U.S. BANK NATIONAL ASSOCIATION, ETC. VS. ANSELMO FERREIRAÂ (F-28576-09, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0507-15T1
U.S. BANK NATIONAL
ASSOCIATION as Trustee
for CSAB 2006-4,
Plaintiff-Respondent,
v.
ANSELMO FERREIRA,
Defendant-Appellant.
_____________________________
Submitted February 1, 2017 – Decided August 3, 2017
Before Judges Carroll and Gooden Brown.
On appeal from the Superior Court of New
Jersey, Chancery Division, Essex County,
Docket No. F-28576-09.
Anselmo Ferreira, appellant pro se.
Reed Smith, LLP, attorneys for respondent
(Henry F. Reichner, on the brief).
PER CURIAM
In this residential foreclosure action, defendant Anselmo
Ferreira appeals from the August 21, 2015 Chancery Division order
denying his motion to vacate a sheriff's sale pursuant to Rule
4:65-5. We affirm.
The essential facts are largely undisputed and easily
summarized. On September 13, 2006, defendant executed a note and
non-purchase money mortgage in favor of Mortgage Electronic
Registration Systems, Inc. (MERS), as nominee for U.S. Mortgage
Corporation of New Jersey, its successors and assigns, in the sum
of $412,000 encumbering residential property located on Delancy
Street in Newark. On May 26, 2009, MERS assigned the mortgage to
plaintiff, U.S. Bank National Association, as Trustee for CSAB
2006-4.
Defendant admits that he defaulted on his mortgage loan in
2009. Plaintiff initiated foreclosure proceedings on May 29,
2009, by filing a foreclosure complaint, and default judgment was
entered on October 26, 2010. Defendant admitted that beginning
in 2010, he submitted multiple loan modification applications to
plaintiff's servicer, all of which were denied. A final judgment
was entered on February 18, 2014.1 In March 2014, defendant
1
The delay was apparently occasioned by the necessity for
plaintiff to comply with the New Jersey Fair Foreclosure Act's
requirement that a Notice of Intention to Foreclose set forth the
name and address of the lender, N.J.S.A. 2A:50-56, as prescribed
in U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (2012).
2 A-0507-15T1
tendered a settlement offer to plaintiff in the amount of $240,000,
which was rejected.
Between June 2014 and March 2015, sheriff's sales were
scheduled and adjourned eight times by plaintiff to allow loss
mitigation review of defendant's additional loan modification
application. On November 28, 2014, defendant's June 2, 2014 loan
modification application was denied. On December 9, 2014,
defendant filed a formal appeal from the November 28, 2014 denial,
which was also denied. Ultimately, on March 3, 2015, a Sheriff's
sale was conducted and plaintiff was the successful bidder.
On May 4, 2015, defendant filed a motion to vacate the
Sheriff's sale. Defendant argued that he was not notified before
the sale that his appeal of the denial of his latest loan
modification application had been denied. According to defendant,
plaintiff thereby violated rules and regulations promulgated by
the Consumer Financial Protection Bureau (CFPB) pursuant to the
Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§2601-
2617. Defendant asserts that the CFPB rules impose a stay on any
sale before he is notified of a final decision on his appeal.
In denying the motion, the trial court first determined that
the motion was untimely because the sale occurred on March 3,
2015, and defendant's motion was filed two months later on May 4,
2015. Referencing Rule 4:65-5, the court noted that the motion
3 A-0507-15T1
should have been filed ten days after the sale or before delivery
of the conveyance.
The court also addressed defendant's claim substantively and,
relying on Guillaume, supra, determined that defendant's multiple
applications for modification did not halt the foreclosure
process, particularly in the absence of any evidence of bad faith
on the part of plaintiff in reviewing defendant's applications
while repeatedly postponing the sale to accommodate such review.
The court found no "factual or legal basis" to vacate the sale,
noting that "[t]here's nothing remotely addressing an issue of
fraud, accident, surprise, mistake or irregularity[.]" 2 In
addition, the court pointed out that the mortgage had been in
default for six years with "no demonstration [by defendant] of an
ability to redeem[.]" The court entered a memorializing order on
August 21, 2015, and this appeal followed.
On appeal, defendant argues that "[his] home should have
never been sold while the loan modification application was still
in process." Defendant asserts that by proceeding to sheriff's
sale while his loan modification appeal was pending, plaintiff
2
The court also rejected defendant's challenge to plaintiff's
standing, finding that plaintiff's receipt of the assignment prior
to the filing of the complaint conferred standing. See Deutsche
Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 318 (App.
Div. 2012).
4 A-0507-15T1
violated equitable principles and the RESPA servicing rules
promulgated by the CFPB.
"[F]oreclosure proceedings seek primary or principal relief
which is equitable in nature[.]" U.S. v. Scurry, 193 N.J. 492,
502 (2008). "[A]n application to open, vacate or otherwise set
aside a foreclosure judgment or proceedings subsequent thereto is
subject to an abuse of discretion standard." Ibid. (citing
Wiktorowicz v. Stesko, 134 N.J. Eq. 383, 386 (E. & A. 1944)).
Accordingly, a trial judge's application or denial of equitable
remedies should not be disturbed "unless it can be shown that the
trial court palpably abused its discretion, that is, that its
finding was so wide off the mark that a manifest denial of justice
resulted." Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999)
(citing State v. Thompson, 59 N.J. 396 (1971)).
A motion to vacate a sheriff's sale is governed by Rule 4:65-
5, which states that any objection to the sale must be served
within the ten days following the sale or before delivery of the
deed, whichever is later. "Examples of valid grounds for objection
include fraud, accident, surprise, irregularity, or impropriety
in the sheriff's sale." Brookshire Equities v. Montaquiza, 346
N.J. Super. 310, 317 (App. Div.) (citing Orange Land Co. v. Bender,
96 N.J. Super. 158, 164 (App. Div. 1967)), certif. denied, 172
N.J. 179 (2002).
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Under Rule 4:65-5, the trial court retains discretion to set
aside a sale if the defendant alleges a valid "independent ground
for equitable relief." Crane v. Bielski, 15 N.J. 342, 346 (1954)
(citing Karel v. Davis, 122 N.J. Eq. 526 (E. & A. 1937)). "Quite
independent of statute or rule of court, the Court of Chancery has
inherent power to order a sale of mortgaged premises and to control
its process directed to that end, and this inherent power of the
court has never been doubted." Id. at 346 (citing Fed. Title &
Mortg. Guarantee Co. v. Lowenstein, 113 N.J. Eq. 200 (Ch. 1933)).
"[O]ur courts will set aside a sheriff's sale for fraud,
accident, surprise, or mistake, irregularities in the conduct of
the sale, or for other equitable considerations[.]" First Trust
Nat. Ass'n v. Merola, 319 N.J. Super. 44, 50 (App. Div. 1999)
(citing Karel, supra, 122 N.J. Eq. at 528). Therefore, a valid
objection alleging one of these equitable bases will not be barred
by the timing restriction of Rule 4:65-5, Union Cnty. Sav. Bank
v. Johnson, 210 N.J. Super. 589, 598 (Ch. Div. 1986) (citing Mutual
Life Ins. Co. v. Goddard, 33 N.J. Eq. 482 (Ch. 1881)), or by the
doctrine of laches, id. at 600. However, despite the court's
broad discretion to employ equitable remedies, this power should
be "sparingly exercised" and "a sale so conducted shall be vacated
only when necessary to correct a plain injustice." First Trust,
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supra, 319 N.J. Super. at 52 (quoting Karel, supra, 122 N.J. Eq.
at 529).
Applying these principles, we discern no abuse of discretion
in the court's denial of defendant's motion and no "plain
injustice" in need of correction. Defendant argues that plaintiff
violated CFPB rules and regulations promulgated pursuant to RESPA
by conducting the sale while his loan modification appeal was
pending. Despite plaintiff's assertion to the contrary, defendant
insists that he was never notified that his appeal was denied. We
reject defendant's contention.
RESPA was enacted by Congress to protect consumers from
abusive practices in the real estate settlement process. 12 U.S.C.
§2601(a). The CFPB was authorized to prescribe rules and
regulations in furtherance of RESPA's goals. 12 U.S.C. §2617(a).
Here, defendant invokes violations of provisions of one such rule.
Under 12 C.F.R. §1024.41(g), "[i]f a borrower submits a complete
loss mitigation application" after the foreclosure process has
begun "but more than [thirty-seven] days before a foreclosure
sale, a servicer shall not . . . conduct a foreclosure sale,
unless:"
[t]he servicer has sent the borrower a notice
. . . that the borrower is not eligible for
any loss mitigation option and the appeal
process . . . is not applicable, the borrower
has not requested an appeal within the
7 A-0507-15T1
applicable time period for requesting an
appeal, or the borrower's appeal has been
denied[.]
[12 C.F.R. §1024.41(g)(1).]
Under 12 C.F.R. §1024.41(i),
[a] servicer must comply with [these
procedural] requirements . . . for a
borrower's loss mitigation application,
unless the servicer has previously complied
with the requirements . . . for a complete
loss mitigation application submitted by the
borrower and the borrower has been delinquent
at all times since submitting the prior
complete application.
The CFPB's final rule and official interpretations regarding the
loss mitigation regulations provide relevant insight to the
prohibition against multiple applications:
The Bureau believes that it is appropriate to
limit the requirements in §1024.41 to a review
of a single complete loss mitigation
application. Specifically, the Bureau
believes that a limitation on the loss
mitigation procedures to a single complete
loss mitigation application provides
appropriate incentives for borrowers
to submit all appropriate information in the
application and allows servicers to dedicate
resources to reviewing applications most
capable of succeeding on loss mitigation
options.
[Mortgage Servicing Rules Under the Real
Estate Settlement Procedures Act (Regulation
X) 78 Fed. Reg. 10696, 10836 (February 14,
2013).]
8 A-0507-15T1
Borrowers have a private right of action to enforce the procedural
requirements set forth in 12 C.F.R. § 1024.41. However, violations
of § 1024.41 are enforced under RESPA, 12 U.S.C. § 2605(f)(1)(A),
which authorizes monetary damages only.
Here, defendant acknowledged that he "submitted multiple
modification applications" since his 2009 default, all of which
were denied. He invokes CFPB rule violations in connection with
his latest loan modification appeal. However, regardless of
whether or not he was notified that his appeal was denied prior
to the sale, the procedural requirements of 12 C.F.R. §1024.41
only apply to a review of a single complete loss mitigation
application. Therefore, defendant's latest application was not
entitled to the protections of 12 C.F.R. §1024.41(g) pursuant to
12 C.F.R. §1024.41(i). Moreover, defendant's sole recourse for a
violation of 12 C.F.R. §1024.41 is monetary damages, not equitable
relief.
As we have observed elsewhere, "[i]n foreclosure matters,
equity must be applied to plaintiffs as well as defendants."
Angeles, supra, 428 N.J. Super. at 320. This mortgage loan went
into default in 2009, three years after inception. The sheriff's
sale did not occur until six years later. Under these
circumstances, we cannot find that the trial court abused its
discretion in denying defendant's motion, made two months after
9 A-0507-15T1
the sheriff's sale. See Omer v. Liu, 419 N.J. Super. 431, 437-38
(App. Div.), certif. denied, 208 N.J. 369 (2011).
Affirmed.
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