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Onewest Bank, FSB v. Follman, No. A-3279-10T4, (N.J. Super. April 3, 2012) is a case where a homeowner who was defending foreclosure attempted to have a default judgment vacated. This case is notable for the ... 

Onewest Bank, FSB v. Follman, No. A-3279-10T4, (N.J. Super. April 3, 2012) is a case where a homeowner who was defending foreclosure attempted to have a default judgment vacated. This case is notable for the fact that it is so similar to the hundreds of other homeowners who have been through similar situations.

Initially, Follman borrowed $149,000 from Indymac bank to purchase a property inLakewood,New Jersey. In return for the mortgage, Indymac endorsed the note in blank and executed it to Mortgage Electronic Registration Systems Inc. (MERS). The mortgage was recorded appropriately. In 2008, Indymac was closed, and its assets were transferred to the federal bank with the same name. Follman defaulted on the mortgage in 2008, about 3 months after Indymac was closed.

On April 28, 2009, the mortgage was assigned to MERS, and this assignment was recorded a week later. On April 30, 2009 Indymac filed a foreclosure complaint against Follman which recited the assignment information as well as the future recordation which was to occur. Follman did not file an answer or respond to the complaint. As a result, a default judgment was entered on August 18, 2009. On September 11, 2009, the mortgage was again assigned, this time to Onewest, the plaintiff in the instant case. Onewest was substituted as the plaintiff based on a motion to the court. On the same date as the substitution, a final judgment of foreclosure was obtained and a writ of execution entered.

Follman was able to attain 2 statutory stays of the foreclosure. The first defense used was a lack of service of process which was filed on October 18, 2010. The motion was denied, and not appealed. On January 11, 2011 the defense counsel refilled the same claim based on December 2010 orders concerning the practice of robo-signing. Follman certified that she never saw nor was advised that plaintiff had any interest in her property. Thus, she claimed a lack of due process. The trial court ruled against Follman initially, and theNew Jerseysuperior court granted a writ for an appeal, which is this case.

The main contention in this appeal was that the bank failed to provide sufficient documentation to prove standing, and thus should not have been allowed to foreclose. Additionally, the defendant claimed excusable neglect based on personal issues including the death of her father and illness of her newborn. The court disagreed, based on the standard for a party seeking to vacate a default judgment.

Vacating default judgments requires a standard that should reconcile the strong interests in judicial finality along with the idea that courts should use equitable notions in having the authority to avoid unjust results. Thus, a trial court's determination should be afforded a high level of deference unless there is clear abuse of discretion. Abuse of discretion will be found when a decision is made with no rational explanation, departed from established policies, or rested on an impermissible basis. The court then decided that the trial court was correct in refusing to vacate judgment.

Standing was not an issue in this case. Standing, is a legal term which represents when a party may or may not maintain an action before a court. It requires a sufficient stake in the outcome, and a substantial likelihood of harm to the plaintiff by an unfavorable decision. To have standing in foreclosing a mortgage, a party generally must own or control the underlying debt. Because the bank presented the supporting documents of the obligation, mortgage, assignments of mortgage, and an affidavit of amount due, the court could enter a default judgment.

The court did not address the excusable neglect claim because the appeal was the first time it was raised as a meritorious defense. An appellate review of a case is limited to the record that was before the trial court. Thus, because the question was never properly issued to the trial court, it could not be argued on appeal.

This case shows the importance of not only answering a complaint, but also in exhausting any likely defense one may have. The defendant in this case was able to delay foreclosure, but ultimately unable to life the default judgment. There may have been a different outcome if the foreclosure defenses were raised earlier. In the alternative, it is noteworthy that the foreclosing entity produced all that was required in order to foreclose. One could assess this case as a bank properly carrying out a foreclosure while a homeowner loses a chance to counter in a proper manner.

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