RESIDENTIAL CREDIT SOLUTIONS, INC., Plaintiff–Respondent, v. CLAUDIA CARMO, Defendant–Appellant.
Defendant Claudia Carmo appeals from orders of the Chancery Division denying her motions to vacate a foreclosure judgment. She claims that the foreclosure judgment was improperly entered because plaintiff lacked standing to foreclose on the subject property. We reject that contention and affirm the Chancery Division's orders.
The essential facts are not in dispute. On September 2, 2005, defendant executed a note evidencing a loan of $349,300 from Mortgageit, Inc. The loan was secured by a mortgage on residential property owned by defendant and located on West Broad Street in Westfield. The mortgage designated Mortgage Electronic Registration Systems, Inc. (MERS), as the nominee
for the lender. The mortgage was recorded in the Union County Clerk's records.
As of February 1, 2009, defendant was in default of the payment terms of the note, and she thereafter made no further payments. On February 26, 2010, plaintiff Residential Credit Solutions, Inc. (RCS), filed a complaint for foreclosure on the Westfield property. RCS alleged in its complaint that MERS, acting on behalf of Mortgageit, Inc., had assigned the mortgage to Wells Fargo Bank N.A. on May 28, 2009, and that Wells Fargo Bank had assigned the mortgage to RCS on January 25, 2010, both of the assignments having been recorded with the Union County Clerk.
After initially failing to file an answer to the foreclosure complaint, defendant moved almost a year later to vacate her default and obtained the court's leave to file an answer in April 2011. Her answer did not specifically dispute the existence of the debt, the authenticity of the note and mortgage, and her default in making payments as required by the note. The answer merely denied generally all the allegations of the foreclosure complaint and put plaintiff RCS to its proofs.
In June 2011, defendant filed a motion to dismiss the complaint on the ground that RCS lacked standing to bring a foreclosure action, and RCS filed a cross-motion for summary judgment. By orders dated November 3, 2011, the Chancery Division denied defendant's motion and granted RCS's motion for summary judgment. In a letter-opinion filed with the orders, the court reviewed defendant's arguments and concluded that RCS had standing to proceed on the foreclosure action. The court struck defendant's answer and returned the matter to the Foreclosure Unit of the Superior Court to proceed as an uncontested matter. On December 16, 2011, the court denied defendant's motion for reconsideration, and on March 5, 2012, we denied her motion for leave to file an interlocutory appeal.
On October 10, 2012, the Chancery Division entered a final judgment of foreclosure. Defendant then moved before the trial court to vacate the judgment. The court denied that motion on November 28, 2012, and also another motion for reconsideration on January 11, 2013. This appeal as of right followed. Since a stay was not issued, the property was sold at sheriff's sale in January 2013, and the sheriff's deed vesting title in the successful bidder was conveyed and recorded on March 27, 2013.
On appeal, defendant contends again that plaintiff RCS did not prove it had standing to bring a foreclosure action against the subject property. She argues that the submissions of RCS in support of its 2011 motion for summary judgment did not establish the chain of assignments necessary to confer standing on RCS and that RCS did not prove it was in possession of the original note at the time it filed its foreclosure complaint in February 2010.
To have standing to bring a foreclosure action, a plaintiff “must own or control the underlying debt.” Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J.Super. 214, 222 (App.Div.2011); accord Wells Fargo Bank, N.A. v. Ford, 418 N.J.Super. 592, 597 (App.Div.2011). The Uniform Commercial Code (UCC), specifically N.J.S.A. 12A:3–301, addresses in pertinent part who may enforce a negotiable instrument such as a mortgage:
“Person entitled to enforce” an instrument means the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to 12A:3–309 or subsection d. of 12A:3–418.
To qualify as the “holder” of a mortgage who can enforce it, plaintiff must show: “transfer of possession of the instrument and its indorsement by the holder.” Mitchell, supra, 422 N.J.Super. at 223 (quoting N.J.S.A. 12A:3–201(b)).
Here, in support of its cross-motion for summary judgment, RCS presented a certification of Romeo Lasam, its Director of Foreclosure and Bankruptcy. Lasam certified that RCS had purchased the loan in September 2009 from the Federal Deposit Insurance Corporation (FDIC) acting as the receiver for Franklin Bank, S.S.B. RCS had established a limited liability company named Franklin Venture, LLC, to bid on the sale of the loans, and its bid had been accepted by the FDIC. Documentary evidence of the sale transaction consisted of seventy-eight pages of listed loans, including the loan at issue in this case. That documentary evidence was apparently provided with Lasam's certification, although defendant has not attached those documents to her appendix on appeal. Lasam also certified that he had personal knowledge that RCS had been in possession of the original note evidencing the debt from defendant to Mortgageit, Inc. since September 2009, that is, before RCS filed the foreclosure complaint in this matter.
Defendant did not refute the declarations contained in Lasam's certification. Based on the undisputed factual record, the Chancery Division rejected defendant's contention that RCS lacked standing to pursue the foreclosure. Since defendant had no other defense to the action, the court granted summary judgment to defendant by its order of November 3, 2011.
Despite the several subsequent motions and proceedings, defendant has never produced any evidence to challenge as a factual matter that RCS obtained the rights under the note and mortgage in September 2009 and that it had possession of the original note from that time until it moved for summary judgment. Although the record does not reveal clearly to us what the role of Wells Fargo Bank was in its assignment of the rights under the note and mortgage to RCS in January 2010, RCS had possession of the original note and documentation demonstrating its right to enforce it at the time it filed its foreclosure complaint and its motion for summary judgment.
Defendant contends the note was not endorsed to RCS, but the note was endorsed in blank by an officer of Mortgaeit, Inc. Consequently, the rightful possessor of the note was its “holder” under N.J.S.A. 12A:3–201 and 3–301, and had a right to enforce it.
Because the record established the right of RCS to enforce the note, and because defendant had no defense other than her challenge to RCS's standing, the Chancery Division correctly entered summary judgment in favor of RCS and subsequently denied defendant's motions to vacate that judgment.