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Mortgage Electronic Registration Systems, Inc. v. Wilson

2005 WL 1284047 (N.J. Super. Ch. Div. 2005) (Unpublished)

MORTGAGES; EQUITABLE MORTGAGES — Even though a note is executed by only one joint property owner, where the joint owners used the property to secure the money lent by a mortgagee, and the money is directly used to purchase the property, both owners should be held responsible for the debt because both benefitted from the loan.

A woman executed a note and mortgage and then defaulted under the terms of the note. The mortgagee filed to foreclose. It then discovered that, at the loan closing, the property had been deeded to the borrower and the borrower’s husband. It then served the borrower’s husband with a summons and complaint and received no responsive pleading. It argued that because the husband “ha[d] enjoyed the same use of the funds as [the borrower] ... [he] gained a benefit from the use and enjoyment of the mortgage proceeds.” It pointed out that had it, the mortgagee, not advanced the funds, the husband and wife would not have acquired title to the property. Its logic was that the husband “should not benefit and [the mortgagee] should be permitted to enter judgment based upon the theory that an equitable mortgage ha[d] been created.” It pointed out that its intent was to grant the purchase money mortgage and that although the husband “did not sign the mortgage it should not change the outcome.” The Court reviewed relevant case law, and agreed that “the way in which the parties agreed to create a mortgage does not matter. So long as the parties intended to secure a debt by a certain piece of property, an equitable mortgage will have been created. Express words are not required to create an equitable mortgage so long as the intention to create such a lien is evident.” Here, it was clear to the Court that the couples’ “intent was to use the property to secure money lent by [the mortgagee].” The money was directly used to purchase the property. To the Court, it was clear that both the husband and wife “should be held responsible for this debt as both benefited.” Consequently, it found that “an equitable mortgage was created” and entered judgment against the husband.

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