In a recent decision, the Appellate Division of the Superior Court of New Jersey held that a bank that sued for foreclosure did not have “standing” to sue because the bank was not in possession of the mortgage note when it filed the complaint. Deutsche Bank Nat. Trust Co. v. Mitchell, 2011 WL 3444223 (N.J.Super.A.D.,2011).
That case involved a foreclosure action filed by the Plaintiff, Deutsche Bank, the day before it was assigned the mortgage. In its original complaint, Deutsche Bank alleged “that ‘[o]n or before the date the within complaint was drafted, the plaintiff herein became owner of the note and mortgage being foreclosed herein.’” Id. at 4. However, Deutsche Bank failed to provide proof about how it obtained the possession of the note. To cure this defect, the bank filed an amended complaint. Although, this amended complaint listed the assignment of the mortgage, this assignment occurred the day after the Bank filed its original complaint. The lower court held that Deutsche Bank cured the defect in its original complaint by filing an amended complaint and therefore, had standing to bring the foreclosure action.
The Appellate Division reversed the lower court’s decision. The Court held that Deutsche Bank did not have standing when it filed its original complaint because it was not in possession of the note at that time. Therefore, it did not have the right to bring the lawsuit in the first place. Standing is a right of a party to bring a lawsuit. In a foreclosure action, “a party seeking to foreclose a mortgage must own or control the underlying debt.” Id. at 5. Thus, “Deutsche Bank could have established standing as an assignee, if it had presented an authenticated assignment indicating that it was assigned the note before it filed the original complaint.” Id at 6. But, it failed to provide any such evidence and hence could not cure the defect in its original complaint that was filed when it never had the right to commence the foreclosure action in the first place. Thus, the Appellate Division’s decision resulted in vacating the sheriff’s sale of the foreclosed property.
© 2011 Nissenbaum Law Group, LLC
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