counsel’s “representation that he believed [the son] had ‘an investor’ who would make the necessary financing available to pay off the arrears.” The bank’s counsel “had no objections to the court’s setting the sheriff’s sale aside since none of the parties expected the property to be sold before [the] court decided [the son’s] motion to vacate the judgment.” The bank argued that leaving title in it would save the bank considerable time and money should the son not be successful in raising the funds needed to reinstate his mortgage. The lower court was concerned that the son might file for bankruptcy and therefore determined “not to vacate the sale and instead ordered the bank ‘not to convey the property ... and not to encumber the property for forty-five days… .’” For forty-five days, nothing happened, and the bank sought to confirm the sheriff’s sale, but the son wanted “more time” in order to obtain “traditional financing.” The Appellate Division reviewed the record and concluded that the lower court’s approach was a legitimate exercise of the court’s equity powers.

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