Annotate this Case






DOCKET NO. A-5577-11T2

U.S. BANK, N.A., as Trustee

For SG Mortgage Security Asset

Backed Certificates, Series













May 6, 2013


Submitted April 15, 2013 Decided


Before Judges Fasciale and Maven.


On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-6227-08.


Carleen Cole, appellant pro se.


Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel; Alex G. Gross, on the brief).


In this mortgage foreclosure case, defendant appeals from an April 27, 2012 order denying her motion to vacate default judgment. Defendant challenges plaintiff's standing to foreclose on the property. We affirm.

In March 2006, defendant executed a note and mortgage to FGC Commercial Mortgage Finance d/b/a Fremont Mortgage (Fremont) regarding the property. The mortgage named Mortgage Electronic Registrations Systems, Inc. (MERS) as mortgagee in a nominee capacity for Fremont. In April 2006, Fremont assigned the note to Fremont Investment & Loan (FIL). FIL sold the loan to SG Mortgage Securities, LLC (SG), which is reflected in a July 2006 prospectus filed with the Security Exchange Commission. In July 2006, plaintiff also entered into a pooling servicing agreement as trustee, with SG as depositor, and Wells Fargo Bank, N.A. (Wells Fargo), as servicer. As a result, plaintiff owned the note. In November 2007, defendant stopped making payments on the loan.

In February 2008, plaintiff filed its foreclosure complaint. In March 2008, MERS executed an assignment of the mortgage to plaintiff. In April 2008, after defendant failed to respond to the complaint, the court entered default. In September 2008, the judge entered default judgment based on certifications of Valorie Wallace and Herman J. Kennerty, Vice Presidents of Loan Documentation for Wells Fargo, certifying that plaintiff was the holder of the note. In October 2008, the court vacated the default judgment and defendant thereafter filed an answer to the complaint. In September 2009, plaintiff sent defendant a Notice of Entry of Default. After defendant failed to respond, in August 2010, plaintiff obtained a final judgment of foreclosure.

In January 2011, the sheriff scheduled a sale of the property, which the court then adjourned approximately eleven times to permit the parties to participate in mediation. The parties engaged in twelve mediation sessions. In January 2012, the court then terminated any further mediation sessions.

In March 2012, nineteen months after final judgment had been entered, defendant filed a motion to vacate the final judgment and cancel the pending sale relying on Rule 4:50-1(a), (d), and (f), contending for the first time that plaintiff lacked standing. The judge denied the motion and this appeal followed.

On appeal, defendant maintains that plaintiff lacked standing to file the complaint.

Our standard of review is well-settled. As Justice Patterson recently reiterated in US Bank National Ass'n v. Guillaume, 209 N.J. 449, 467 (2012), a "party seeking to vacate [a default] judgment" in a foreclosure action must satisfy Rule 4:50-1, which states in pertinent part that

[o]n motion, with briefs and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; . . . (d) the judgment or order is void; . . . or (f) any other reason justifying relief from the operation of the judgment or order.


The rule is "designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case." Ibid. (internal quotation marks omitted).

We afford "substantial deference" to the trial judge and reverse only if the judge's determination amounts to a clear abuse of discretion. Ibid. An abuse of discretion is when a decision is "made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Ibid. (internal quotation marks omitted).

In support of the motion to vacate, defendant relied on subsections (a), (d), and (f) of Rule 4:50-1. We conclude that defendant has not demonstrated that she is entitled to relief under any of these sections. As such, the judge did not abuse his discretion.

Regarding her Rule 4:50-1(a) contention, defendant filed her motion to vacate beyond the one-year limitation that Rule 4:50-2 imposes. As a result, she is not entitled to relief under subsection (a). Furthermore, defendant has not demonstrated excusable neglect and a meritorious defense as required under this section of the rule and case law. See Guillaume, supra, 209 N.J. at 469.

"Excusable neglect" may be found when the default was "'attributable to an honest mistake that is compatible with due diligence or reasonable prudence.'" Guillaume, supra, 209 N.J. at 468 (quoting Mancini v. EDS, 132 N.J. 330, 335 (1993)). Here, plaintiff properly obtained final judgment in August 2010, the court adjourned the sale repeatedly to allow for mediation, and defendant did not move to vacate the judgment until nineteen months later, after unsuccessfully mediating the case twelve times.

Furthermore, we reject defendant's reliance on subsection (d) because defendant filed her motion untimely approximately nineteen months after final judgment had been entered and she is unable to show, on the merits, that she is entitled to a vacation of the judgment. "A Rule 4:50-1(d) motion, based on a claim that the judgment is void, does not require a showing of excusable neglect but must be filed within a reasonable time after entry of the judgment." Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J. Super. 91, 98 (App. Div. 2012) (citing R. 4:50-2). Under certain circumstances, "equitable considerations may justify a court in rejecting a foreclosure defendant's belated attempt to raise as a defense the plaintiff's lack of standing." Id. at 99-100. Such is the case here.

We stated in Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012), that

[i]n foreclosure matters, equity must be applied to plaintiffs as well as defendants. Defendant did not raise the issue of standing until he had the advantage of many years of delay. Some delay stemmed from the New Jersey foreclosure system, other delay was afforded him through the equitable powers of the court, and additional delay resulted from plaintiff's attempt to amicably resolve the matter. Defendant at no time denied his responsibility for the debt incurred nor can he reasonably argue that Deutsche is not the party legitimately in possession of the property. Rather, when all hope of further delay expired, after his home was sold and he was evicted, he made a last-ditch effort to relitigate the case. The trial court did not abuse its discretion in determining that defendant was not equitably entitled to vacate the judgment.


Like Angeles, defendant failed to deny responsibility for her debt, waited to file the motion to vacate until numerous attempts to mediate failed, and provided no reasonable explanation for her delay.

Moreover, defendant is unable to show, on the merits,

that she is entitled to vacate the judgment pursuant to subsection (a) or (d). "'As a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt.'" Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div.) (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011)). Plaintiff met this requirement. Fremont sold defendant's loan, it was identified in the mortgage loan schedule attached to the PSA, and the office of foreclosure received a true copy of the note. Furthermore, two individuals employed by the servicer certified that the plaintiff held the note.

In Russo, supra, 429 N.J. Super. at 101, we held based on Guillaume and Angeles, that "even if [the] plaintiff did not have the note or a valid assignment when it filed the complaint, but obtained either or both before entry of judgment, dismissal of the complaint would not have been an appropriate remedy . . . because of [the] defendants' unexcused, years-long delay in asserting that defense." In Russo, defendants challenged plaintiff's standing to file the foreclosure complaint because it did not take an assignment of the mortgage until after the complaint was filed. Id. at 96. We concluded, "in this post-judgment context, that lack of standing would not constitute a meritorious defense to the foreclosure complaint." Id. at 101. "[S]tanding is not a jurisdictional issue in our State court system and, therefore, a foreclosure judgment obtained by a party that lacked standing is not 'void' within the meaning of Rule 4:50-1(d)." Ibid. The same rationale applies here. Hence, standing issues aside, plaintiff had a legal right to enforce the note, pursuant to the Uniform Commercial Code, at the time it obtained the judgment. See Ford, supra, 418 N.J. Super. at 597.

Moreover, plaintiff fully complied with Rule 4:64-1(b)(10), which provides that "if the plaintiff is not the original mortgagee or original nominee mortgagee," the complaint must state "the names of the original mortgagee and a recital of all assignments in the chain of title." Page three, paragraph 4(a), of the complaint clearly evidences the intended assignment and states:


The assignment was then executed on March 10, 2008, less than one month after the complaint was filed, well before the court entered judgment.

Next, defendant argues that plaintiff's counsel submitted an inadequate certification in opposition to the motion to vacate judgment. Although we reject the merits of that contention, we briefly address amended foreclosure Rules 4:64-1 and 4:64-2. On June 9, 2011, the Supreme Court adopted substantial amendments to the rules governing mortgage foreclosure actions. The Court adopted the amendments "in response to so-called 'robo-signing' in foreclosure and bankruptcy filings in which employees of [the plaintiff or its] mortgage lenders or servicers allegedly submit affidavits without personal knowledge of the information contained in such documents." Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:64-1 (2013). The rules were effective immediately.

In an order accompanying the newly-adopted rules, the Chief Justice addressed cases in which judgment was entered but no sale of the property has occurred. The order provides in pertinent part that

in all residential mortgage foreclosure actions in which judgment has been entered but no sale of the property has occurred as of [June 9, 2011], plaintiff's counsel before the sale of the property shall be required to file an affidavit, . . . (a) stating that the attorney has communicated with an employee or employees of the plaintiff or the plaintiff's mortgage loan servicer (1) who personally reviewed the affidavit of amount due and the original or true copy of the note, mortgage, and recorded assignments, if any, submitted to the court, and (2) confirmed their accuracy; (b) setting out the date and mode of communication employed; (c) setting out the name(s), title(s)[,] and responsibilities in those titles of the plaintiff's employee(s) or the employee(s) of the plaintiff's mortgage loan servicer with whom the attorney communicated; and (d) attesting that the complaint and all subsequent documents filed with the court comport with the requirements of Rule 1:4-8(a).[2]


Here, plaintiff obtained its judgment in August 2010, before the effective date of these rules. Thus, the requirements of Rules 4:64-1(a)(2) and 4:64(d) did not require plaintiff to attach a certification to its complaint.

The order that the Chief Justice entered, however, states that "in all residential mortgage foreclosure actions in which judgment has been entered but no sale of the property has occurred as of [June 9, 2011], plaintiff's counsel before the sale of the property shall be required to file an affidavit" providing certain information. It is unclear whether the property has been sold; however, no such affidavit was produced on appeal. Therefore, our affirmance is without prejudice for defendant to file promptly with the trial court a Rule 4:50-1 motion on that discrete issue if warranted.

Finally, we disagree that Rule 4:50-1(f) justifies vacation of the judgment. Subsection (f) permits a judge to vacate a default judgment for "any other reason justifying relief from the operation of the judgment or order," and "is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (internal quotation marks omitted). The applicability of this subsection is limited to "situations in which, were it not applied, a grave injustice would occur." Ibid. (internal quotation marks omitted). On this record, defendant has not shown any such "exceptional circumstances."

After a thorough review of the record and consideration of the controlling legal principles, we conclude that defendant's remaining arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E).


1 On March 5, 2009, the Hudson County Probate court appointed Marsha Trice as guardian ad litem for this defendant.

2 See N.J. Judiciary, Residential Mortgage Foreclosure Rules: Amendments to Rules 4:64-1 and 4:64-2; Revised Form Certifications/Affidavits (June 9, 2011), available at http://www.judiciary.state.nj.us/notices/2011/n110610f.pdf.