NATIONSTAR MORTGAGE, LLC, ETC. VS. ATHENA KOSTOPOULOS (F-002238-15, BERGEN COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: September 20, 2019
• Docket: A-1532-18T1
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1532-18T1

NATIONSTAR MORTGAGE, LLC, d/b/a MR. COOPER,

Plaintiff-Respondent,

v.

ATHENA KOSTOPOULOS and THOMAS KOSTOPOULOS, wife and husband,

Defendants-Appellants,

and

WESTLAND GARDEN STATE PLAZA, PALISADES COLLECTION, LLC, and THE STATE OF NEW JERSEY,

Defendants. _________________________________

Argued September 9, 2019 - Decided September 20, 2019

Before Judges Sabatino and Natali. On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F- 002238-15.

Haralampo Kasolas argued the cause for appellants (Brach Eichler LLC, attorneys; Haralampo Kasolas, of counsel and on the briefs).

Michael T. Madaio argued the cause for respondent (Sandelands Eyet LLP, attorneys; Michael T. Madaio, of counsel and on the brief).

PER CURIAM

In this residential foreclosure case, Athena and Thomas Kostopoulos

(collectively "defendants") 1 raise several arguments challenging the entry of

final judgment in foreclosure against them, an earlier grant of summary

judgment, and other orders by the trial court.

Defendants defaulted on their mortgage loan in July 2006, and have not

made any payments since then. Their primary arguments are that the original

plaintiff in this case, Wilmington Trust Company ("Wilmington"), did not have

standing to bring a foreclosure action against them, and they were not properly

served with notice of the motion for final judgment. For the reasons that follow,

1 The foreclosure complaint lists other defendants, but they have not participated in this appeal. A-1532-18T1 2 we conclude these arguments and the other points raised by defendants lack

merit, and accordingly affirm.

I.

We recite the background in considerable detail, in light of defendants'

primary challenges to plaintiff's standing and related chain-of-custody issues.

The Transactions

On September 16, 2003, defendant Athena Kostopoulos executed a note

promising to pay $564,000 on a residential mortgage loan at a 6% yearly interest

rate to Lehman Brothers Bank FSB, with a maturity date of October 1, 2033.

That same day, Athena and Thomas Kostopoulos executed a mortgage to

Mortgage Electronic Registration Systems Inc. ("MERS") as nominee for

Lehman Brothers Bank, FSB, covering the subject premises in Paramus. The

mortgage was recorded with the Bergen County Clerk's Office on October 10,

2003. The note was subsequently indorsed from Lehman Brothers Bank, FSB

to Lehman Brothers Holdings, Inc. ("LBHI"). The instrument was endorsed "in

blank," pursuant to N.J.S.A. 12A:3-205, making it payable to a bearer and

negotiable by transfer of possession alone.

A series of related transactions then occurred on November 1, 2003.

Lehman Brothers Bank, FSB assigned all of its rights, title and interest in a set

A-1532-18T1 3 of bank mortgage loans, which plaintiff asserts included defendants' loan, to

LBHI. That same day, LBHI entered into a Mortgage Loan Sale and Assignment

Agreement conveying the loans to Structured Asset Securities Corporation

("SASC") on a "servicing-retained basis." SASC, in turn, conveyed the

mortgage loans to Citibank, N.A. ("Citibank") as trustee, under a Trust

Agreement. LBHI entered into a servicing agreement with Aurora Loan

Services, Inc. ("Aurora"), whereby Aurora became servicer of the mortgage

loans. Aurora was also what is known in the trade as a "master servicer" of the

loans under the Trust Agreement.

Consequently, as of November 1, 2003, Aurora became the servicer and

master servicer for the Series 2003-35 loans. LBHI owned the servicing rights,

SASC owned the loans, and Citibank was trustee for SASC.

On July 1, 2004, CitiMortgage became both owner of the servicing rights

to the loans within the Series 2003-35 certificates and servicer of the loans,

pursuant to a Servicing and Servicing Rights Assignment and Assumption

Agreement between LBHI and CitiMortgage dated June 30, 2004. This

contractual agreement was also evidenced by a letter sent to defendants,

informing them that CitiMortgage would be their servicer effective July 1, 2004.

A-1532-18T1 4 According to a Trustee's Certificate, as of July 1, 2004, Wilmington

served as Trustee for, among other agreements, the November 1, 2003 Trust

Agreement relating to the Series 2003-35 certificates. The certificate is dated

November 4, 2015. It is signed by a Vice President of Wilmington, and

acknowledged and agreed to by a Vice President of Citibank as predecessor

trustee.

The record further shows that on March 6, 2012, Aurora and Nationstar

entered into a Residential Servicing Asset Purchase Agreement, whereby

Nationstar purchased Aurora's rights, title, and interest in a set of assets,

including Aurora's interest in the November 1, 2001 Trust Agreement and

Servicing Agreement regarding the Series 2003-35 certificates.

The Assignments

On December 21, 2010, MERS, as nominee for Lehman Brothers Bank

FSB, assigned the mortgage to CitiMortgage. This assignment was recorded

with the Bergen County Clerk's Office on January 10, 2011.

Given the assignment of the servicing rights under the Servicing

Agreement to CitiMortgage, Aurora's remaining interest in the Servicing

Agreement and Trust Agreement would solely be its role as "master servicer."

Therefore, Nationstar, having purchased this interest, was the master servicer

A-1532-18T1 5 for the Series 2003-35 certificates pool. That is consistent with a February 24,

2016 Securities and Exchange Commission ("SEC") filing by CitiMortgage

entitled "Management Assessment of Compliance with Applicable Servicing

Criteria," which lists Nationstar as master servicer, and the entity to which

CitiMortgage is reporting to as servicer for the loans in the Series 2003 -35

certificates.

On February 28, 2014, CitiMortgage assigned the mortgage to

Wilmington as trustee for the trust. The assignment was recorded on March 14,

2014. No other assignments were made until after the trial court in this case

granted Wilmington's summary judgment motion.

On August 7, 2017, CitiMortgage executed an assignment of the mortgage

to Nationstar. This assignment was recorded on August 21, 2017.2

On August 21, 2017, Wilmington assigned the mortgage to Nationstar,

and that assignment was recorded on September 14, 2017. Plaintiff's counsel

later filed a certification to the court explaining that this August 7 assignment

from CitiMortgage to Nationstar "has no bearing on the chain of title." On

October 16, 2017, the trial court granted Wilmington's motion to substitute

Nationstar as plaintiff in this action.

2 We discuss this particular document, infra, in Part II. A-1532-18T1 6 Note Possession

According to a certification by a CitiMortgage employee, CitiMortgage

came into possession of the original note on or about November 12, 2013. The

certification includes a printout of the location history, which supports the

certification. CitiMortgage then maintained possession of this note until on or

about April 21, 2015, when it was sent to the foreclosure counsel of record,

which is evidenced by an April 29, 2015 Bailee Agreement.

The Foreclosure Action and Motion Practice

Defendants defaulted on their loan on July 1, 2006 by failing to make

timely payments. As we have already noted, defendants have not made any

payments in the ensuing thirteen years since this default.

In January 2015, Wilmington filed a complaint in foreclosure against

Athena and Thomas Kostopoulos, and other parties. Defendants submitted a pro

se answer and counterclaim for declaratory judgment, consumer fraud in

violation of N.J.S.A. 56:8-1, and violation of the Fair Foreclosure Act, N.J.S.A.

2A:50-53 to -73.

On August 17, 2015, Wilmington moved for summary judgment, to strike

defendant's answer, to dismiss defendants' counterclaims, to enter default

judgment against defendants, and to return the case to the Office of Foreclosure

A-1532-18T1 7 to proceed uncontested. On October 26, 2015, defendants – by this point

represented by counsel – cross-moved for summary judgment. The court heard

oral argument on these motions on December 8, 2015.

On December 10, 2015, Judge Gerald C. Escala issued an order and

written opinion granting summary judgment in favor of Wilmington, striking

defendants' answer, instructing the clerk to enter default against defendants as

though no answering pleading had been filed, dismissing defendants'

counterclaims, returning the matter to the Office of Foreclosure to proceed as an

uncontested matter, and denying defendants' claim for a commission.

After it was substituted as the plaintiff, Nationstar moved for final

judgment on May 21, 2018. A legal assistant with plaintiff's law firm certified

that the office mailed a copy of the notice of this motion to defendants and their

attorney, as well as the other defendants named in the complaint, on May 1,

2018. The notice in the record stated in all capital letters "if you want to object

to the calculation of amount due, you must do so in writing within 10 days after

the day you received this motion."

Defendants' attorney subsequently tendered a certification and supporting

documentation purporting to show that defendants were not notified through the

"eCourts" system of plaintiff's motion for final judgment. The submission

A-1532-18T1 8 included a printout showing that defendants and their attorney were not sent

electronic notice of the filling, and an email from June 27, 2018 that eCourts

was having noticing issues.

Judge Edward A. Jerejian granted final judgment in foreclosure to

Nationstar on June 22, 2018. The judgment recited that Nationstar is entitled to

recover from defendants "$1,063,755.67 together with interest at the Contract

rate of 6% on $681,931.44 being the principal sum in default including advances

from February 8, 2018 to June 22, 2018 and lawful interest thereafter on the

total sum due to plaintiff together with costs of this suit to be taxed including

counsel fee of $7,500 raised and paid in the first place out of the mortgaged

premises." The judgment directed that the mortgaged property be sold to raise

and satisfy the amounts due.

Defendants moved to vacate the final judgment. They also sought (1)

vacate Judge Escala's earlier December 10, 2015 order granting, among other

things, summary judgment to plaintiffs; (2) vacate the order substituting

Nationstar as plaintiff; and (3) dismiss the foreclosure complaint for lack of

standing and perpetrating fraud on the court.

After hearing oral argument, Judge James J. DeLuca issued orders on

November 7, 2018, denying relief to defendants. The orders were accompanied

A-1532-18T1 9 by lengthy written riders, explaining the court's reasons for its rulings. The

present appeal ensued.

II.

On appeal, defendants present a host of arguments, including: (1)

summary judgment was improper because of contested issues of fact; (2)

Wilmington lacked standing to bring the foreclosure action because it was not

the trustee of the Series 2003-35 certificates and Nationstar already controlled

the underlying debt; (3) defendants' motion to vacate should have been granted

because two separate entities were attempting to service the loan; (4) the

electronic notification of plaintiffs' motion for judgment failed and thus service

of the motion was inadequate; and (5) this court's opinion in Residential

Mortgage Loan Trust 2013-TT2 by U.S. Bank National Association v. Morgan

Stanley Capital, Inc., 457 N.J. Super. 237 (App. Div. 2018), requires reversal of

the final judgment because necessary parties have not been noticed.

Having considered these contentions, we affirm the court's rulings,

substantially for the sound reasons expressed by Judges Escala and DeLuca. We

amplify those rulings with only a few comments.

A lender's right to foreclose is an equitable right inherent in a mortgage,

triggered by a borrower's failure to comply with the terms and conditions of the

A-1532-18T1 10 associated loan. S.D. Walker, Inc. v. Brigantine Beach Hotel Corp., 44 N.J.

Super. 193 (Ch. Div. 1957). To obtain relief in a mortgage foreclosure action,

the mortgagee (or its successor in interest) must establish that: (1) the mortgage

and loan documents are valid; (2) the mortgage loan is in default; and (3) it has

a contractual right to foreclose in light of the default. See, e.g., Great Falls Bank

v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542

(App. Div. 1994); Somerset Trust Co. v. Sternberg, 238 N.J. Super. 279, 283-84

(Ch. Div. 1989).

Generally, "a party seeking to foreclose a mortgage must own or control

the underlying debt." Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597

(App. Div. 2011) (quoting Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323,

327-28 (Ch. Div. 2010)). "In the absence of a showing of such ownership or

control, the plaintiff lacks standing to proceed with the foreclosure action an d

the complaint must be dismissed." Ibid. See also Deutsche Bank Trust Co.

Americas v. Angeles, 428 N.J. Super. 315 (App. Div. 2012); Deutsche Bank

Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 216 (App. Div. 2011).

In the present case, we are satisfied that plaintiff Nationstar had standing

to obtain final judgment against defendants. We reach that conclusion

A-1532-18T1 11 essentially for the reasons articulated by the trial court which need not be

repeated here.

Our only comment regarding standing concerns the August 7, 2017

assignment of the mortgage from CitiMortgage to Nationstar. As plaintiff's

counsel has acknowledged, that particular document was issued in error.

CitiMortgage had already assigned the mortgage to Wilmington in February

2014. This interim error was soon cured, however, two weeks later on August

21, when Wilmington assigned the mortgage to Nationstar. Regardless of the

error, both instruments ultimately directed the assignment to the same assignee:

Nationstar. Moreover, Nationstar was duly substituted as plaintiff in this case

before final judgment was entered in its favor. We agree with the trial court

that, under the circumstances, the erroneous August 7 assignment document was

of no moment.

Our only other comment concerns defendants' reliance upon Residential

Mortgage, 457 N.J. Super. at 237. That case involved a distinguishable situation

in which there had been multiple foreclosure actions brought by different entities

against the defendants. Id. at 241. Eventually a putative assignee filed a quiet

title action to establish its rights as the holder of the mortgage and note. Ibid.

We recognized in that case, as did the trial court, that there was some

A-1532-18T1 12 contradictory evidence regarding the chain of title. Id. at 247. Nevertheless, we

upheld summary judgment for the plaintiff because the defendants "did not

produce any legally competent evidence that any entity, other than those named

as defendants in the complaint, [had] an interest in the note and mortgage." Ibid.

The defendants did not produce "evidence that they made mortgage payments to

any banks or mortgage companies other than the original mortgagee." Id. at

247-48. Consequently, we found that the plaintiff had established "at least a

colorable claim of ownership of the mortgage and note," and "no purpose would

be served by remanding [the] case for further proceedings." Id. at 248.

The same is true here. Despite the apparent glitch of the August 7

assignment and other irregularities in the chain of title alleged by defend ants,

no creditor other than Nationstar has materialized to assert a claim to payment

on the mortgage. Although we do not encourage sloppy practices by mortgagees

and those who process foreclosure actions, Nationstar's entitlement to foreclose

is sufficiently clear to uphold the final judgment. Moreover, there is no

equitable basis to set aside this mortgage that has been in default for well over

a decade.

A-1532-18T1 13 To the extent defendants have raised other points we have not yet

mentioned, they lack sufficient merit to warrant discussion in this opinion. R.

2:11-3(e)(1)(E).

Affirmed.

A-1532-18T1 14