GMAC Mortg., LLC v. Willoughby

• Decision Date: 31 July 2017
• Citation: 230 N.J. 172,165 A.3d 787
• Court: New Jersey Supreme Court
• Parties: GMAC MORTGAGE, LLC, Plaintiff–Respondent, v. Tamilynn WILLOUGHBY, Defendant–Appellant.

230 N.J. 172
165 A.3d 787

GMAC MORTGAGE, LLC, Plaintiff–Respondent,
v.
Tamilynn WILLOUGHBY, Defendant–Appellant.

Supreme Court of New Jersey.

Argued March 21, 2017
Decided July 31, 2017

Joshua W. Denbeaux argued the cause for appellant (Denbeaux & Denbeaux, attorneys).

Andrew P. Zacharda argued the cause for respondent (Tompkins, McGuire, Wachenfeld & Barry, attorneys).

Linda E. Fisherargued the cause for amici curiae Seton Hall Law Center for Social Justice, New Jersey Citizen Action, La Casa de Don Pedro, and the Housing and Community Development Network of New Jersey (Seton Hall University School of Law, Center for Social Justice, and Jurow & Schore, attorneys; Linda E. Fisher, Kevin B. Kelly, Rebecca Schore, and Margaret Lambe Jurow, on the briefs).

JUSTICE ALBIN delivered the opinion of the Court.

230 N.J. 175

In November 2008, following the collapse of the housing market, this Court implemented a statewide Residential Mortgage Foreclosure Mediation Program to address the economic crisis that left many of our citizens facing the loss of their homes. The primary goal of the Mediation Program was to provide a neutral forum where homeowners and lenders could attempt to reach mutually agreeable terms for restructuring loans to avoid foreclosures. The Program was intended to bring finality to disputes, not to be a springboard for endless rounds of mediation and litigation. This appeal illustrates one case that eluded the beneficent purposes of the Program.

After defaulting on her home loan with plaintiff GMAC Mortgage, LLC, defendant TamiLynn Willoughby entered into New Jersey's Foreclosure Mediation Program. The mediation process led to an agreement between GMAC and Willoughby that gave Willoughby a path to save her home through a "permanent modification" of the loan. The agreement, executed in 2010, set forth the required down payment and monthly payments, the unpaid principal balance, the amount in arrears, and the length and interest rate of the loan.

Willoughby complied with that agreement, paying the down payment and each monthly installment for one year. Then, GMAC began sending Willoughby proposals differing from the 2010 agreement, which GMAC claimed was provisional. Willoughby moved to enforce the 2010 settlement agreement, but instead the chancery court ordered additional mediation sessions. Willoughby

230 N.J. 176

never accepted in writing any of GMAC's proposals to modify the original agreement. Protracted litigation ensued. Willoughby's efforts to enforce the 2010 settlement agreement proved fruitless, and GMAC's foreclosure action ended with a Sheriff's sale of Willoughby's home.

Willoughby was denied relief by the chancery court, which held that the 2010

165 A.3d 789

mediation agreement was "provisional" and not enforceable as a final settlement agreement. The Appellate Division affirmed.

We now reverse and conclude that Willoughby and GMAC entered into an enforceable settlement agreement through the Foreclosure Mediation Program.

The language of the 2010 mediation agreement—much of it handwritten by GMAC's attorney—spoke of a "permanent modification" that was final and binding. The specificity of the terms, including the length of the mortgage, did not suggest that the agreement was a temporary placeholder awaiting a final resolution. The 2010 mediation agreement was worded as a final settlement, not a prelude to further negotiations. Willoughby has endured years of litigation, ending with the loss of her home. She was entitled to the benefit of the agreement for which she had bargained.

In light of the sale of Willoughby's home, we remand to the chancery court to craft an appropriate remedy.

I.

A.

In February 2006, TamiLynn Willoughby obtained a loan in the amount of $183,000 from GMAC Mortgage, LLC (GMAC). The loan was secured by a mortgage on Willoughby's home in Union Beach, New Jersey. In June 2006, Willoughby defaulted on the loan, and four months later GMAC filed a complaint to foreclose on her home. In August 2007, GMAC obtained a final judgment for $205,915.30 on the defaulted loan.

230 N.J. 177

A Sheriff's sale of Willoughby's home was scheduled for September 2009. The chancery court granted Willoughby's motion to stay the Sheriff's sale and permitted the parties to participate in New Jersey's Foreclosure Mediation Program.

At mediation sessions on April 13 and May 25, 2010, Willoughby met with GMAC's attorney to discuss settlement terms. At the May 2010 mediation session, the parties reached an agreement, which was memorialized in a "Foreclosure Mediation Settlement Memorandum"—a form document provided by the Judiciary.

A preamble to the Settlement Memorandum states: "The parties agree that the foreclosure action is resolved upon the following terms, conditions, and covenants." (emphasis added). GMAC's attorney handwrote the settlement terms into the blank section of the Settlement Memorandum. He began by noting that Wiloughby was "being offered a trial to permanent modification plan contingent on signed modification documents and an initial down payment." (emphasis added). The Agreement states that Willoughby will (1) make a $6000 down payment to GMAC by June 7, 2010; (2) repay the estimated principal balance of $215,365.30, amortized at a rate of five percent over 480 months; and (3) make monthly payments estimated at $1678.48. In addition, the Agreement indicates "$71,736.39 in arrears will be put into a non interest bearing balloon that is payable upon maturity, refinance, or sale."

The Settlement Memorandum includes certain handwritten guarantees: "If all trial payments are made [GMAC] will make modification permanent ," but "[i]f any payment is missed, [GMAC] will continue with foreclosure." (emphasis added). Finally, the Memorandum provides, in boilerplate language, that "[t]he parties agree that when executed this mediation settlement memorandum shall be final, binding and enforceable upon all parties ." (emphasis added). Willoughby and GMAC's attorney signed the Agreement.

Following the signing of the Settlement Memorandum, the mediator filed with the chancery court a "Foreclosure Mediation

165 A.3d 790

Completion Report" on which he checked off two boxes: "Provisional

230 N.J. 178

Settlement—No Need to Reschedule Mediation (Case Not Dismissed)" and "Loan Modification."

In accordance with the Settlement Memorandum, Willoughby delivered the $6000 down payment by cashier's check to GMAC's counsel. Several weeks later, Willoughby signed a "Forbearance Agreement" forwarded to her by GMAC's servicing agent that reflected some of the basic terms of the Settlement Memorandum. The Forbearance Agreement required Willoughby to make monthly payments of $1678.48 through June 1, 2011. Willoughby made each payment.

By letter dated June 7, 2011, a different servicing agent of GMAC forwarded to Willoughby a wholly new loan modification agreement because she "successfully completed the requirements of [her] Special Forbearance Program." The new loan proposal had a maturity term of twenty-five years instead of forty years, also at an amortization rate of five percent, but required monthly payments of $1814.52 instead of $1678.48. The new balloon payment due on the date of the loan's maturity was $114,362.41 instead of the $71,736.39 due under the May 2010 Agreement. The letter did not suggest that the terms were subject to negotiation. Willoughby did not sign the new loan modification agreement as directed in the letter, but she did begin making monthly payments of $1814.78.

GMAC's second servicing agent sent Willoughby two other modification agreements in December 2011 and May 2012 with slightly different terms than the June 7, 2011 proposal. In these new proposed agreements, the amortization rate was increased to 5.5%. Willoughby did not accept the new loan modification agreements but continued making the $1814.78 monthly payments.

By letter dated August 30, 2012, GMAC's servicing agent returned Willoughby's monthly payment and advised that her loan would be "referred to foreclosure" because of her failure to sign the proposed May 2012 modification agreement. At this point, Willoughby had made payments over a period of sixteen months totaling $58,790.69 under the May 2010 Agreement.

230 N.J. 179

In September 2012, Willoughby filed a pro se motion to enforce the May 2010 Agreement.¹ Instead of deciding the motion, the chancery court ordered the parties to return to mediation. The court apparently did not advise the unrepresented litigant that she had a right to appeal its order.

At a mediation session in October 2012, GMAC offered Willoughby an "Interim Provisional Settlement" with new loan modification terms: a required down payment of $3630, a maturity term of thirty years on an unpaid principal balance of $181,783.82 with a 6.125% amortization rate, and monthly payments of approximately $1805. GMAC rejected a counteroffer made by Willoughby.

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