The NJ Superior Court Appellate Division recently handed down an interesting ruling in the case of DEUTSCHE BANK NATIONAL TRUST COMPANY v. MITCHELL.
The Court believes it is important for a bank or other lending corporation to actually hold the lien or note on a property before foreclosing on it. Seems like a simple enough point but with the crazy world of mortgage resale and assignment it is a point which has slipped through the crack more than once over the past few years. It is interesting that at the trial level it seems the Court was fine with allowing the foreclosure to proceed based on the fact the lender was assigned the note after they filed for foreclosure but before the property went to Sheriff’s Sale.
It is an interesting case but there is another part of the case that caught my eye, one the Court was not called to rule upon but it is essential for every distressed homeowner to read and understand.
Bethea in this story is the homeowner who after her mother died had trouble paying her mortgage and looked for someone to help her navigate her pre-foreclosure options.
The Agreement provided that Bethea would create a reserve account by setting aside $37,187 from the closing proceeds. If Bethea failed to make a rental payment, the Agreement authorized counsel to pay the rent from the reserve account. The Agreement also provided that Bethea would pay Elite a $25,000 “consulting fee.” Mitchell received $10,000 from the “consulting fee.”
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