You be the Judge: Foreclosure

If you are involved in a foreclosure, this may interest you.

When a borrower defaults on the obligation to repay a mortgage note, the lender can sue on the note.  The lender can also foreclose on the mortgage given as collateral for the repayment of the note.

Most lenders do both.

Suits for money damages on mortgage notes are brought in the Law Division of the Superior Court; suits to foreclose mortgages are brought in the Chancery Division of the same Court. 

The suits, however, are separate.

Recently, the Supreme Court considered a case where the mortgagors had defaulted.  The lender had filed the two suits.  A summary judgment was rendered first in the Law Division on the mortgage note for an unpaid balance of approximately $850,000.  In the subsequent foreclosure suit, the lender certified the debt to be more than $1,000,000 and another judgment was entered for that amount.

The mortgagor appealed.

YOU BE THE JUDGE: Is a lender limited in its foreclosure suit to the amount of the judgment already recovered on the promissory note?

The borrower argued the lender was bound by the amount of the first judgment.  The Appellate Division agreed with the lender.

The Supreme Court, however, reversed.  It held that a lender was entitled to claim for additional advances, interest, costs and attorneys fees (if any) incurred since the first judgment.  But, otherwise, under the doctrine of issue preclusion, the amount of the debt must be the same in the foreclosure as in the prior suit. 

The decision points out that a courtroom can bring justice and may be the only way to protect your rights. We know courtrooms; we have harnessed the power of the law in courtrooms to bring justice for our clients for decades. Please contact us to discuss how we can help you in a new lawsuit or provide a "second opinion" about your pending lawsuit. There is no obligation for the initial consultation.