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Mortgage Electronic Registration Systems, Inc. v. Ronghi

A-4363-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

FORECLOSURES; MORTGAGES; NOTICES — Even assuming that a borrower does not receive the required “notice to cure” under the Fair Foreclosure Act, a borrower cannot wait for very long after a default judgment is entered, and certainly not after a purchaser at a sheriff’s sale begins investing substantial sums of money and time into the property and expect that the default judgment will be set aside.

A lender properly initiated a foreclosure action against a homeowner-borrower, but for an arguable failure to provide an adequate “notice to cure” prior to selling a foreclosed property at a sheriff’s sale to recoup its loan amount. The borrower did not file an answer to the action after receiving proper notice of the foreclosure complaint. After the sheriff’s sale, the borrower did not file a motion to vacate the default judgment for almost one year. When it did file, the borrower claimed that a lender representative had advised him that the sale had been put off and not to worry. The borrower claimed that he had negotiated a loan modification agreement but had no supporting documentation. The lower court held a hearing to determine whether the lender provided the borrower with a notice to cure the default under the notice requirements of the Fair Foreclosure Act, and to consider whether the default judgment should be vacated because of any material misrepresentations by the lender and any excusable neglect for the borrower’s failing to answer the foreclosure complaint. The Court found that the borrower was fully aware that a foreclosure was in process even if he had not been provided with a notice to cure. It held that the borrower could have taken appropriate action to attack the filing of the foreclosure complaint based upon failure to provide a “notice to cure” but instead did nothing until he received a default judgment. After an evidentiary hearing, it found that the borrower had not demonstrated proof of any loan modification agreement.

On appeal, the Appellate Division affirmed the lower court’s ruling. Even assuming that the borrower did not receive the required “notice to cure” under law, it concluded that the lower court correctly denied the motion to vacate default judgment. The Court noted that the borrower was properly served with a summons and complaint as well as with a final judgment of default, and that he knowingly stopped making payments on the mortgage. It observed that the borrower waited approximately ten months to move to vacate the default judgment, well after the purchaser at the sheriff’s sale began investing substantial sums of money and time into the property’s renovation. The Court therefore concluded that any alleged deficiencies in the “notice of right to cure” requirements did not warrant the relief that the borrower requested. It held that any excusable neglect must be supported by a meritorious defense, and the borrower’s claim of loan modification or lender misrepresentation was without merit.

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