Recent, Notable N.J. Foreclosure Decisions: U.S. National Bank Association v. Montesdeoca; D'Agostino v. Maldonado
Thursday, October 31, 2013
Here, "defendant offers the following narrative regarding the loan. Defendant, born in Ecuador in 1950, arrived in the United States in or around September 2002 with his wife and four adult sons. Having unsuccessfully run a flower shop in the United States, defendant assumed a position with a cleaning company earning $600 a week. In addition to this income, defendant asserts he earned approximately $5,000 annually by importing and selling flowers. Defendant later took a position as a driver earning $500 a week while his wife worked in a pharmacy earning $7.00 an hour. These facts are incorporated in this opinion not for any sentimental consideration but for their material significance to the loan instruments which underlie this litigation."
Thereafter, "defendant was preapproved for a $607,000 loan though, apparently to defendant’s surprise, there were two loans. Defendant asserts it was explained to him by [Plaintiff] the second loan was in place of a down payment. The interest rates were discrepant with the first loan subject to a 7.375% rate and the second subject to a 14.000% rate. Defendant asserts [Plaintiff] said the rates “were only temporary”."
In holding the case open for further discovery, the Court ponders, "There is an intriguing question left unanswered; if defendant’s proofs are found credible, what is the appropriate remedy? Surely, forgiveness of the entire loan seems not only draconian but without support in New Jersey case law. That issue, as with many others, shall be left for future consideration."
In D'Agostino v. Maldonado, New Jersey's Supreme Court held that victims of illegal mortgage-rescue schemes may recover damages under the Consumer Fraud Act, even where their homes have been returned to them. Specifically, ""When an unconscionable commercial practice has caused the plaintiff to lose money or other property, that loss can satisfy both the 'ascertainable loss' element of the CFA claim and constitute 'damages sustained' for purposes of the remedy imposed under the CFA[.]"
Here, "plaintiff Anthony D’Agostino contacted defendant and, according to trial testimony, requested his assistance. Plaintiff Anthony D’Agostino testified that the parties verbally agreed on a relatively simple transaction: plaintiffs would pay defendant $40,000, and defendant would repair the property and use rental payments from tenants to bring the mortgage on the Property current.
"The documents prepared by defendant to memorialize their agreement, however, proposed a transaction far more complex than the proposed basic service agreement that had been discussed. Defendant prepared five documents: a Letter of Agreement, an Agreement and Declaration of Trust, a Warranty Deed to Trustee, an Assignment of Beneficial Interest in Trust and an Option Agreement. By the execution of these documents, a trust was created, with defendant named the sole Trustee. For consideration of ten dollars, plaintiffs conveyed their interest in the Property to defendant in his capacity as Trustee. Although plaintiffs were no longer the property owners, the documents provided that defendant had the authority to collect rents, make repairs, pay the mortgage and pay property taxes, and that Denise D’Agostino would be personally liable to pay the mortgage balance. Defendant’s documents gave plaintiffs a one-year option to recover title to the Property by paying defendant $400,000. According to the trial court’s findings, plaintiffs signed the papers without reading them or consulting an attorney.
"Defendant anticipated substantial profit from rental payments. He negotiated a new payment agreement with the lender holding the mortgage. According to defendant’s testimony, however, he soon found that the rental payments were insufficient to cover the increased mortgage payments due under the revised agreement, and he realized that he would have to contribute his own funds to pay the mortgage. On March 28, 2008, defendant prepared a quitclaim deed which transferred full interest in the Property to defendant. Plaintiffs then executed the quitclaim deed. Although the quitclaim deed recited that defendant paid $360,000 for this interest, he did not pay any money to plaintiffs in consideration for the transfer."
Although all Justices agreed that the Defendant violated the CFA, the D'Agostino Court was split as to whether Plaintiff was entitled to further damages pursuant to the CFA after being restored to his initial position.