Wednesday, November 26, 2014

Expiring Statute Of Limitations Leaves New Jersey Homeowner With Free & Clear Home While Foreclosing Lender Left Holding The Bag

In Newark, New Jersey, reports:
  • In what may be a first in New Jersey, a Morris County man who defaulted on his $520,000 mortgage in 2007 has instead won the right to retain ownership of his house, according to court records.

    Earlier this month, Gordon A. Washington of Madison won a challenge against creditors Specialized Loan Servicing LLC and Bank of New York Mellon to collect the debt, saying they failed to file a viable foreclosure complaint within a six-year statute of limitations.

    In his written opinion, Judge Michael B. Kaplan repeatedly expressed his reluctance to nullify the mortgage agreement — stating he did so with a "figurative hand holding the nose" — but, nonetheless, he ruled in favor of Washington by voiding the mortgage lien.

    "The debtor retains the property, free of any claim of the defendants," Kaplan wrote in his Nov. 5 decision. "The court will proceed to gargle in an effort to remove the lingering bad taste."(1)

    Earlier this year, the percentage of New Jersey homes in foreclosure rose to the highest rate in the nation.

    Montclair lawyer Margaret Jurow told The Record, which first reported the court's decision early Saturday morning, that this was the first case she was aware of in which the court applied the statute of limitations to the correction of a mortgage loan, and that borrowers can generally only hope for a modification of the loan to get a lower down payment.

    The newspaper reported that it wasn't able to determine Friday if Washington's creditors intended to appeal the decision.

    Washington's attorney, Walter Nealy, told NJ Advance Media Saturday afternoon the decision spoke for itself and that Washington's bankruptcy proceedings were ongoing.
Source: Morris County man facing foreclosure beats creditors, takes ownership of house.

Thanks to Deontos for the heads-up on the story.

(1) "The maxim has long been recognized that equity aids the vigilant, not those who sleep on their rights." Brick Plaza, Inc. v. Humble Oil & Refining Co., 218 N.J. Super. 101, 526 A.2d 1139 (App. Div.1987) (citing Stout v. Seabrook's Executors, 30 N.J. Eq. 187, 190-191 (Ch. 1878), aff'd o.b. 32 N.J. Eq. 826 (E. & A. 1880)). The lender, and its assignors (if any) had six years to successfully enforce their rights, What does this judge not get? A judge who sympathizes with plaintiff/financial institutions who slept on their rights for six years in a foreclosure case is a judge having no business presiding over foreclosure cases. I extend my sympathy to those homeowner/defendants who regrettably get stuck with Judge Kaplan presiding over their foreclosure cases. Hopefully, they'll have counsel versed in the appellate process because prevailing in such a foreclosure action may require a trip to an appellate court to reverse an unfavorable trial court ruling.

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