The New Jersey Appellate Division has affirmed that accelerating a residential mortgage debt is not a prerequisite to the lender foreclosing the mortgage. In Deutsche Bank National Trust Co. v. Blando, A-1826-17T3 (App. Div. March 20, 2019), the defendants defaulted on their mortgage loan. The subject mortgage provided that in the event of a default, the lender will notify defendants “that a failure to cure by a specified date may result in acceleration of the full outstanding amount of the loan at the option of the lender.” After the defendants’ default, the plaintiff sent the defendants a notice of intention to foreclose in accordance with the New Jersey Fair Foreclosure Act. The notice informed the defendants that if they failed to satisfy the amounts due and owing by a specified date, then the plaintiff “may accelerate and require that you pay all amounts owing and secured by [the note and mortgage] in full[.]”

The plaintiff subsequently filed a mortgage foreclosure action and later moved for summary judgment. Defendants opposed the motion, arguing that the plaintiff could not foreclose because it did not send the defendants a written notice accelerating the debt prior to filing its complaint. The trial court granted the plaintiff’s motion and held that acceleration of the debt prior to filing the foreclosure complaint was not required by law. Thereafter, the plaintiff moved for final judgment, and the defendants did not oppose that motion, which the lower court then granted.

The defendants appealed from the final judgment, arguing that the trial court erred in granting summary judgment because they raised a genuine dispute of material fact with respect to whether the plaintiff accelerated the debt prior to filing the complaint. The Appellate Division rejected the defendants’ argument and affirmed.

Citing well-settled precedent, the appellate court reasoned that the plaintiff had the right to foreclose, because the defendants did not contest the validity of the mortgage, their default, or the plaintiff’s standing to foreclose. The Appellate Division found that there was no binding precedent supporting the argument that acceleration of a note must take place prior to the filing of a foreclosure complaint. Rather, the appellate court found that, to the extent the defendants disputed whether the loan had been properly accelerated, and thus whether the amount due and owing on the note did not include the accelerated principal and interest, it was incumbent on them to contest the amount owed when the plaintiff moved for entry of final judgment of foreclosure.

In short, Blando stands for the proposition that whether or not a lender accelerated a debt prior to filing a foreclosure action will not be dispositive of the lender’s right to foreclose. Furthermore, to the extent a lender’s failure to accelerate may provide any defense to a borrower, the defense must be asserted in connection with a motion for final judgment, in setting the amount due.

Deutsche Bank National Trust Co. v. Blando, A-1826-17T3 (App. Div. March 20, 2019) can be found at https://www.njcourts.gov/attorneys/assets/opinions/appellate/unpublished/a1826-17.pdf?c=Mk1.

To discuss creditors’ rights matters with this article’s author, please contact:

Jonathan P. Vuotto, Esq.
jpv@mcandrewvuotto.com