August 8, 2011

Today, the Appellate Division of the New Jersey Superior Court approved for publication a decision which reversed an Ocean County, New Jersey trial court foreclosure judgment and remanded with directions that the case be dismissed without prejudice due to the Plaintiff’s failure to comply with New Jersey’s pre-suit notice statute, which requires a foreclosing party to identify the name and address of the lender (who owns the obligation). The Court held that identification of the “servicer acting on behalf of the owner” is legally insufficient, and fails to comply with the statute. The case is Bank of New York as Trustee of CWALT, etc. v. Laks, No. A-4221-0593.

The pre-suit notice identified Countrywide as the alleged servicer acting on behalf of the owner, with the owner not being identified. The foreclosure which was later filed named Bank of New York as Trustee of a securitized mortgage loan trust as the foreclosing Plaintiff.

The Court held that the language of the statute is mandatory; that there is no room for anything other than strict compliance that the LENDER be identified; and that a borrower who raises the issue of noncompliance with the pre-suit notice statute prior to the entry of judgment is entitled to a dismissal without prejudice. The Court also highlighted the standard for a foreclosing Plaintiff to prove standing on summary judgment, and reversed the trial court’s striking of the borrower’s contesting answer which raised the notice issue, doing so even though the securitized trustee bank ultimately produced a second version of the note with a second blank endorsement in alleged support of its “standing” position. The Court found that this did not cure the threshold problem raised by noncompliance with a statute which concerns mandatory actions which must be undertaken prior  to suit being filed.

What is interesting about this case is that a dismissal is allowed at any time prior to judgment. That means, if we read this decision correctly and accurately, that a borrower can file a contesting answer without a motion to dismiss, raise the failure of the Plaintiff to comply with the pre-suit notice statute as a defense, and obtain a dismissal after the answer is filed.

We thank one of our dedicated readers for bringing this to our attention today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com