NY Mortg. Trust v. Deely

In NY Mortg. Trust v. Deely, the defendant appealed the orders granting summary judgment to the plaintiff and the final judgment of foreclosure in this residential mortgage foreclosure action. The New Jersey Appellate Division affirmed. The issue was whether the defendant’s earlier recorded mortgage was properly equitably subrogated to the plaintiff’s later recorded mortgage. The Court departed from its holding in First Union Nat’l Bank v. Nelkin, 354 N.J. Super. 557 (App. Div. 2002), and adopted the approach of the Third Restatement. Thus, the Court held that equitable subrogation is appropriate when loan proceeds from refinancing satisfy the first mortgage, the second mortgage is paid in full as part of the transaction, and the transaction is based on a discharge of the second mortgage, so long as the junior lienor, here the defendant, is not materially prejudiced.

NEW-YORK-MORTGAGE