WELLS FARGO BANK, N.A., v. SANDRA A. FORD | NJ APPELLATE DIVISION Reverses Foreclosure Due to Lack of Standing
Below is a well thought out decision by the SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION.
The court decided that Wells Fargo lacked standing to foreclose.
Some excerpts from the opinion…
(Emphasis added by 4F)
WELLS FARGO BANK, N.A.,
SANDRA A. FORD,
This appeal presents significant issues regarding the evidence required to establish the standing of an alleged assignee of a mortgage and negotiable note to maintain a foreclosure action.
On March 6, 2005, defendant Sandra A. Ford executed a negotiable note to secure repayment of $403,750 she borrowed from Argent Mortgage Company (Argent) and a mortgage on her residence in Westwood. Defendant alleges that Argent engaged in various predatory and fraudulent acts in connection with this transaction.
Five days later, on March 11, 2005, Argent purportedly assigned the mortgage and note to plaintiff Wells Fargo Bank, N.A. (Wells Fargo). Wells Fargo claims that it acquired the status of a holder in due course as a result of this assignment and therefore is not subject to any of the defenses defendant may have been able to assert against Argent.
Defendant allegedly stopped making payments on the note in the spring of 2006, and on July 14, 2006, Wells Fargo filed this mortgage foreclosure action. In an amended complaint, Wells Fargo asserted that Argent had assigned the mortgage and note to Wells Fargo but that the assignment had not yet been recorded.
Wells Fargo subsequently filed a motion for summary judgment. This motion was supported by a certification of Josh Baxley, who identified himself as “Supervisor of Fidelity National as an attorney in fact for HomEq Servicing Corporation as attorney in fact for [Wells Fargo].” Baxley’s certification stated: “I have knowledge of the amount due Plaintiff for principal, interest and/or other charges pursuant to the mortgage due upon the mortgage made by Sandra A. Ford dated March 6, 2005, given to Argent Mortgage Company, LLC, to secure the sum of $403,750.00.” . Baxley’s certification also alleged that Wells Fargo is “the holder and owner of the said Note/Bond and Mortgage” executed by defendant and that the exhibits.
Attached to his certification, which appear to be a mortgage and note signed by defendant, were “true copies.” Again, the source of this purported knowledge was not indicated. The exhibits attached to the Baxley certification did not include the purported assignment of the mortgage.
The trial court issued a brief oral opinion granting Wells Fargo’s motion for summary judgment. The court observed that defendant “has raised numerous serious disturbing allegations relating to the originator of this loan [Argent], which if true would be a substantial violation of law and substantial violation of her rights.” Nevertheless, the court concluded that those allegations did not provide a defense to Wells Fargo’s foreclosure action because Wells Fargo was a “holder in due course” of the mortgage and note. The court apparently based this conclusion in part on a document attached to Wells Fargo’s reply brief, entitled “Assignment of Mortgage,” which was not referred to in Baxley’s certification or authenticated in any other manner.
Defendant filed a notice of appeal from the judgment.
On appeal, defendant argues that (1) Wells Fargo failed to establish that it is the holder of the negotiable note she gave to Argent and therefore lacks standing to pursue this foreclosure action; (2) even if Wells Fargo is the holder of the note, it failed to establish that it is a holder in due course and therefore, the trial court erred in concluding that Wells Fargo is not subject to the defenses asserted by defendant based on Argent’s alleged predatory and fraudulent acts in connection with execution of the mortgage and note; and (3) even if Wells Fargo is a holder in due course, it still would be subject to certain defenses and statutory claims defendant asserted in her answer and counterclaim.
We conclude that Wells Fargo failed to establish its standing to pursue this foreclosure action. Therefore, the summary judgment in Wells Fargo’s favor must be reversed and the case remanded to the trial court.
The Baxley certification Wells Fargo submitted in support of its motion for summary judgment alleged that “[p]laintiff is still the holder and owner of the said Note/Bond and mortgage,” and a copy of the mortgage and note was attached to the certification. In addition, Wells Fargo submitted a document that purported to be an assignment of the mortgage, which stated that it was an assignment of “the described Mortgage, together with the certain note(s) described
therein with all interest, all liens, and any rights due or to become due thereon.”
If properly authenticated, these documents could be found sufficient to establish that Wells Fargo was a “nonholder in possession of the [note] who has the rights of a holder.”
Baxley’s certification does not allege that he has personal knowledge that Wells Fargo is the holder and owner of the note. In fact, the certification does not give any indication how Baxley obtained this alleged knowledge. The certification also does not indicate the source of Baxley’s alleged knowledge that the attached mortgage and note are “true copies.”
Furthermore, the purported assignment of the mortgage, which an assignee must produce to maintain a foreclosure action, see N.J.S.A. 46:9-9, was not authenticated in any manner; it was simply attached to a reply brief. The trial court should not have considered this document unless it was authenticated by an affidavit or certification based on personal knowledge.
For these reasons, the summary judgment granted to Wells Fargo must be reversed and the case remanded to the trial court because Wells Fargo did not establish its standing to pursue this foreclosure action by competent evidence. On the remand, defendant may conduct appropriate discovery, including taking the deposition of Baxley and the person who purported to assign the mortgage and note to Wells Fargo on behalf of Argent. Our conclusion that the summary judgment must be reversed because Wells Fargo failed to establish its standing to maintain this action makes it unnecessary to address defendant’s other arguments. However, for the guidance of the trial court in the event Wells Fargo is able to establish its standing on remand, we note that even though Wells Fargo could become a “holder” of the note under N.J.S.A. 12A:3-201(b) if Argent indorsed the note to Wells Fargo even at this late date, see UCC Comment 3 to N.J.S.A. 12A:3-203, Wells Fargo would not thereby become a “holder in due course” that could avoid whatever defenses defendant would have to a claim by Argent because Wells Fargo is now aware of those defenses.
Consequently, if Wells Fargo produces an indorsed copy of the note on the remand, the date of that indorsement would be a critical factual issue in determining whether Wells Fargo is a holder in due course. Accordingly, the summary judgment in favor of Wells Fargo is reversed and the case is remanded to the trial court for further proceedings in conformity with this opinion.
You can check out the full 13 page opinion below…
WELLS FARGO BANK, N.A., as Trustee, Plaintiff-Respondent, v. SANDRA A. FORD, Defendant-Appellant.
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