AURORA LOAN SERVICES, LLC, Plaintiff-Respondent, v.

BERNICE TOLEDO, Defendant-Appellant, and

Defendants.

_________________________________________________________ Submitted September 26, 2011 - Decided October 18, 2011

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Before Judges Alvarez and Skillman. On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. F-10005-09. Kenneth C. Marano, attorney for appellant. Victoria E. Edwards (Akerman Senterfitt), attorney for respondent.

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MR. TOLEDO, Husband of BERNICE TOLEDO, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., As Nominee For LEHMAN BROTHERS BANK FSB; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., As Nominee For AURORA LOAN SERVICES LLC,

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SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-0804-10T3

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Defendant appeals from an order entered on August 31, 2010, which granted a summary judgment in this mortgage foreclosure

action declaring that defendant's answer "sets forth no genuine

issue as to any material fact challenged and that [plaintiff] is entitled to a judgment as a matter of law." There is no

indication in the record before us that plaintiff ever secured a final judgment of foreclosure. interlocutory. Therefore, the appeal appears

See Wells Fargo Bank, N.A. v. Garner, 416 N.J. However, because defendant

Super. 520, 523-24 (App. Div. 2010).

did not move to dismiss on that basis and the appeal has been pending for a substantial period of time, we grant leave to appeal as within time and address the merits. 4(b)(2). See R. 2:4-

However, the following facts may be gleaned from that record. Defendant owns a home in the Borough of Prospect Park. On

July 24, 2006, defendant executed two promissory notes payable to Lehman Brothers Bank, the first for $320,000, which was

payable on August 1, 2021.

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payable on August 1, 2036, and the second for $60,000, which was Both notes were secured by mortgages

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on defendant's home.

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The record before us is rather sparse and disjointed.

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A-0804-10T3

PER CURIAM

On September 1, 2006, plaintiff began servicing the notes on behalf of Lehman. Sometime in 2008, defendant went into default in the payment of her obligations under the notes.

On January 30, 2009, plaintiff purportedly obtained an

assignment of the $320,000 note from Lehman and the mortgage securing that note.1 This assignment was signed by a person

named Joann Rein, with the title of Vice-President of Mortgage

assignment document as a "nominee for Lehman Brothers Bank." This document is discussed in greater detail later in the

On February 23, 2009, plaintiff filed this mortgage

negotiations to resolve the matter.

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foreclosure action.

The parties subsequently engaged in Those negotiations were

unsuccessful and are not relevant to our disposition of this appeal.

Plaintiff filed a motion for summary judgment to strike

fact material to plaintiff's right to foreclose upon defendant's property.

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The record does not indicate whether there also was an assignment of the $60,000 note and mortgage securing that note.

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defendant's answer on the ground there was no contested issue of

In support of this motion, plaintiff relied primarily

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opinion.

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Electronic Systems, Inc. (MERS).

MERS was described in the

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upon an affidavit by Laura McCann, one of its vice-presidents, and exhibits attached to that affidavit, which are discussed later in this opinion. certification. Defendant submitted an answering

After hearing oral argument, the trial court issued a brief written opinion and order granting plaintiff's motion. appeal followed. This

To have standing to foreclose a mortgage, a party generally

N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011) (quoting Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch.

instrument, such as the promissory notes executed by defendant,

underlying debt "is governed by Article III of the Uniform Commercial Code (UCC), N.J.S.A. 12:3-101 to -605, in particular N.J.S.A. 12A:3-301." Ibid. Under this section of the UCC, the

only parties entitled to enforce a negotiable instrument are

of the instrument who has the rights of the holder, or [3] a person not in possession of the instrument who is entitled to

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enforce the instrument pursuant to [N.J.S.A.] 12A-3-309 or

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"[1] the holder of the instrument, [2] a nonholder in possession

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the determination whether a party owns or controls the

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Div. 2010)).

If the debt is evidenced by a negotiable

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must "own or control the underlying debt."

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Wells Fargo Bank,

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subsection d. of [N.J.S.A.] 12A:3-418." (brackets added).

N.J.S.A. 12A:3-301

418 N.J. Super. at 598, that plaintiff is neither a "holder" of

the promissory notes executed by defendant nor a "person not in possession" of those notes who is entitled to enforce them pursuant to N.J.S.A. 12A:3-309 or N.J.S.A. 12A:3-418(d).

Therefore, as in Ford, plaintiff's right to foreclose upon the

whether plaintiff established that it is "a nonholder in possession of the instrument[s] who has the rights of a holder."

To establish its right to foreclose upon the mortgage

plaintiff relied upon an affidavit by Laura McCann, a vicepresident of plaintiff.

"custody and control of the business records of [plaintiff] as they relate to [defendant's] loans." Regarding each of the

certifications, McCann asserts that it is a "true and correct copy."

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confirmed that those attachments were copies of originals in plaintiff's files.

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copies of defendant's notes and mortgages attached to her

However, McCann does not state that she personally

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defendant executed to secure her $320,000 note to Lehman,

McCann's affidavit states that she has

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N.J.S.A. 12A:3-301; see Ford, supra, 418 N.J. Super. at 498-99.

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mortgages defendant executed to secure those notes depends upon

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In this case, it is clear for the same reasons as in Ford,

McCann's affidavit also has attached a copy of a document that purports to be a "Corporate Assignment of Mortgage" from MERS, as Lehman's nominee, to plaintiff. Again, McCann's

affidavit asserts that this document "is a true and correct copy of the instrument assigning the Mortgage and Note to

[plaintiff]," but does not state that she personally confirmed that it was a copy of the original.

A certification in support of a motion for summary judgment

Super. at 599 (quoting R. 1:6-6); see also Deutsche Bank Nat'l Trust Co. v. Mitchell, ___ N.J. Super. ___, ___ (App. Div. 2011)

the need for strict compliance with this requirement in mortgage

new court rule which specifically states that an affidavit in support of a judgment in a mortgage foreclosure action must be "based on a personal review of business records of the plaintiff or the plaintiff's mortgage loan servicer." R. 4:64-2(c)(2).

"personal review of [plaintiff's] business records" relating to defendant's notes and mortgages.

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evidence that the purported assignment of the mortgages and

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Furthermore, even if plaintiff had presented adequate

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McCann's affidavit does not state that she conducted such a

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foreclosure actions by adopting, effective December 20, 2010, a

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(slip op. at 17-19).

Our Supreme Court has recently reaffirmed

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must be based on "personal knowledge."

Ford, supra, 418 N.J.

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notes attached to McCann's affidavit was a copy of the original in plaintiff's files, this would not have been sufficient to establish the effectiveness of the alleged assignment.

document was signed by a JoAnn Rein, who identifies herself as a vice-president of MERS, as nominee for Lehman Brothers, and was notarized in Nebraska.

Plaintiff's submission in support of its

motion for summary judgment did not include a certification by

Rein or any other representative of MERS regarding her authority

assignment.

In the absence of such further evidence, we do not

view the purported assignment of the mortgages and notes to be a

judgment in plaintiff's favor.

There is an additional potential problem with this purported assignment.

payee of the promissory notes secured by the mortgage, but rather by MERS, "as nominee for Lehman." Although the notes and

petition for bankruptcy protection in September 2008, see Andrew Ross Sorkin, Lehman Files for Bankruptcy; Merrill is Sold, N.Y.

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Times (Sept. 14, 2008), which was before the purported assignment of defendant's mortgage and note on January 30, 2009.

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mortgages appointed MERS as Lehman's nominee, Lehman filed a

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Evidence 221 (6th ed. 2006).

The assignment was not made by Lehman, as

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self-authenticating document that can support the summary N.J.R.E. 901; see 2 McCormick on

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to execute the assignment or the circumstances of the

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This

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Therefore, we question whether Lehman's designation of MERS as its nominee remained in effect after Lehman filed its bankruptcy

bankruptcy trustee.

On remand, the trial court should address

the question whether MERS was still Lehman's nominee as of the date of its purported assignment of defendant's note and mortgage to plaintiff.

Accordingly, we reverse the August 31, 2010 order granting

court for further proceedings in conformity with this opinion.

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plaintiff's motion for summary judgment and remand to the trial

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petition, absent ratification of that designation by the