New Jersey Appellate Division Holds That Mortgagor Lacked Standing to Challenge Assignment of Note and Mortgage to Foreclosing Mortgagee

The New Jersey Appellate Division recently held that a mortgagor could not challenge the assignment of a note and mortgage even when the assignment allegedly occurred in violation of a pooling and servicing agreement.  See US Bank Nat. Ass’n v. Riley, 2016 WL 2888952 (N.J. Super. Ct. App. Div. May 18, 2016).  In the case, the defendant purchased a property and executed a note and mortgage in order to secure the loan to do so.  Pursuant to a pooling and servicing agreement (“PSA”), the original mortgagee assigned the mortgage to the plaintiff, as trustee of the mortgage trust.  Under the terms of the PSA, the plaintiff was required to take physical possession of the mortgage and note within ninety days of the trust’s closing date, however, the trustee was not assigned the note and mortgage until five years later.  After the defendant defaulted on the loan and one year after the assignment, the plaintiff initiated a foreclosure action against the defendant.  Although the defendant did not dispute that she had executed and defaulted under the loan documents, she instead argued that the assignment of the note and mortgage was void because it violated the terms of the PSA.  The plaintiff moved for summary judgment, which the trial court granted.  On appeal, the Appellate Division affirmed the decision.  Applying New York law, the court held that the defendant lacked the standing to challenge the assignment because she was neither a party to nor a beneficiary of the trust.

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