HSBC BANK USA, ETC. VS. DEBORAH DELBANGO(F-014533-14, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4238-15T2

HSBC BANK USA, NATIONAL
ASSOCIATION TRUSTEE FOR
DEUTSCHE ALT-A SECURITIES,
INC. MORTGAGE LOAN TRUST,
SERIES 2007-OA2 MORTGAGE
PASS-THROUGH CERTIFICATE,

Plaintiff-Respondent,

v.

DEBORAH DELBANGO a/k/a
DEBORAH VERITAS a/k/a
DEBORAH F. VERITAS, and
NATIONAL CITY BANK,

Defendants-Appellants.
_______________________________

Argued August 8, 2017 – Decided August 17, 2017

Before Judges Hoffman and Currier.

On appeal from the Superior Court of New
Jersey, Chancery Division, Monmouth County,
Docket No. F-014533-14.

Gary E. Fox argued the cause for appellant
(Fox & Melofchik, L.L.C., attorneys; Mr. Fox
on the briefs).

Stuart I. Seiden argued the cause for
respondent (Duane Morris LLP, attorneys; Mr.
Seiden, Brett L. Messinger, and Kelly K.
Bogue, of counsel and on the brief).
PER CURIAM

In this residential foreclosure action, defendant Deborah

Delbango appeals from an order entered after trial striking her

answer and referring the case to the Office of Foreclosure, and

the subsequent final judgment. After a review of the contentions

in light of the record and applicable legal principles, we affirm.

We discern the following facts and procedural history from

the record on appeal.

In January 2007, defendant executed an adjustable rate note

to IndyMac Bank, FSC and a mortgage securing the note to Mortgage

Electronic Registration Systems, Inc.

In December 2011, defendant became unemployed and she

apprised IndyMac of her situation in January 2012. Defendant and

IndyMac entered into a conditional forbearance agreement

(agreement) in February 2012. The agreement permitted defendant

to make lower monthly payments for one year that would be applied

towards the original principal and interest. The bank would not

undertake any legal action against defendant as long as she was

in compliance with the agreement. Although the agreement stated

that IndyMac would work with defendant to identify "a more

permanent foreclosure prevention alternative," it clarified that

defendant might not qualify for any foreclosure alternative and

2 A-4238-15T2
the bank had the sole discretion to make that decision. It further

advised that there was no guarantee that the loan would be eligible

for consideration under the Home Affordable Modification Program

(HAMP).

In April 2013, defendant was informed in a Notice of Intention

to Foreclose (NOI) that she was in default on her mortgage as of

June 2012. Plaintiff HSBC Bank U.S. was identified in the NOI as

the lender.1 The NOI advised defendant that she needed to pay

$28,627.44 within thirty-five days in order to cure the default.

IndyMac sent defendant a notice in October 2013 that it was

transferring the servicing of her loan to Ocwen Loan Servicing,

LLC (Ocwen) effective November 1. Ocwen contacted defendant

shortly thereafter, advising that it was evaluating her

qualification for HAMP before considering any other alternatives.

Defendant submitted an application under HAMP with all required

documents. However, in December 2013, defendant was informed by

Ocwen that plaintiff did not allow loan modifications.

Plaintiff filed its complaint for foreclosure in April 2014.

Defendant contested the action and asserted affirmative defenses.

1
At some point not stated in the record, the note was transferred
to a new lender – plaintiff HSBC Bank U.S. There is no challenge
to plaintiff's ownership of the Note.

3 A-4238-15T2
A bench trial took place over two days in September 2015 before

Judge Patricia Del Bueno Cleary.

Ocwen's representative testified at trial that he had

personally reviewed Ocwen's business records and confirmed that

plaintiff was in possession of the note and mortgage. He also

stated that defendant's account was in default commencing with the

monthly payment due on July 1, 2012. The representative explained

that although defendant was making payments in accordance with the

forbearance agreement, those payments were one-third of the

original mortgage payment amount; therefore, the account went into

default. He stated: "[B]ecause they were not full payments it

would take almost three of those payments just to equal one

payment" and therefore the account would reflect it was in default.

Defendant testified at trial that when she learned she was

to be laid off from her job, she contacted IndyMac in January 2012

advising of her situation. Defendant stated that IndyMac provided

her information on how to apply for the forbearance plan. She

received the agreement and signed it, and was of the understanding

that as long as she made the payments established under the

forbearance plan, she was not defaulting on the note.

Defendant remained current on her mortgage payments through

March 2012. In April, she sent in the payment listed on the

agreement (roughly a third of her original mortgage payment). She

4 A-4238-15T2
paid the lesser amounts set forth under the agreement through

March 2013. Defendant conceded that when she received her mortgage

statement in April 2013, it noted that she was ten months past due

in her payments.

At the expiration of the agreement, defendant testified that

she was told by an IndyMac representative to fill out an

application for a loan modification. She submitted the application

and subsequent requests for financial documents and information.

Defendant testified that she spoke to numerous representatives of

IndyMac and Ocwen during this time period, and that she documented

her conversations in handwritten notes. These notes were presented

at trial and admitted into evidence. The notes reflect

conversations with different people at IndyMac from April through

October 2013. The notes reflected that financial information was

requested; defendant also called periodically to check on the

status of her loan modification application.

Defendant also testified that she was told by several people

at IndyMac that she should not make any mortgage payments while

she was going through the loan modification process. She did not

have any written documentation to support this testimony nor any

notes memorializing those conversations.

After defendant received the letter in October 2013 that her

loan was being transferred to Ocwen for servicing, she contacted

5 A-4238-15T2
IndyMac. She states she was told that her application would be

transferred to Ocwen who would continue assessing her

modification. Before Owen took over the loan on November 1, 2013,

defendant stated that several IndyMac representatives contacted

her requesting additional financial information. As all of the

information was not received by IndyMac before November 1,

defendant was told that IndyMac could no longer act on her

application, and it was going to be transferred to Ocwen.

Defendant made an appointment to speak with an Ocwen

representative in mid-November; during that conversation she was

told she needed to submit additional information to process her

modification request. Defendant confirmed that she received the

subsequent letter in December 2013 advising her that plaintiff did

not participate in the HAMP program nor permit loan modifications.

Following the close of counsels' arguments, Judge Cleary

issued an oral decision. She noted that plaintiff had proven a

prima facie case for foreclosure on the property; there was no

dispute that defendant had signed the note and mortgage nor that

she had defaulted on the loan. However, defendant asserted the

affirmative defense of unclean hands because she had been told by

various individuals to stop making payments after the conclusion

of the forbearance period.

6 A-4238-15T2
 In addressing the proffered defense, the judge reviewed the

"copious notes" that had been presented by defendant memorializing

her conversations with the lender's representatives. Judge Cleary

stated:

There are many, many letters, many, many
notes, it sets forth times, it sets forth
dates, it sets forth names of persons who the
defendant contacted about this. There are
numerous times where . . . plaintiff told the
defendant to send in more information, which
she did . . . . But there is nothing in any
of these notes that tells us a name of who
suggested . . . or who told the defendant that
she did not have to pay. There is not a
specific date where she was told not to pay.

The judge concluded that defendant had not met her burden of

proof to establish unclean hands, and therefore, an order striking

the answer and defenses was entered. The matter was transferred

to the foreclosure unit.

On appeal, defendant reiterates her argument that the

doctrine of unclean hands prevents the entry of a judgment of

foreclosure. She relies on Totowa Savings and Loan Ass'n v.

Crescione, 144 N.J. Super. 347, 351 (App. Div. 1976), to support

her contention that since it was plaintiff who "induced and caused

the default," equity requires that such actions not be tolerated.

Defendant urges us to fashion an equitable remedy to permit her

to remain in her home and resume making her mortgage payments

without the imposition of any arrearages.

7 A-4238-15T2
 In considering these arguments, we are mindful of our limited

scope of review. "The factual findings of a trial court are

reviewed with substantial deference on appeal, and are not

overturned if they are supported by 'adequate, substantial and

credible evidence.'" Manahawkin Convalescent v. O'Neill, 217 N.J.

99, 115 (2014) (citations omitted). Such deference is especially

due when a trial judge's findings "are substantially influenced

by [the judge's] opportunity to hear and see the witnesses and to

have the 'feel' of the case, which a reviewing court cannot enjoy."

Zaman v. Felton, 219 N.J. 199, 216 (2014) (alteration in original)

(citation omitted).

Judge Cleary considered all of the evidence presented by

defendant. She observed that defendant was meticulous in keeping

handwritten notes of her conversations with various mortgage

representatives. However, in the multitude of notes admitted into

evidence, there was not one reference to a conversation in which

defendant was instructed to cease her mortgage payments. There

was no support for her allegation that she had been told to stop

her payments. The judge found, after hearing and seeing defendant,

and considering the written evidence, that defendant could not

support her contention that she had been "induced" to default on

her mortgage.

8 A-4238-15T2
 We do not find Totowa to be instructive under these

circumstances. In that matter, the defendants obtained a mortgage

loan from the plaintiff and were told a certain amount would be

applied to the principal and interest on the loan each month. Id.

at 349. After making the specified monthly payments for twenty

years, the defendants believed the loan was satisfied and requested

its cancellation. Id. at 350. The plaintiff then determined that

the monthly amortization figure had been incorrect, leaving the

defendants still owing a sizeable balance on the principal. Ibid.

After the defendants refused to pay the newly established

balance, the plaintiff instituted foreclosure proceedings. Ibid.

The defendants contended that the default resulted solely from the

plaintiff's conduct, and therefore, the plaintiff should be

equitably estopped from any recovery. Ibid.

We determined that, despite the mistake made by the bank in

the monthly calculation, defendants still owed, and were obligated

to pay, the principal balance. Id. at 351. They were not entitled

to a "substantial windfall, despite the absence of fault on their

part." Ibid. We agreed, however, that the "harsh remedy of

foreclosure" should be delayed and that a "fair and reasonable"

fee schedule for the payment of the balance due should be set.

Id. at 351-52.

9 A-4238-15T2
 We fail to see how Totowa is helpful to defendant's position

in the case before us. There is no contention that plaintiff or

its predecessor made any mistake regarding this loan. Defendant

defaulted on her mortgage payments; after the forbearance period

ended, no further payments were ever made. Plaintiff advised

defendant of her default and her right to cure through the NOI.

The default was not cured. It is well established that defendant

was not entitled to a mortgage modification, U.S. Bank National

Ass'n. v. Curcio, 444 N.J. Super. 94, 114 (App. Div. 2016), and

she was informed of that in the forbearance agreement.

The trial judge's determination was supported by the credible

evidence in the record.

Affirmed.

10 A-4238-15T2