NOT FOR PUBLICATION WITHOUT THE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-1059-17T2
U.S. BANK, NATIONAL
ASSOCIATION, AS TRUSTEE
RELATING TO THE CHEVY
CHASE FUNDING LLC
MORTGAGE-BACKED
CERTIFICATES, SERIES 2005-3,
Plaintiff-Respondent,
v.
JIN CHOI, his/her heirs, devisees,
and personal representatives, and his,
her, their or any of their successors
in right, title and interest,
Defendant-Appellant,
and
JI YOUNG, MIDLAND FUNDING,
LLC, BALLON STOLL BADER
& NADLER PC, and STATE OF
NEW JERSEY,
Defendants.
________________________________
Submitted February 11, 2019 – Decided March 6, 2019
Before Judges Fasciale and Rose.
On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No. F-
015615-14.
Joseph A. Chang, attorney for appellant (Jeffrey Zajac,
on the brief).
Pluese, Becker, & Saltzman, LLC, attorneys for
respondent (Stuart H. West, on the brief).
PER CURIAM
In this residential foreclosure case, Jin Choi (defendant) appeals from a
September 19, 2017 final judgment. Defendant stopped making payments to
U.S. Bank, N.A. (plaintiff) in 2009. Defendant contends that the judge erred by
(1) finding that defendant lacked standing to challenge plaintiff's compliance
with the agreement governing the mortgage; (2) finding that plaintiff proved that
it possessed the promissory note and mortgage; (3) finding that plaintiff had
standing to file the foreclosure complaint; and (4) granting plaintiff summary
judgment. We disagree and affirm.
On July 8, 2005, defendant executed an adjustable rate, negatively
amortizing note (the note) containing a prepayment penalty in the amount of
$1,148,000 with an initial interest rate of 6.5% made payable to Chevy Chase
Bank, F.S.B. (Chevy Chase Bank). At the same time, defendant also executed
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2
a mortgage to Mortgage Electronic Registration System (MERS), securing
repayment of the amounts due under the terms of the note. In 2008, defendant
executed a Mortgage Loan Modification Agreement (the Modification
Agreement) with Chevy Chase Bank, which represented an adjustable rate,
negatively amortizing loan, and contained a prepayment penalty. The "lender"
on the Modification Agreement was "Chevy Chase Bank, F.S.B." The
acknowledgement designated Chevy Chase Bank, F.S.B. "the holder of the Deed
of Trust note." In 2010, a MERS Assignment of Mortgage 1 was executed that
purportedly assigned the mortgage to plaintiff.
Section 2.01 of the Pooling and Servicing Agreement (PSA) stated that
Chevy Chase Funding would provide the Trustee with the original mortgage
note endorsed by the originator, Chevy Chase Bank, in blank with a complete
chain of endorsements from the payee to the Trustee. Chevy Chase Funding,
LLC would also provide the Trustee with the
[m]ortgage [n]ote, endorsed without recourse in either
blank or to the order of U.S. Bank National Association
[a]s [T]rustee . . . with all intervening endorsements
1
MERS is a system that tracks ownership and servicing changes of the mortgage
loan without the need to record any of the documents each time ownership
changes. Entities must be members of MERS to participate. If a mortgage is
sold or transferred from a participating MERS member to an entity that is not a
member, an Assignment of Mortgage is prepared transferring the mortgage from
MERS to the non-MERS entity.
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showing a complete chain of endorsement from the
originator to the last endorser[, and] . . . an original
assignment or assignments of [m]ortgage showing an
unbroken chain of title from the originator to the
[p]erson assigning to the Trustee (or to MER[S] . . .).
Plaintiff filed this complaint in April 2014, and then moved for summary
judgment. Defendant opposed the motion and cross-moved for summary
judgment. Judge Robert P. Contillo reserved decision and granted defendant
permission to depose Sorell Elbert (Elbert), plaintiff's document custodian.
This deposition related to Elbert's "custodial functions" and not as a
representative of the Trust. Exhibit E of Elbert's affidavit was a "screenshot
maintained in the ordinary course of the [c]ustodian's business." She
characterized this document by stating, "an exception was added as a result of
the [c]ustodian not having possession of the original recorded [m]ortgage. The
exception was removed on May 21, 2007. No other exceptions are noted. The
absence of any other exception demonstrates the [c]ustodian's possession of the
original [n]ote on September 20, 2005." As the "exception" was removed, the
original mortgage, as opposed to a copy, was received by the Trustee.
Elbert also stated "the original [n]ote was endorsed in compliance with
the governing [PSA]." She attached an undated Final Certification of the
Trustee, stating that "it should have been executed within [forty-five] days of
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4
the execution and delivery of the Initial Certification, pursuant to [s]ection 2.02
of the [PSA] for the Trust." She said, "I acknowledge that the final cert[ified]
document itself, the letter, was not dated; but it should have been executed
within the [forty-five] days of the initial cert[ification] being issued. And that's
based on what the PSA requires."
Michael Ward (Ward) is an employee of Specialized Loan Servicing, LLC
(SLS), plaintiff's servicer. He filed an affidavit in which he alleged that plaintiff
possessed the note and mortgage. He then filed a supplemental affidavit to show
ownership of defendant's loan.
The judge denied defendant's cross motion for summary judgment,
granted plaintiff's motion, and entered the judgment under review.
I.
Section 2.01 of the PSA required the depositor to provide the Trustee with
the original mortgage note endorsed by the originator, with a complete chain of
endorsements from the payee to the Trustee. In the judge's order granting
plaintiff's motion for summary judgment, he wrote,
[d]efendant also challenges [p]laintiff's standing to
foreclose in this matter by challenging the [PSA]. A
borrower, however, lacks standing to challenge a PSA
because he is not a party to the PSA, nor can he
demonstrate that he is a third-party beneficiary of the
PSA's terms. See Correia v. Deutsche Bank Nat'l Trust
A-1059-17T2
5
Co., 452 B.R. 319, 324 (1st Cir. B.A.P. 2011)
("[d]ebtors lack[] standing to challenge the mortgage's
chain of title under the PSA"). Furthermore, there is no
evidence that [d]efendant was an intended third-party
beneficiary of the PSA. As such, the alleged
deficiencies in the PSA are irrelevant to [p]laintiff's
standing to bring this foreclosure action. Therefore,
[p]laintiff has standing to bring this action.
Defendant is not a party to the PSA and he is not a beneficiary of its terms. We
conclude therefore that he lacks standing to challenge the PSA.
II.
We reject defendant's contention that Elbert's and Ward's affidavits were
insufficient to prove ownership and possession of the note. Rule 4:64-2(c)(2)
states that "the affiant shall confirm . . . that the affidavit is made based on a
personal review of business records of the plaintiff or the plaintiff's mortgage
loan servicer, which records are maintained in the regular course of business[.]"
If a motion is based on facts not appearing of record or
not judicially noticeable, the court may hear it on
affidavits made on personal knowledge, setting forth
only facts which are admissible in evidence to which
the affiant is competent to testify and which may have
annexed thereto certified copies of all papers or parts
thereof referred to therein.
[R. 1:6-6.]
The business records exception under N.J.R.E. 803(c)(6) states:
A-1059-17T2
6
A statement contained in a writing or other record of
acts, events, conditions, and, subject to Rule 808,
opinions or diagnoses, made at or near the time of
observation by a person with actual knowledge or from
information supplied by such a person, if the writing or
other record was made in the regular course of business
and it was the regular practice of that business to make
it, unless the sources of information or the method,
purpose or circumstances of preparation indicate that it
is not trustworthy.
The "general acceptance of reliability will not attach if 'the trial court, after
examining . . . [the records] and hearing the manner of their preparation
explained, entertains serious doubt as to whether they are dependable or worthy
of confidence.'" State v. Matulewicz, 101 N.J. 27, 30 (1985) (second alteration
in original) (quoting Mahoney v. Minsky, 39 N.J. 208, 218 (1963)).
Rule 4:64-2(d) states:
Plaintiff's counsel shall annex to every motion to enter
judgment in a residential mortgage foreclosure action
an affidavit of diligent inquiry stating: (1) that the
attorney has communicated with an employee or
employees of the plaintiff or of the plaintiff's mortgage
loan servicer who (A) personally reviewed the affidavit
of amount due and the original or true copy of the note,
mortgage and recorded assignments, if any, being
submitted and (B) confirmed their accuracy; (2) the
date and mode of communication employed; (3) the
name(s), title(s) and responsibilities in those titles of
the plaintiff's employee(s) or the employee(s) of the
plaintiff's mortgage loan servicer with whom the
attorney communicated pursuant to this rule; and (4)
A-1059-17T2
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that the aforesaid documents comport with the
requirements of [Rule] 1:4-8(a).
In his order granting summary judgment to plaintiff, the judge wrote:
Here, Michael Ward, an employee of the loan
servicer, swore to having access to [p]laintiff's business
records, and to reviewing those records. Sorell Elbert,
an employee of the [p]laintiff, swore to the same.
Defendant has not offered any evidence of the falsity of
Mr. Ward's or Ms. Elbert's affidavits, even after the
court granted [d]efendant permission to depose Ms.
Elbert. . . . Contrary to [d]efendant's opinion, and
explained above, N.J.R.E. 803(c)(6)'s business records
exception allows an individual to certify to the
information found in certain business documents as the
documents are held in the ordinary course of business
and as long as that individual has reviewed those
documents. That is the exact scenario here. Thus, Mr.
Ward's and Ms. Elbert's affidavits are admissible.
N.J.R.E. 902(h) governs "self-authentication" and states that extrinsic
evidence of authenticity as a condition precedent to admissibility is not
necessary for "[d]ocuments accompanied by a certificate of acknowledgment
executed in the manner provided by law by a notary public or other officer
authorized by law to take acknowledgments." The same is true for certified
copies of public records. See N.J.R.E. 902(d).
To acknowledge a deed or other instrument made on
behalf of a corporation or other entity, the maker shall
appear before an officer specified in [N.J.S.A.] 46:14-
6.1 and state that the maker was authorized to execute
A-1059-17T2
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the instrument on behalf of the entity and that the maker
executed the instrument as the act of the entity.
[N.J.S.A. 46:14-2.1(a).]
Notary publics are " [o]fficers authorized to take acknowledgments" under
N.J.S.A. 46:14-6.1. The plain language of N.J.R.E. 902(h) and N.J.S.A. 46:14-
2.1(a) rebuts the allegation that extrinsic proof is necessary.
III.
"The only material issues in a foreclosure proceeding are the validity of
the mortgage, the amount of the indebtedness, and the right of the mortgagee to
resort to the mortgaged premises." Great Falls Bank v. Pardo, 263 N.J. Super.
388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994). "[E]ither
possession of the note or an assignment of the mortgage that predated the
original complaint confer[s] standing." Deutsche Bank Tr. Co. Ams. v. Angeles,
428 N.J. Super. 315, 318 (App. Div. 2012). If a plaintiff cannot establish that it
owned or controlled the underlying debt at the time the complaint is filed, it
"lacks standing . . . and the complaint must be dismissed." Wells Fargo Bank,
N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011). "If a debt is evidenced
by a negotiable instrument, such as the note executed by [a] defendant," whether
a plaintiff has established ownership or control over the note "is governed by
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Article III of the Uniform Commercial Code (UCC), N.J.S.A. 12A:3-101 to -
605, in particular N.J.S.A. 12A:3-301." Ibid.
There are "three categories of persons entitled to enforce negotiable
instruments" as described in N.J.S.A. 12A:3-301. Deutsche Bank Nat'l Tr. Co.
v. Mitchell, 422 N.J. Super. 214, 222-23 (App. Div. 2011). N.J.S.A. 12A:3-301
provides:
"Person entitled to enforce" an instrument means the
holder of the instrument, a nonholder in possession of
the instrument who has the rights of a holder, or a
person not in possession of the instrument who is
entitled to enforce the instrument pursuant to [N.J.S.A.]
12A:3-309 or subsection d. of [N.J.S.A.] 12A:3-418. A
person may be a person entitled to enforce the
instrument even though the person is not the owner of
the instrument or is in wrongful possession of the
instrument.
N.J.S.A. 46:9-9 states that,
All mortgages on real estate in this State, and all
covenants and stipulations therein contained, shall be
assignable at law by writing, whether sealed or not, and
any such assignment shall pass and convey the estate of
the assignor in the mortgaged premises, and the
assignee may sue thereon in his own name[.]
To show its status as an assignee, a plaintiff must "present[] an authenticated
assignment indicating that it was assigned the note before it filed the origi nal
complaint." Mitchell, 422 N.J. Super. at 225.
A-1059-17T2
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N.J.S.A. 46:18-13(a) states that "[o]nly the established holder of a
mortgage shall take action to foreclose a mortgage." An entity is the
"established holder of a mortgage" if that entity is: (1) "the record holder of the
mortgage as established by the latest record of assignment or by the original
mortgage recording in the records of the county clerk or the register of deeds
and mortgages, as appropriate to the county in which the mortgaged property is
located"; or (2) "found to be the holder of the mortgage in a civil action joining
as defendants the record holder of the mortgage, the mortgagor, and any other
person known to have an interest in the mortgage." N.J.S.A. 46:18-13(b).
Here, plaintiff presented a Certification and Business Records from Elbert
regarding the receipt of the Note, and produced the original note in court.
Plaintiff claims that the loan was transferred on September 28, 2010, when
MERS, as Nominee for Chevy Chase Bank, executed an Assignment of
Mortgage to U.S. Bank, N.A., as Trustee relating to the Chevy Chase Funding,
LLC, Mortgage-Backed Certificates, Series 2005-3. This Assignment of
Mortgage was recorded in the Bergen County Clerk's Office on October 15,
2010. Thus, plaintiff claims that as of October 15, 2010, it had standing to bring
a foreclosure action. Further, plaintiff argues that Elbert and Ward certified that
plaintiff possessed the note before the Complaint was filed. It claims that Elbert
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received and stored the original note on September 1, 2005. Thus, it also claims
that it is the holder of the note under N.J.S.A. 12A:3-301. As both the record
holder and as the party in physical possession of the note, we conclude that
plaintiff had standing to file a foreclosure action against defendant.
IV.
Lastly, we turn to defendant's contention that the judge erred by granting
plaintiff's motion for summary judgment. When reviewing an order granting
summary judgment, we apply "the same standard governing the trial court
. . . ." Oyola v. Xing Lan Liu, 431 N.J. Super. 493, 497 (App. Div. 2013). A
court should grant summary judgment when the record reveals "no genuine issue
as to any material fact" and "the moving party is entitled to a judgment or order
as a matter of law." R. 4:46-2(c). We therefore consider the facts in a light most
favorable to the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142
N.J. 520, 523 (1995).
Defendant alleges that he set forth a prima facie case of predatory lending
under the New Jersey Consumer Fraud Act (NJCFA), N.J.S.A. 56:8-1 to -210.
While there is no precise definition ascribed to the concept of "predatory
lending," it has been described as
a mismatch between the needs and capacity of the
borrower. . . . In essence, the loan does not fit the
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borrower, either because the borrower's underlying
needs for the loan are not being met or the terms of the
loan are so disadvantageous to that particular borrower
that there is little likelihood that the borrower has the
capability to repay the loan.
[Assocs. Home Equity Servs., Inc. v. Troup, 343 N.J.
Super. 254, 267 (App. Div. 2001) (alteration in
original).]
N.J.S.A. 56:8-2 states:
The act, use or employment by any person of any
unconscionable commercial practice, deception, fraud,
false pretense, false promise, misrepresentation, or the
knowing, concealment, suppression, or omission of any
material fact with intent that others rely upon such
concealment, suppression or omission, in connection
with the sale or advertisement of any merchandise or
real estate, or with the subsequent performance of such
person as aforesaid, whether or not any person has in
fact been misled, deceived or damaged thereby, is
declared to be an unlawful practice[.]
To state a claim under the NJCFA, a plaintiff must allege (1) "unlawful conduct
by defendant;" (2) "an ascertainable loss by plaintiff;" and (3) "a causal
relationship between the unlawful conduct and the ascertainable loss."
D'Agostino v. Maldonado, 216 N.J. 168, 184 (2013). We have previously
explained that a negatively amortized adjustable rate mortgage loan is not a per
se predatory loan. See Rosenberg v. Washington Mut. Bank, FA, 369 N.J.
Super. 456, 465-66 (App. Div. 2004).
A-1059-17T2
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Here, the judge noted that while defendant had an annual income of
$80,000 – not a monthly income of $40,000 as the loan application stated –
defendant also had monthly expenses of $15,000 and made payments on the loan
for over three years. Thus, the judge found no fraud in the execution of the loan.
In his certification, defendant stated, "I fell behind on my mortgage payment
because of a decline in the economy and loss of customers for my consulting
business." Defendant also supplemented his income on the loan application with
a letter from his CPA explaining that if defendant "uses funds from the business
for the new purchase . . . it will not adversely effect his business." "[P]ublic
policy does not impose upon the Bank absolute liability for the hardships which
may befall the business venture it finances." See, e.g., Globe Motor Car Co. v.
First Fid. Bank, N.A., 273 N.J. Super. 388, 394 (Law Div. 1993); see also Pereira
v. United Jersey Bank, N.A., 201 B.R. 644, 670 (S.D.N.Y. 1996).
Defendant claims that he is not fluent in English. But at his deposition,
defendant spoke and read English without an interpreter. Further, as the judge
explained, defendant received and signed copies of a Truth in Lending
Disclosure Statement, an Adjustable Rate Mortgage Disclosure, and a Consumer
Handbook on Adjustable Rate Mortgages, which were all in English. Defendant
A-1059-17T2
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also had legal representation throughout the loan transaction and admitted to
willfully disregarding documents related to the loan.
Affirmed.
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