The New Jersey Supreme Court has ruled that a home lender may be liable for consumer fraud law based on its allegedly breaching of agreements to forbear on foreclosure proceedings. The Court reversed dismissal of the case by a lower court. The Defendant held a mortgage on the Plaintiff’s home and when the Plaintiff became delinquent on her payments, the Defendant obtained a judgment of foreclosure.
Before a sheriff’s sale was held, however, the parties entered into successive agreements under which the Plaintiff agreed to make certain payments to eliminate her arrearage. In exchange, the Defendant promised to dismiss the foreclosure action once the Plaintiff became current on her mortgage payments. The Plaintiff sued under the state’s consumer fraud statute when the Defendant allegedly threatened foreclosure despite her alleged compliance with the terms of the forbearance agreements.
The Defendant argued that the state’s consumer fraud law did not apply to post-judgment settlement agreements entered into to stave off a foreclosure sale. The Court disagreed, stating:
We hold that the post-foreclosure-judgment agreements in this case were both in form and substance an extension of credit to the plaintiff originating from the initial loan. Fraudulent lending practices, even in a post-judgment setting, may be the basis for a Consumer Fraud Act lawsuit.
Our firm is handling a number of similar cases for homeowners in Alabama and in several other states. If you need more information on this litigation, contact Bill Robertson, a lawyer in our Consumer Fraud Section, at 800-898-2034 or by email at Bill.Robertson@beasleyallen.com.
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