Brief Fact Summary. Midatlantic National Bank, (Appellee), holds a first purchase money mortgage, executed by Jean R. DeSeno and her ex-husband Stefano T. DeSeno on a property owned by Ms. DeSeno, (Appellant). Appellee obtained a foreclosure judgment in the Superior Court of New Jersey but Appellant filed for Chapter 11 Bankruptcy prior to the sale of the property. Appellee successfully moved for relief from the stay.
Synopsis of Rule of Law. A foreclosure judgment on a New Jersey Home mortgage terminates a debtor’s right to cure a default on that mortgage. Under Section:1123(a)(5)(E), “any lien” includes a security interest held by a New Jersey home mortgage lender in the property following the entry of a foreclosure judgment.
As we noted in Perry: Even though the contractual terms between the parties in this case have merged into the entry of judgment of foreclosure, the security interest or lien against the property continues to be the product of the consensual arrangement between debtor and lender.View Full Point of Law
Whether Appellant has a right to cure the default on her mortgage.
Whether Section:1123(a) gives the debtor the authority to modify a foreclosure judgment created under New Jersey Law.
No. Appellant’s right to cure her default on the mortgage terminated upon the entry of the foreclosure judgment.
Yes. Appellant may modify the foreclosure judgment in her Chapter 11 plan under Section:1123(a)(5)(E).
The right to cure a default on a mortgage on a home located in New Jersey terminates upon entry of a foreclosure judgment. Section:1322(b)(5) authorizes the curing of a default only in a contractual relationship, which under New Jersey law ceases to exist following a foreclosure judgment.
Appellant may modify the foreclosure judgment in her Chapter 11 plan under Section:1123(a)(5)(E). A New Jersey home mortgage lender retains a security interest following the entry of a foreclosure judgment. Under Section:1123(a)(5)(E), “any lien” includes security interests.