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Bankers Trust Company of California, N.A. v. Gillman

A-1448-01T3 (N.J. Super. App. Div. 2002) (Unpublished)

FORECLOSURES—Where a mortgage has been assigned but the assignment has not been recorded and has been lost, the mortgagee of record is a proper plaintiff in a foreclosure action.

A mortgage lender assigned a mortgage and note to an intermediary party which shortly thereafter assigned the mortgage and note to the ultimate holder. Neither of the assignments were recorded. The assignment to the intermediary party was lost. The borrower defaulted and a mortgage foreclosure action was filed naming the original lender, who was still the mortgage holder of record. After the sheriff sale eventually took place, the original mortgage holder assigned its successful bid to the actual holder of the mortgage. The borrower refused to vacate the premises and was evicted. The writ of possession erroneously identified the original lender as the plaintiff despite the fact that the bid had been assigned and a deed issued to the ultimate mortgage holder. On appeal, the borrower contended that the foreclosure action should have been dismissed for lack of standing because the named plaintiff did not, in fact, own the property. The borrower’s argument was that because the original lender “had previously assigned its interest to another entity, commencing the action in its name was a legal nullity.” The Court disagreed, holding that, “[g]iven that the two assignments of the mortgage were unrecorded, the last mortgage holder of record was the appropriate entity to commence the foreclosure action. First, as an in rem proceeding, the action [could] be filed by the mortgagee, his representative or assignee.” Further, “as a practical matter, [a] judgment of foreclosure cannot be entered through the Office of Foreclosure in the name of an unrecorded assignee. The action, once commenced, could have been continued in the name of the original mortgagee even if it had been assigned to [another party] during the pendency of the action or following entry of judgment.” Accordingly, the Court held that “utilizing the identity of the mortgage holder of record, in the absence of an recorded assignment was permissible.”

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