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GE Capital Mortgage Services, Inc. v. Miller

A-3100-03T1 (N.J. Super. App. Div. 2004) (Unpublished)

FORECLOSURE; NOTICE—While it would be normal to set aside a foreclosure sale if the property owner is not notified of the date of sale, where the property owner knew of the prior adjournment, repeatedly filed for bankruptcy and took other steps to delay the sale for more than ten years, and ignored a bankruptcy court order for prospective relief, equity allows a court to validate the sale.

A homeowner bought a house and took a mortgage loan. Five years later, the homeowner defaulted and the lender filed a foreclosure action and obtained a default judgment. For the next ten years, the homeowner “managed to avoid a sheriff’s sale on her house by filing a series of bankruptcies, none of which were completed.” As a result, she lived in the house without making mortgage payments. Eventually, the Bankruptcy Court “gave prospective relief from any future bankruptcy filings” and ordered that “any future bankruptcy filing would not impose an automatic stay as to the mortgaged premises without further order of that court.” A sheriff’s sale took place and the mortgagee was the successful bidder. The homeowner moved to set aside the sale because she had not received notice. Although the lower court declined to vacate the sale, the Appellate Division, in an earlier case, reversed. The sale was rescheduled, but adjourned at the homeowner’s request when she filed her eighth bankruptcy. A foreclosure sale was scheduled, but the homeowner did not receive notice of the new date. At that sale, a third party bought the house for slightly less than the amount owed on the mortgage. The homeowner moved to set aside the sale for lack of notice, but because the house had been bought by a third party, that relief was denied.

The homeowner filed a further appeal, contending that the third party was not an “innocent” third party purchaser because it was a real estate investment firm. She did not, however, contend that the third party had any connection with the mortgagee. She also claimed that she had a purchaser under contract to buy the house and that the house was worth a lot more than the purchase price at the sheriff’s sale.

The Appellate Division agreed with the lower court “that the equities did not favor [the homeowner].” It was concerned that the woman had lived in the house “without making mortgage payments for over ten years” and that “[s]he abused the legal system by repeatedly filing bankruptcies over a ten year period to stave off a foreclosure sale, including filing for bankruptcy after the Bankruptcy Court had earlier issued an order for prospective relief.” Even the unsigned contract she produced showed a sale price of less than what was paid at the sheriff’s sale. As for her claim of not receiving notice of the adjourned sale, she knew that the original sale was adjourned, “because she requested the adjournment.” She also knew or should have known that her bankruptcy filing was not valid grounds for the adjournment. Therefore, even though the Appellate Division did “not condone the failure to give [the woman] notice of the sale,” it agreed that she was not entitled to relief.

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