Posted by kevin on April 20, 2015 under Foreclosure Blog | 
In the past week, I have received telephone calls from 5 homeowners whose homes were in foreclosure. 3 of the owners told me that they had received notice from the sheriff that a sale has been scheduled. In other words, final judgment had already been entered. I quoted them a fee, and when they picked themselves off the floor, I told them that the chances of overturning the judgment were slim and might not justify the expense involved.
If you have had the chance to read this blog (or other blogs dealing with foreclosures), you will know that in NJ, the courts have made it very difficult for borrowers to succeed in litigation. In 2011 just after pro borrower decisions, I was getting positive results in court on a regular basis. This made it easier to negotiate a settlement. One by one, however, defenses have been whittled down by the courts which has made litigation and settlement more difficult.
One of the first areas where the courts hit back at borrowers were in cases dealing with post judgment relief. What does that mean? Well, for the most part, it means that the borrower does not file an answer to the complaint, but waits until final judgment is entered before he or she hires an attorney to contest the foreclosure.
To set aside the final judgment, a borrower must file a motion to vacate the judgment. The test is that the borrower must show excusable neglect plus a meritorious defense. This a a pretty high standard, made even tougher by a series of unpublished decisions that came down from late 2011 to 2013 which further cut off access to the courts in post judgment situations. Add to the high standard to vacate and the tough case law, the penchant of many judges to give lenders more than one bite at the apple in opposing the motion to vacate. Your lawyer winds up writing 2 or more briefs and making as many appearances. And, after all that work, you lose about 90% of these motions on the trial level.
On a practical level, reviewing all the documents, drafting the initial papers, going to court and then writing supplemental briefs with two or more court appearances is time consuming and, thus, costly. It can easily run into $7500-9,000 worth of time. So, I tell clients unless you have that one in a thousand fact pattern, you are probably wasting your money.
So what do you do? If you are behind on your mortgage, you will get a letter of default from the servicer. Then, you will get a Notice of Intent to Foreclose along with the ‘we are your bank and we are here to help’ letter. That is the time that you hire an attorney. It gives you the best chance to get what you want, and it gives an experienced defense attorney the most flexibility in shaping a defense.
Posted by kevin on March 4, 2012 under Foreclosure Blog |
Since November, we have awaited anxiously for the NJ Supreme Court decision US Bank, NA v. Guillaume. This was touted to be the definitive ruling on the Notice of Intent to Foreclose (NOI) requirements under the Fair Foreclosure Act (FFA). Well, the decision was released this week.
The FFA requires the mortgage lender to send to the mortgage debtors an NOI prior to filing a foreclosure complaint relating to a residential mortgage. The NOI statute states that the notice must contain 11 different points of information. One of the critical points of information is the name and address of the Lender. However, the FFA does not say what the penalty should be if the mortgage lender fails to comply with the NOI requirements.
There have been 5 major cases dealing with the NOI requirement before Guillaume. The first decision indicated that substantial compliance was good enough (in other words, you did not have to include all 11 items of information). Under this case, the plaintiff could leave out the name and address of the lender. Decisions 2-5 said that you had to strictly comply; that is, you had to include the name and address of the lender. One case seems to suggest that dismissal of the complaint was not necessary for a violation (Frankly, it is not clear to me what that court was saying on this issue). Two cases said that dismissal without prejudice was appropriate but not necessary. The fifth case said dismissal with prejudice was mandatory. Dismissal was the remedy favored by borrowers.
Because the decisions on the remedy for a violation of the NOI requirements were not uniform, judges were coming down with different decisions based on the same facts. Whether the case was dismissed, in effect, depended on which judge was assigned the case. This is not good.
In Guillaume, the borrowers sat on their rights for the better part of 16 months, a default judgment had been entered against them, and a sheriff’s sale had been scheduled. That is when the Guillaumes finally retained an attorney. (Message to all readers-that is a big mistake.) On a motion to set aside the default judgment, it was argued that the plaintiff failed to comply with the NOI requirements. The trial court refused to dismiss, and told the plaintiff to send out a revised notice which included the name and address of the lender. Two revised notices were sent but both were deficient. Still the trial court would not vacate the default or dismiss the case. The appellate level decision in Guillaume said substantial compliance was good enough. If plaintiff gave the name of the servicer, it satisfied the purpose of the statute. That decision did not even mention the 5 major cases on the issue.
The case went up to the Supreme Court. The lenders, in effect, put all new foreclosures on hold, pending the decision of the Supreme Court. Attorneys for both sides were happy that the Supreme Court was finally going to decide what the remedy for a FFA violation was. Good or bad, we would have a definitive decision and be able to advise our clients.
The Supreme Court held that a lender must strictly comply with the NOI requirements- in other words, the notice had to include the name and address of the lender. That was definitive. Then, the Court said that since the Legislature did not provide a remedy, they would consider the appropriate remedy. So far, so good. Then, the Court said that foreclosures are decided by chancery judges. In the old days, chancery courts were called courts of equity. Traditionally equity allowed judges wide flexibility in making their rulings based on the specific facts before them. So in keeping with this tradition,, the Supreme Court said that if there was an NOI violation, the judges were free to shape their own remedies as long as they did not abuse their discretion.
What does that mean in practical terms? Judge A could decide to dismiss. Judge B could decide to stay the case for 30 days so that a new NOI could be sent. Judge C could decide something different. As long as the given judge does not abuse his or her discretion, the ruling cannot be overturned on appeal. No clarity.
So, we waited a decade to get a definitive decision on the NOI requirement, and did not get a definitive decision. That is disappointing.
Posted by kevin on January 26, 2012 under Foreclosure Blog |
2011 was a slow year for foreclosures in NJ. The robo-signing issue put practically all foreclosures on hold. When the NJ Supreme Court finally gave the go ahead to most of the banks to continue with foreclosure action, the banks decided to sit on the fence for two reasons: first, to get a ruling from the Supreme Court of NJ on what exactly must be presented in a Notice of Intent to Foreclose and what the penalty for non-compliance is; and second, to see if the national robo-signing deal pushed by the Obama administration could be effected. As of this date, neither has occurred. However, if I were a betting man, I would bet that the NJ Supremes will come down with their decision in the Notice of Intent to Foreclose case (Guillaume) before the people in Washington get off their duffs. In fact, that decision should come down any day now.
Read more of this article »
Posted by kevin on January 15, 2012 under Foreclosure Blog |
The buzz among foreclosure attorneys is that the NJ Supreme Court was going to issue expeditiously a decision in the Guillaume case, which dealt with whether a Notice of Intent (NOI) to Foreclose could just list the name and address of the servicer as opposed to the name and the address of the lender as specifically provided by the statute. Although not an issue in the lower court decision since they ruled that the name and address of a servicer was good enough, the second issue that everyone hopes that the Supremes deal with is what is the remedy for a violation. Some lower courts have said that the only remedy can be dismissal without prejudice; others say that putting case on hold until new notice is sent out is good enough. I believe that dismissal without prejudice is the proper remedy.
Read more of this article »
Posted by kevin on December 14, 2011 under Foreclosure Blog |
Last week, I argued before the Appellate Division to set aside a default judgment. My client had good arguments that the loan was predatory, that the plaintiff lacked standing and that the Fair Foreclosure Act may have been violated. However, the judges focused on the fact that my client never hired a lawyer until more than a year after default judgment had been entered. I made creative arguments to get around this “bad fact”- arguments that are a little too detailed and, perhaps, too boring to be presented here.
Without going into detail, there is a lesson to be learned irrespective of how the Appellate Division rules. When you get served with a Notice of Intent to Foreclose or a Complaint, hire an attorney to file an answer. I know that at the same time these papers are coming in, the servicer is bombarding the borrower with letters about modifications containing statements that the lender wants to work with you to save your house. That is usually a lot of hot air especially when you look at the dismal percentages on permanent modifications being granted even at this late date.
Read more of this article »
Posted by kevin on August 21, 2011 under Foreclosure Blog |
Lenders in foreclosure actions had a bad couple of days (August 8 & 9) in NJ. On the 8th, an appellate panel came down with a published opinion in BONY, as Trustee v. Laks. This is a Fair Foreclosure Act case. We use the FFA as a procedural defense to dismiss cases without prejudice. It is important because it is a published opinion right out of the blocks and it involves a pro se plaintiff (someone who is not represented by a lawyer)
Read more of this article »
