Lack of standing is the most powerful defense in New Jersey foreclosure cases — if the party suing you cannot prove it legally owns or has the right to enforce your mortgage note, the court must dismiss the foreclosure. NJ law requires the plaintiff to demonstrate standing at the time the complaint is filed, and defects in the assignment chain, MERS issues, and robo-signed documents have resulted in dismissals of foreclosure actions across the state.
What Is Standing in Foreclosure?
Standing is the legal requirement that the party filing a lawsuit has a sufficient connection to the matter to bring the case. In NJ foreclosure, this means the plaintiff must prove it is either the holder of the original promissory note, a party entitled to enforce the note under the Uniform Commercial Code (UCC), or a party with a valid assignment of both the note and mortgage from the original lender through an unbroken chain. The NJ Supreme Court has repeatedly emphasized that standing must exist at the time the foreclosure complaint is filed — not merely at some later point during the litigation.
Assignment Chain Defects
Most residential mortgages have been sold and transferred multiple times through the secondary mortgage market. Each transfer requires a proper assignment of both the note (the borrower’s promise to pay) and the mortgage (the lien on the property). Common assignment chain defects that create standing issues include gaps in the chain where one or more intermediate transfers are missing, assignments executed after the foreclosure complaint was filed (attempting to retroactively establish standing), assignments signed by individuals without authority to act on behalf of the assignor, and assignments into securitized trusts that were executed after the trust’s closing date in violation of the trust’s Pooling and Servicing Agreement (PSA).
MERS Issues
Mortgage Electronic Registration Systems (MERS) is a private electronic registry used to track mortgage ownership and servicing rights. MERS is frequently listed on mortgage documents as the “nominee” for the original lender and its successors and assigns. Standing challenges involving MERS arise when MERS attempts to assign the mortgage without demonstrating it had authority from the actual note holder, when the assignment from MERS is executed by a person who is simultaneously an officer of MERS and the assignee entity (creating a conflict of interest), or when MERS purports to assign the note despite being only a nominee for the mortgage. NJ courts have scrutinized MERS assignments and have dismissed foreclosure cases where the MERS assignment was defective.
Key NJ Case Law on Standing
NJ courts have developed a substantial body of case law on foreclosure standing. In Deutsche Bank National Trust Co. v. Mitchell (2011), the NJ Appellate Division held that the plaintiff must prove standing as of the date the complaint is filed and that subsequent acquisition of the note does not cure the standing defect. The court reinforced the principle that standing is a threshold issue that cannot be established retroactively. In Bank of New York v. Raftogianis (2010), the court addressed the relationship between the note and mortgage, holding that an assignment of the mortgage without the note is a nullity. These decisions establish that NJ courts take standing challenges seriously and will dismiss foreclosure cases where standing is not properly established.
How to Challenge Standing in Your Answer
If you are served with a foreclosure complaint in NJ, you should raise lack of standing as an affirmative defense in your Answer. Your Answer should specifically deny that the plaintiff is the holder or owner of the note and mortgage, assert that the plaintiff lacks standing to bring the foreclosure action, and request that the plaintiff be required to produce the original note, all assignments, and proof of the chain of title. After filing your Answer, your attorney can conduct discovery (formal requests for documents and information) to obtain the plaintiff’s evidence of standing and identify defects in the assignment chain.
What Happens When Standing Is Successfully Challenged
If you successfully demonstrate that the foreclosing party lacks standing, the court will dismiss the foreclosure complaint. The dismissal is typically without prejudice, meaning the correct party with proper standing could potentially refile the action. However, a successful standing challenge provides the homeowner significant benefits: time to negotiate a loan modification or other workout, leverage in settlement negotiations, and in some cases permanent relief if the correct party cannot be identified or the statute of limitations has run on the underlying debt.
Call Friscia & Associates Today
If you are facing foreclosure in New Jersey, the party suing you may not have the right to do so. Call Friscia & Associates at (973) 500-8024 to speak with a NJ foreclosure defense attorney who can analyze the assignment chain on your mortgage, identify standing defects, and aggressively challenge the foreclosure in court.
Legal Disclaimer: The information on this page is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this content. Every foreclosure case is different, and outcomes depend on the specific facts and circumstances involved. If you need legal advice, please contact our office to schedule a consultation.