Foreclosure Judgment Upheld in Spite of Lost Note

Nov 28, 2018

In a case involving an appeal from a final judgment of foreclosure, the Appellate Division recently held that plaintiff had the right to enforce a Mortgage in spite of the fact that the Note was lost prior to its assignment to plaintiff.  Investors Bank v. Torres, - N.J. Super. – (App. Div. 2018).

Defendant challenged plaintiff’s right to foreclose alleging that plaintiff never owned or controlled the underlying debt.  Plaintiff’s assignor, CitiMortgage, Inc., acquired the Note and Mortgage through a merger and then assigned it to the plaintiff.  However, the Note was lost prior to the assignment, but a Citi representative executed a Lost-Note Affidavit which provided that the Note was misplaced, lost or destroyed after execution by the defendant and delivery to Citi.

The court held that pursuant to N.J.S.A. 12A:3-309, a person who was both in possession of a Note and entitled to enforce it when the loss occurred may enforce that Note and may transfer that right to another.  The subsequent transferee need only prove the terms of the instrument and the person’s right to enforce the instrument and thus upheld the plaintiff’s right to foreclosure.

The court rejected defendant’s argument that the Lost-Note Affidavit was inadmissible because it was not properly authenticated.  The Affidavit signed by the Citi representative was proved prima facie genuine which is the only requirement to establish authenticity under N.J.R.E. 901 and the testimony of the subscribing notary was not required to authenticate the document.