SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0793-15T1

HSBC BANK USA, NATIONAL

ASSOCIATION AS TRUSTEE FOR

OPTEUM MORTGAGE ACCEPTANCE

CORPORATION, ASSET-BACKED

PASS-THROUGH CERTIFICATES,

SERIES 2005-2,

Plaintiff-Respondent,

v.

GERARDO AVALOS and BEATRIZ 

AVALOS, HUSBAND AND WIFE, 

TENANTS/OCCUPANTS, 

Defendants-Appellants,

and

WACHOVIA BANK, NATIONAL

ASSOCIATION,

Defendant.

__________________________________

Submitted September 27, 2016 – Decided 

Before Judges Ostrer and Vernoia.

On appeal from the Superior Court of New 

Jersey, Chancery Division, Somerset County, 

Docket No. F-8125-12.

Tomas Espinosa, attorney for appellants.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." 

Although it is posted on the internet, this opinion is binding only on the 

parties in the case and its use in other cases is limited. R.1:36-3.

March 14, 2017
2 A-0793-15T1

Pluese, Becker & Saltzman, LLC, attorneys for 

respondent (Stuart H. West, on the brief).

PER CURIAM

In this mortgage foreclosure case, defendants Gerardo and 

Beatriz Avalos appeal from: (1) the Chancery Division's June 20, 

2014 orders granting summary judgment to plaintiff HSBC Bank U.S., 

N.A. (HSBC),1 and denying defendants' motion to dismiss; and (2)

the court's August 17, 2015 final judgment of foreclosure. We 

affirm.

In January 2005, defendants executed a note to Opteum 

Financial Services, LLC (Opteum), in the amount of $195,000. To 

secure payment, defendants executed a mortgage encumbering their

North Plainfield home in favor of Mortgage Electronic Registration 

Systems (MERS), as nominee for Opteum. The loan was later sold 

into a pool of assets governed by a pooling and servicing agreement 

(PSA), in which HSBC served as trustee. 

On October 1, 2011, defendants stopped making payments under 

the 2005 note and mortgage. After the default, an Opteum assistant 

vice president endorsed the note in favor of HSBC. MERS, as 

Opteum's nominee, assigned the mortgage to HSBC, which then 

recorded it in Somerset County on April 2, 2012.

 

1 HSBC sues as trustee for Opteum Mortgage Acceptance Corporation, 

Asset-Backed Pass-Through Certificates, Series 2005-2. We refer 

to HSBC in its role as trustee.
3 A-0793-15T1

A month later, HSBC filed its foreclosure complaint. After 

successfully vacating a default previously entered, defendants 

filed their answer and counterclaim in August 2013. Defendants 

admitted they stopped making payments. The gist of their defense 

was that HSBC lacked standing, did not own the loan, and the trust, 

under the pooling agreement, was never validly formed.

In granting HSBC's motion for summary judgment, and denying 

defendants' motion to dismiss, Judge Edward M. Coleman found, in 

a written decision, that defendants defaulted under the mortgage 

and HSBC had standing to foreclose because it possessed the note 

and was assigned the mortgage. Citing Thorpe v. Floremoore Corp., 

20 N.J. Super. 34, 37 (App. Div. 1952), the judge found that HSBC 

had fulfilled the three prerequisites to foreclosure: mortgage 

execution, recording, and indebtedness. Judge Coleman also 

rejected defendants' contention that HSBC lacked standing because 

of a violation of the PSA. He concluded that, as non-parties to 

the PSA, defendants lacked standing to challenge HSBC's compliance 

with it. The final judgment of foreclosure established defendants' 

total indebtedness as of August 17, 2015, and authorized the 

Sheriff's sale of the property.

On appeal, defendants essentially contend that HSBC violated 

terms of the trust that the PSA created. They argue that they are 

intended third-party beneficiaries of the trust and have standing 
4 A-0793-15T1

to enforce its terms. In particular, they contend defendants' 

note and mortgage were not delivered to the trust before its 

closing date, as set forth in the PSA; consequently, HSBC lacks 

standing to enforce the note and mortgage. 

We review the trial court's grant of summary judgment de 

novo, applying the same standard as the trial court. Henry v. 

N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). As did the 

trial court, we conclude defendants lack standing to assert a 

breach of the PSA. They were not parties to the agreement, nor 

were they intended third-party beneficiaries. Notably, the PSA 

expressly identified certain third-party beneficiaries, including 

the master servicer, but omitted mortgagors like defendants. 

Our conclusion that defendants lack standing to enforce the 

PSA is consistent with the decisions of multiple courts that have 

addressed the issue. See Correia v. Deutsche Bank Nat'l Trust 

Co., 452 B.R. 319, 324-25 (B.A.P. 1st Cir. 2011) (stating that the 

debtors lacked standing to object to breaches of the PSA because 

they were neither parties to the contract nor third-party 

beneficiaries); Rajamin v. Deutsche Bank Nat'l Trust Co., 757 F.3d 

79, 88-90 (2d Cir. 2014) (holding that the mortgagors lacked 

standing to complain of violation of the securitization trust 

agreement, and concluding that under § 7-2.4 of New York's Estates, 
5 A-0793-15T1

Powers and Trusts Law (EPTL),2 a trustee's unauthorized acts are 

not void, but voidable only at the behest of trust beneficiaries, 

which are the certificate-holders, not the mortgagors); Barnett 

v. Countrywide Bank, FSB, 60 F. Supp. 3d 379, 386 (E.D.N.Y. 2014) 

(finding that the plaintiffs "lack[ed] the requisite standing 

. . . to challenge the securitization process, to 'quiet title,' 

or to enforce the PSA"); Flores v. EMC Mortg. Co., 997 F. Supp.

2d 1088, 1104-05 (E.D. Cal. 2014) (stating that the borrowers 

lacked standing to pursue claims arising from the securitization 

agreement); Jenkins v. JP Morgan Chase Bank, NA, 156 Cal. Rptr.

3d 912, 927 (Ct. App. 2013) (stating that the borrower "lack[ed] 

standing to enforce . . . the investment trust's pooling and 

servicing agreement").

To the extent not addressed, defendants' remaining arguments 

lack sufficient merit to warrant discussion in a written opinion. 

R. 2:11-3(e)(1)(E).

Affirmed.

 

2 EPTL § 7-2.4 states: "If the trust is expressed in the instrument 

creating the estate of the trustee, every sale, conveyance or 

other act of the trustee in contravention of the trust, except as 

authorized by this article and by any other provision of law, is 

void." We note the PSA is governed by New York law.