Many individuals in the northern New Jersey area are facing serious problems regarding the ownership of a home purchased during the sub-prime mortgage boom. No one really understood how terrible the result of this type of mortgage could be. Sadly, many families in the Bergen, Hudson and Passaic County area have already lost their homes as they did not take immediate action and contact a New JereyBankruptcylawyer to assist them in resolving the issue. Many debtors believe that participating in a short sale or signing over a deed in lieu of foreclosure will forever wipe out any mortgage debt. However, we have seen in many cases that lenders are coming after these debtors for the "deficiency" and many times are suing debtors to collect the deficiency. A short sale is essentially the opportunity to sell your home for an amount that is less than the mortgaged amount. This can be a viable option for some individuals, but in other cases, it is too far past the point where a short sale can be achieved before foreclosure. In these cases, it may be necessary to file a bankruptcy filing to halt the proceedings on the foreclosure in order to have time to resolve the issue and not end up out on the street. Each case is unique, and it is critical that you get knowledgeable legal advice and are steered in the right direction, depending on your circumstances.
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What is a deed in lieu?
A deed in lieu is another option that is available to some individuals. This is when the property is signed over to the bank and the individual no longer has to deal with the main mortgage securing the property. However, many debtors have mortgaged their property with two mortgages. It is typical for many northern New Jersey homeowners to have financed their homes with and 80/20 type of mortgage situation. This is where one mortgage secures 80% of the home and another mortgage secures the other 20% percent of the home. These debtors usually purchased the home with no down payment and 100% financing. Signing over a deed in lieu of foreclosure may in some cases resolve the problems with the larger mortgage; however, the smaller mortgage is still owed to the lender (usually a different lender). These matters are emotional and extremely upsetting, and the northern New Jerseybankruptcylawfirm of Rafael Gomezunderstands that you need help, and you need it now. Your questions will be answered confidentially and you will understand your actual options, and can avoid scam artists that are preying on those who are suffering financial stress. Contact Bergen, Hudson, Passaic CountybankruptcyattorneyRafael Gomez by calling 201-646-3333
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It is a common myth
that bankruptcy will "ruin" your credit. The truth is that after your bankruptcy is
compete, you will have no unpaid debt on your credit report and you will now be
able to rebuild your credit through careful financial management and paying
your bills in a timely manner. While you
may face increased interest rates on any new credit cards or car loans, if you
pay them off regularly and show your creditors you are being responsible
financially, your credit score can improve dramatically within just a few
years. Every person's financial history
is unique and you should speak to an experienced northern New Jerseybankruptcylawyer from Bergen, Hudson and Passaic County like Rafael Gomez to get more information
on what to expect after you are finished with your bankruptcy.
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We have successfully
helped hundreds and hundreds of our clients eliminate their debt and start
building a new financial future for themselves and their families through
bankruptcy. Rafael Gomez is dedicated to
helping individuals and business owners protect their valuable assets and get
relief from the harassment of collection agencies while using bankruptcy to
either discharge all their unsecured debt through chapter 7 or reorganize and
pay off their debt over time with chapter 13.
When you come to speak with Rafael Gomez for your free bankruptcyconsultation, we will review your finances and advise you on what your best
options are.
Another step in
restoring your good credit after bankruptcy involves reviewing your various
credit reports to make sure that any remaining derogatory comments are
removed. While there are companies that
advertise to do this for you, it is something you can do yourself. There are other methods of improving your
credit rating including secured credit cards and getting a co-signed loan with
another person who has good credit.
Making the payments and paying off such loans reflects well on both
party's credit reports. To discuss what
you can expect after your bankruptcy, speak to an experienced bankruptcy lawyer
like Rafael Gomez.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE OF HSI ASSET SECURITIZATION CORP. TRUST 2007-NCI, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-NC1, Plaintiff-Respondent,
v.
WITTMORE WILLIAMS AND CHERYL WILLIAMS, Defendants-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
PER CURIAM.
Defendants Cheryl and Wittmore Williams appeal from a March 9, 2017 order denying their motion to vacate a March 8, 2016 sheriff's sale in this mortgage foreclosure action. We affirm.
Defendants purchased their home on March 7, 1997. On September 27, 2006, defendants executed an adjustable rate promissory note to MortgageTree Lending for $340,000, with initial monthly payments of $2,740.99 for principal and interest, and a maturity date of October 1, 2036. Initially, interest was calculated at 9.45% but was subject to readjustment every six months, up to a maximum of 16.45%. On September 27, 2006, defendants also executed a mortgage on their residence to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for MortgageTree Lending to secure the loan. The mortgage was recorded on October 25, 2006.
Defendants both became unemployed in 2008. They defaulted on the loan payments that fell due on May 1, 2008, and each month thereafter. A notice of intention to foreclose (NOI) was mailed to defendants, notifying them of the default and how to cure it. Defendants failed to cure the default.
On August 28, 2008, MERS assigned the mortgage to plaintiff Deutsche Bank National Trust Company, as Trustee for HSI Asset Securitization Corp. Trust 2007-NC1 (the Bank). The assignment was recorded on September 16, 2008.
Plaintiff filed a foreclosure complaint on October 14, 2008, and an amended complaint on October 28, 2008. A private process server served defendants with the summons and complaint on November 10, 2008. On January 8, 2009, default was entered against defendants for failure to respond to the complaint. On September 19, 2013, the matter was dismissed for lack of prosecution.
Defendants claim they applied and were approved for a loan modification in 2013. They certify they began making mortgage trial payments in May 2013, believing they would receive a permanent modification from Specialized Loan Servicing (SLS), the loan servicer at the time. Defendants allege after making a $1597.35 payment (an amount less than one monthly installment), plaintiff never refunded the payment and failed to follow through on the loan modification.
Plaintiff's complaint was reinstated on January 28, 2015. Plaintiff filed a motion for entry of judgment on May 22, 2015. On June 24, 2015, final judgment was entered in favor of plaintiff in the amount of $624,836.38. Defendants never filed a motion to vacate the default judgment.
A sheriff's sale was scheduled to take place on October 6, 2015. The sale was advertised in the Herald News on September 11, 18, 25, and October 2, 2015. The advertisement included the date, location, and time of the sale with a brief description of the property and directions on where the full legal description could be found. The advertisement noted the sheriff reserved the right to adjourn the sale without further notice by publication.
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Plaintiff voluntarily adjourned the sheriff's sale to November 17, 2015, and then again to January 5, 2016, for purposes of loss mitigation. The sale was then rescheduled to February 2, 2016.[1] On February 2, 2016, plaintiff again voluntarily adjourned the sale to March 8, 2016, for loss mitigation. Defendants were sent adjournment letters for each of the adjourned sales, with the possible exception of the original adjournment to November 17, 2015.[2]
On February 2, 2016, defendants filed a Chapter 7bankruptcy. Shortly thereafter, on February 23, 2016, the bankruptcy was dismissed by the Bankruptcy Court. On the same day, defendants were sent a letter from an authorized agent of SLS regarding loss mitigation assistance, seemingly triggered by the bankruptcy petition. This letter is the only reference in the record regarding a purported loan modification. The letter stated: "The Client offers several alternatives that may provide you financial relief. Such options are listed below: Loan Modification[;] Short Sale[;] Deed in Lieu of Foreclosure."
The sheriff's sale took place on March 8, 2016, and plaintiff was the successful bidder. Defendants' redemption period expired on March 18, 2016. A sheriff's deed, dated March 21, 2016, was delivered to plaintiff's counsel on March 29, 2016; the deed was subsequently recorded on November 16, 2016.
Also on March 8, 2016, Cheryl Williams signed a response form to the SLS letter, expressing interest in the loss mitigation alternatives and checking a box that read, "I hereby authorize [SLS], upon successful approval of a loan modification, to file for court approval of the loan modification." The form is also signed by the "[d]ebtor's [a]ttorney." There is no proof this form was actually mailed back; if it was, it would have been received after the sheriff's sale.
On April 19, 2016, defendants re-filed their bankruptcy petition, allegedly unaware their home had already been sold and conveyed by the sheriff to plaintiff. On August 24, 2016, plaintiff obtained an order granting its motion for relief from the automatic stay as to the mortgaged premises from the Bankruptcy Court.
Meanwhile, defendants entered into two lease agreements with tenants on April 1 and July 1, 2016 to "help [them] qualify [their] income in case any type of mortgage loan modification was available." On November 21, 2016, plaintiff's counsel sent a notice to the tenants regarding defendants' loss of the property due to foreclosure and advising the tenants to pay future rent to plaintiff. On December 29, 2016, plaintiff obtained a Writ of Possession for eviction purposes.
On January 16, 2017, more than ten months after the sale, defendants filed a motion to vacate the sheriff's sale. As of the time the motion was heard, the mortgage balance had increased to more than $650,000.
During oral argument, defendant's counsel conceded the property is "probably severely under water" because the mortgage balance far exceeds the value of the property. He further conceded the "property is in bad shape" and has "serious" heating issues.
The motion was denied by the chancery court in an oral decision on June 5, 2017. In his oral decision, the motion judge noted plaintiff had not received a single mortgage payment in the more than eight years since defendants defaulted on May 1, 2008. He noted defendants had provided no evidence that redemption was a realistic possibility. The judge found the balance of equities favored plaintiff, which was facing "an enormous loss." He determined that vacating the sale would further prejudice plaintiff because the inevitable delay would result in additional expenses and costs.
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The judge found defendants' reliance upon Rule 4:50-1 in their motion papers to be misplaced since defendant's motion sought to vacate the sheriff's sale, not reopen the final judgment. The judge further noted defendants were time-barred from relief under Rule 4:50-1 because their motion was filed seventeen months after the final judgment was entered on June 24, 2015. This appeal followed.
On appeal, defendants raise the following arguments: (1) the trial court erred in denying defendants' motion to vacate the sheriff's sale based on lack of notice and irregularities in the sale; (2) defendants lacked actual notice of the sheriff's sale in violation of their right to procedural due process; (3) the foreclosure sale was not properly advertised and was adjourned excessively without proper notice; (4) defendants should not be foreclosed from pursuing all available redemption methods based on their current inability to pay; and (5) defendants furnished sufficient trial payments for a binding loan modification which plaintiff refuses to honor.
Rule 4:65-2 mandates that "notice of the [sheriff's] sale shall be posted in the office of the sheriff of the county . . . where the property is located, and also, in the case of real property, on the premises to be sold[.]" Additionally, "at least [ten] days prior to the date set for sale, [the party obtaining the order or writ shall] serve a notice of sale by registered or certified mail, return receipt requested," on "every party who has appeared" and the "owner of record." R. 4:65-2.
The sheriff "may continue such sale by public adjournment, subject to such limitations and restrictions as are provided specially therefor." R. 4:65-4. The rule does not require notice of adjourned sale dates be served in any particular manner. See First Mut. Corp. v. Samojeden, 214 N.J. Super. 122, 127-28 (App. Div. 1986). Service of the adjournment notices by regular mail is permissible.
Adjournment requests by the plaintiff, "whether or not agreed to by the debtor, are required to be granted by the Sheriff irrespective of any prior adjournments." Pressler & Verniero, Current N.J. Court Rules, cmt. on R. 4:65-4 (2018) (citing Wells Fargo Home Mortg. v. Stull, 378 N.J. Super. 449, 454-55 (App. Div. 2005)). Here, plaintiff adjourned the sale several times for loss mitigation, an appropriate reason to adjourn a sale. Defendants were not prejudiced by the adjournments. On the contrary, they benefitted from the postponements of the sale. Thus, defendants' contention that there were excessive sale adjournments has no merit.
Rule 4:65-5 requires motions for the hearing of an objection to a sheriff's sale to be "served within [ten] days after the sale or at any time thereafter before the delivery of the conveyance." See Mercury Capital Corp. v. Freehold Office Park, Ltd., 363 N.J. Super. 235, 238 (Ch. Div. 2003) (noting that the right to object to the sale "is not finally terminated until the sheriff delivers a deed to the successful bidder"). Here, the property was sold on March 8, 2016, and the deed was delivered to plaintiff's counsel on March 29, 2016. Defendants filed their motion to vacate the sale on January 16, 2017, more than nine months after delivery of the sheriff's deed. The motion judge correctly found defendants failed to move to vacate the sale in a timely fashion.
We are mindful, however, that "as a matter of fundamental fairness, [Rule 4:65-2] must be construed as entitling interested parties to actual knowledge of the adjourned date upon which the sale actually takes place." Samojeden, 214 N.J. Super. at 123. Failure to comply with the rule requiring notice of the sheriff's sale normally requires voiding of the sale. See Assoulin v. Sugerman, 159 N.J. Super. 393, 397 (App. Div. 1978) (quoting Pressler, Current N.J. Court Rules, cmt. on R. 4:65-2 (1978)) (holding that noncompliance with the notice requirements imposed by Rule 4:65-2 "warrants setting the sale aside, `provided the party entitled thereto has no knowledge of the pendency of the sale, seeks relief promptly upon learning thereof, and no intervening equities in favor of innocent third parties have been created in the interim'"); Orange Land Co. v. Bender, 96 N.J. Super. 158, 164 (App. Div. 1967) (explaining that where mortgagor did not receive mandatory notice of sheriff's sale and had no knowledge of sale for five months, chancery court "could properly have set aside the sale or ordered redemption").
The motion judge found the notices sent by plaintiff's counsel to defendants advising of the March 8, 2016 adjourned sale date were mailed to the same address as the prior notices defendants admitted receiving. He further found the notices were not returned by the Post Office as undeliverable. As a result, the judge held there was presumptive good service. "New Jerseycases have recognized a presumption that mail properly addressed, stamped, and posted was received by the party to whom it was addressed." Ssi Med. Servs. v. HHS, Div. of Med. Assistance and Health Servs., 146 N.J. 614, 621 (1996) (citations omitted). The record supports the judge's conclusion that plaintiff complied with its duty to inform defendants of the March 8, 2016 adjourned sale date and that defendants had actual notice of the sale date. Accordingly, the denial of defendants' untimely motion was not an abuse of discretion.
Furthermore, the power to void a sheriff's sale "is discretionary and must be based on considerations of equity and justice." First Trust Nat'l Ass'n v. Merola, 319 N.J. Super. 44, 49 (App. Div. 1999) (citing Crane v. Bielski, 15 N.J. 342, 349 (1954)). To that end, the Court in Scurry applied the "time-honored maxims that the law does not compel one to do a useless act[,] and that equity follows the law." 193 N.J. at 505-06 (alteration in original) (citations omitted). Here, unlike the unique circumstances in Scurry, remanding this matter for a new sale or to permit a reasonable redemption period would be an exercise in futility. The market value of the property is far less than the redemption amount. Thus, defendants have no equity in the property. In any event, defendants concede they do not have the financial ability to cure the arrearages, let alone redeem the mortgage, within a reasonable period time. Therefore, a remand would serve no useful purpose.
Defendants remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
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Affirmed.
[1]Plaintiff asserts the adjournment resulted from defendants exercising their statutory adjournment rights. This is inconsistent with defendants' claim that they were unaware of any sheriff's sale. The notice of adjournment does not indicate the reason for adjournment.
[2]Defendants may have been mailed a notice for this first adjournment as well, but a copy is not provided in either party's appendix.
Despite all of the advantages that bankruptcy may provide, there are many valid reasons for choosing not to file a petition. Some of these concern problems in the cases of particular debtors; others relate simply to the fact that bankruptcy is not the only means to address the debtor'slegal problems and may not be necessary.
Loss of property
One consequence of a Chapter 7bankruptcy is the loss of nonexempt property or its value in cash. This is not a problem for many debtors because consumer debtors rarely have any nonexempt property. Except in those few states that have low exemptions and have passed laws making the federal bankruptcyexemptions unavailable to their residents, the amount of property a debtor is allowed to keep is generous enough to protect the property of most nonhomeowners and many homeowners. As of 2011 (these figures change periodically) only debtors with equity of substantially more than $21,000 per debtor in a home, $3,225 in a car or $10,775 in household goods and certain other property are likely to have problems under the federal exemptions. Even in those cases, a Chapter 13bankruptcy often presents a viable alternative through which debtors may retain all of their possessions.
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A bankruptcy will be part of a debtor'scredit history for as long as the law allows, that is, 10 years under the Fair Credit Reporting Act. This means that anyone who requests a credit report will be informed of the bankruptcy filing. The effect this will have on future credit cannot be predicted, but it is an understandable concern of many people who are considering bankruptcy.
There is no definite response to this concern. However, debtors who owe substantial amounts, especially if they are in default, already have poor credit ratings. In the eyes of some creditors, a bankruptcy that wipes the slate clean will be an improvement. Not only will the potential customer be free of other financial obligations, but he or she will also be unable to obtain a Chapter 7 discharge for another eight years in most cases. For these reasons, some creditors have been known to actively solicit recent bankruptcydebtors.
As bankruptcy has become more prevalent in the United States, creditors have increasingly considered it only one factor in their decision about granting credit, and most have chosen not to automatically exclude the ever-growing number of people who have filed a bankruptcycase. Even mortgage lenders are often willing to disregard a bankruptcy that is more than a few years old.
Bankruptcy's effect on a debtor's reputation in the community is almost always imperceptible. In a small town, however, especially if debts are owed to local people, the stigma of bankruptcy cannot be entirely discounted. The potential harm can only be evaluated locally, on a case-by-case basis, and weighed against the advantages that bankruptcy offers. Again, the possibility of voluntarily paying selected debts should not be overlooked if it would ameliorate the problem.
Closely related to the problem of reputation is that of discrimination against debtors who have filed bankruptcycases. To a large extent, the BankruptcyCode alleviates this problem.
Government bodies generally may not discriminate on the basis of a bankruptcy or because of a debt discharged in bankruptcy. Thus, a housing authority or grantor of government assistance benefits cannot deny benefits to a person based on previously discharged debts. Similarly, utilities may not deny service based on a bankruptcy or discharged debts, though they may demand a security deposit for continued service. Private employers may not discriminate with respect to employment or terminate employment based on bankruptcy or discharged debts. Debtors can rest assured that the law protects them in this regard and that they will be able to enforce their rights in court, if necessary.
However, the distinction between discrimination based on bankruptcy or discharged debts and discrimination based on future financial responsibility should be clearly understood. That is, even creditors who are precluded from discrimination based on bankruptcy may refuse new credit or other services if the refusal is properly based on other considerations.
The law regarding discrimination by other private entities, such as creditors who provide essential services, is not as clear. It should be pointed out that this type of discrimination is extremely rare, especially in urban areas where many providers of goods and services are available. It would be most likely to occur in a small town, where only one merchant offered a particular product or service. In that case, if it could be shown that later discrimination was a prohibited attempt to coerce payment of the debt, the debtor could go to court to seek damages because the creditor violated the bankruptcylaws.
Again, the situation can best be assessed locally, on a case-by-case basis. Discrimination against debtors who have filed bankruptcycases is normally not a problem, but if a debtor is in doubt, he or she should consult an experienced bankruptcyattorney.
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Cost of filing a petition
Besides any attorneys' fee, which are reasonable in the Law Firm of Rafael Gomez, bankruptcy carries an out-of-pocket cost of at least $284-$299 for the court fees and fees for a prebankruptcycredit counseling briefing and a credit education course requierd after the case is filed. Other fees may raise this figure somewhat. In a Chapter 13case, for example, the trustee is usually entitled to a commission of up to 10 percent of the payments made through the plan. In some cases, various utilities may require security deposits to ensure continued service.
These costs, like the less tangible costs, must be weighed when deciding whether to file a bankruptcy case. Where the debts are not large or troublesome, it may simply not be worthwhile to spend the amount necessary to eliminate them.
In some cases, bankruptcy is simply the wrong tool to use, and none of the advantages will be realized. One such situation is that of the debtor whose debts are fully secured by security interests or other liens on property that cannot be impaired through bankruptcy and who does not have sufficient income to remedy a default even with all of the help bankruptcy provides. Unless there is some advantage to litigating in bankruptcycourt, bankruptcy will not solve this debtor's basic problems. At most, it may discharge the debtor's personal liability for the debts and gain the advantage of the automatic stay for a month or more. Although in some cases this could be worthwhile, in most it will not ultimately benefit the debtor.
The problem of debtors in this predicament is often that their current expenses exceed their income. Because bankruptcy (except for Chapter 13's ability to stretch out or reduce certain types of short-term expenses) basically deals with assets and liabilities, it does not address this problem directly in most cases.
The opposite situation can also sometimes cause problems. If a debtor has substantial and valuable nonliened property that cannot be exempted, a premature bankruptcy will generally hasten property loss rather than prevent it. Because unsecured creditors must sue the debtor to obtain judgmentliens or levies on the debtor's property, loss of the property outside bankruptcy may be quite slow. On the other hand, liquidation of nonexempt property generally occurs quickly in the bankruptcy process. And, because unsecured creditors are entitled to the present value of nonexempt property in Chapter 13, a case under that chapter would be quite costly. In this situation, the best option is probably to wait at least until execution on the property appears imminent, unless the debtor can afford the necessary Chapter 13case.
Some debtors may be barred altogether from filing a bankruptcy for some period of time. An individual cannot file if he or she had a previous bankruptcycase dismissed in the past 180 days and the dismissal was (1) for willful failure to abide by court orders or to appear in court in proper prosecution of the case or (2) a voluntary dismissal following a request for relief from the automatic stay of section 362 of the Code.
Finally, some debtors may stand to gain little from a Chapter 7bankruptcy because they cannot receive a discharge due to a prior bankruptcy. For these people, the prospect is somewhat brighter. In most cases, a Chapter 13case can still provide significant relief.
