Monday, August 15, 2011

Victim Of Sale Leaseback Equity Stripping Racket Gets Reprieve As NJ Appeals Court Nixes Note-Lacking Lender's Foreclosure Action, Vacates Sale

The Star Ledger reports:

  • A New Jersey foreclosure by Deutsche Bank was overturned by a state appellate court panel yesterday because the bank could not show it possessed a debt note for the house when it moved to foreclose in 2008.

  • The case could impact the prospects of many state foreclosure cases, according to Peggy Jurow, a senior attorney for Legal Service[s] of New Jersey(1) who deals with foreclosure and predatory lending cases. "What today’s case does is say that the lender has to have had the assignment of mortgage and possession of the (loan) note before it files a foreclosure action," Jurow said yesterday. "They can’t fix up that sort of paperwork problem afterwards. They have to dismiss the case and start again."

  • In the case, Jacqueline Bethea said her two-family home in Plainfield was bought out by Elite Financial Services(1) with the promise that she could remain in her home.

  • Elite Financial Services sold Bethea’s property to a third party who got a new mortgage from Long Beach Mortgage Company. Eventually, the debt note and the mortgage backing it was transferred to Deutsche Bank.

  • The immediate result of the decision is Deutsche Bank must go back to court and prove it has the note for the debt before it can foreclose again, Jurow said. But she said the appellate court’s decision could have implications for other foreclosure cases in the state. As of May, the number of foreclosures filed in state Superior Court had reached about 62,000.

  • "Bethea could have been any homeowner," Jurow said. "In the vast majority of cases, stuff like this goes on. The paperwork is sort of an afterthought, and that’s what I think you see in this."

Source: Deutsche Bank foreclosure sale overturned by N.J. appellate court.

For the ruling, see Deutsche Bank National Trust v. Mitchell, Docket No. A-4925-09T3 (App. Div. August 9, 2011) (approved for publication) (if link expires, TRY HERE).

(1) Legal Services of New Jersey coordinates the statewide Legal Services system, which provides free legal assistance to low-income New Jerseyans for their civil legal problems.

(2) Elite Financial Services was a notorious, Northern New Jersey equity stripping foreclosure rescue racket until it found itself in criminal hot water with the Newark Feds. See:

The New Jersey appeals court, in the first entence of its ruling, describes homeowner defendant Jacqueline Bethea as "a victim of a buy-lease-back "mortgage rescue scam[.]"

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