Court Opinion

ID: 4191442
Source: CourtListenerOpinion
Date Created: 2017-08-01 14:07:33.346165+00
Date Added: 2024-06-11T07:47:05.598655
License: Public Domain

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

                     GMAC Mortgage, LLC v. TamiLynn Willoughby (A-97-15) (076006)

Argued March 21, 2017 -- Decided July 31, 2017

ALBIN, J., writing for the Court.

       In this appeal, the Court determines whether a loan modification agreement, entered into through the
medium of the Judiciary’s Residential Mortgage Foreclosure Mediation Program, was a permanent or provisional
agreement.

          In February 2006, defendant TamiLynn Willoughby obtained a mortgage from plaintiff GMAC Mortgage,
LLC (GMAC), which she defaulted on in June 2006. GMAC filed a foreclosure complaint and obtained a final
judgment, and a Sheriff’s sale of the property was scheduled for September 2009. The chancery court granted
Willoughby’s motion to stay the sale and permitted the parties to participate in New Jersey’s Residential Mortgage
Foreclosure Mediation Program, which was implemented by this Court in response to the economic crisis that
resulted from the collapse of the housing market. The Program was intended to provide a neutral forum where
parties could attempt to reach mutually agreeable terms for restructuring loans in order to avoid foreclosures and
bring finality to disputes.

          In May 2010, Willoughby and GMAC reached an agreement, which was memorialized in a “Foreclosure
Mediation Settlement Memorandum,” a form document provided by the Judiciary. GMAC’s attorney handwrote the
terms of the Agreement into the blank section of the memorandum, including that Willoughby was “being offered a
trial to permanent modification plan contingent on signed modification documents and an initial down payment.”
Per the terms of the Agreement, Willoughby would pay a $6000 down payment by June 7, 2010, followed by
monthly payments of $1678.48. In the event all trial payments were made, GMAC agreed to “make modification
permanent,” but if Willoughby missed any payments, it would continue with the foreclosure. The parties agreed that
the Agreement was “final, binding and enforceable[.]” The mediator then filed a “Foreclosure Mediation
Completion Report,” checking off that the Agreement was a “Provisional Settlement – No Need to Reschedule
Mediation (Case Not Dismissed)” and “Loan Modification.”

          Willoughby paid the down payment and proceeded to make monthly payments of $1678.48 through June 1,
2011. On June 7, 2011, GMAC’s loan servicing agent sent Willoughby a new loan modification agreement with
different terms, including increased monthly payments of $1814.52. Willoughby did not sign the new agreement,
but began making the increased payments. In December 2011 and May 2012, Willoughby received two more
modification agreements with slightly different terms, which she did not accept. On August 20, 2012, GMAC
returned her monthly payment and advised that the loan would be referred to foreclosure because she failed to sign
the May 2012 agreement. Willoughby had made $58,790.69 in payments under the May 2010 Agreement.

          Willoughby moved to enforce the May 2010 Loan Modification Agreement. The chancery court ordered
the parties to return to mediation, where GMAC offered a “Provisional Settlement Agreement” with new terms,
including a $3630 down payment and monthly payments of $1805. Willoughby paid the down payment and
verbally indicated that she accepted GMAC’s terms, but she did not execute the loan modification documents and
GMAC revoked the offer. The chancery court denied Willoughby’s motion to enforce the May 2010 Agreement,
finding that it was a “provisional settlement” as evidenced by Willoughby’s submission to subsequent mediation
sessions. On November 4, 2013, her home was sold to GMAC at a Sheriff’s sale for $100.

        In an unpublished opinion, the Appellate Division affirmed the chancery court’s determination that the May
2010 Agreement was unenforceable. The panel determined that, because Willoughby never signed a permanent
modification agreement, the parties never achieved a meeting of the minds for an enforceable agreement. The Court
granted Willoughby’s petition for certification. 227 N.J. 146 (2016).

HELD: Willoughby satisfied all contingent terms of the May 2010 Agreement, rendering the Agreement permanent
and binding. Despite being compelled to engage in subsequent mediations and negotiations in an effort to save her
home, Willoughby did not voluntarily abandon the May 2010 Agreement. The chancery court should have granted
her pro se motion to enforce the Agreement as a permanent loan modification.

1. At its core, this is a contractual dispute, and, like all such disputes, the language of the agreement typically
governs. In determining the meaning or validity of a contract, the Court’s review is de novo. It looks at the contract
with fresh eyes, giving a faithful and logical reading to the words chosen by the parties to the agreement. The issue
here also implicates the Residential Mortgage Foreclosure Mediation Program, which mandates mediation in all
cases in which homeowners, who occupy their residences, contest foreclosure actions. The Program is intended to
lead to amicably mediated resolutions and not endless rounds of mediation or litigation, goals which can only be met
if the chancery courts enforce mediated settlements. (pp. 13-16)

2. The parties dispute whether the settlement was a provisional or permanent loan modification. Under principles
of contract law, a valid settlement agreement requires an “offer and acceptance,” and terms that are sufficiently
definite so that each party can, with reasonable certainty, ascertain the performance they must render. Although the
agreement here is not entirely free from ambiguity, the terms are sufficiently definite and detailed to indicate, with
reasonable certainty, that the parties intended a permanent loan modification. The Agreement stated that it was “a
trial to permanent modification plan contingent” on signed documents and a down payment. It also stated that, if
Willoughby made all trial payments, it would become permanent. Willoughby signed the documents, made the
down payment, and made all the trial payments. The Agreement has all of the indicia of a permanent and binding
agreement, and Willoughby relied on a reasonable interpretation of it in making payments to save her home. (pp.
16-19)

3. Nothing in the Agreement suggested that, after twelve months, GMAC could unilaterally demand that
Willoughby agree to a new loan modification on different terms or compel her to accept continued mediation
sessions. Although Willoughby began making increased monthly payments, apparently fearing that GMAC would
restart the foreclosure action, she did not sign any of the new loan modification agreements, ultimately looking to
the courts for protection. When the chancery court did not enforce the Agreement and returned the case to
mediation, the case went awry. Although Willoughby was compelled to proceed with mediations and negotiations
in an effort to save her home, the record establishes that she never voluntarily abandoned the May 2010 Agreement,
having not signed the documents necessary to execute a contract superseding it. (pp. 19-20)

4. Through the medium of the Judiciary’s Foreclosure Mediation Program, GMAC and Willoughby entered into a
loan modification agreement, which provided that if Willoughby made all the trial payments, the Agreement would
become permanent. Willoughby carried out her part of the bargain. The chancery court should have granted her pro
se motion to enforce the agreement as a permanent loan modification. Moreover, the Mediation Program
Completion Report should provide a check-off category entitled “Final Settlement (Case Not Dismissed)” in order to
make clear the type of agreement reached here where the final settlement was contingent on the homeowner’s
completion of trial payments and where compliance with those terms would result in dismissal of the foreclosure
action. (pp. 20-22)

5. The Court remands to the chancery court to fashion, in its sound discretion, a suitable and equitable remedy. If
Willoughby’s home was sold to a bona fide, good faith purchaser, she is not entitled to specific performance.
However, in the absence of specific performance, she is entitled to damages, if any, for breach of contract. In
performing that calculation, the chancery court may consider all relevant facts, including the payments made by
Willoughby under the May 2010 Agreement, insurance proceeds GMAC received for damage caused to
Willoughby’s home during Hurricane Sandy, and the time Willoughby spent in her home without making monthly
payments. (pp. 22-23)

          The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the chancery
court for proceedings consistent with this opinion.

     CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON, FERNANDEZ-VINA,
SOLOMON, and TIMPONE join in JUSTICE ALBIN’s opinion.

                                                          2
                                      SUPREME COURT OF NEW JERSEY
                                        A-97 September Term 2015
                                                    076006

GMAC MORTGAGE, LLC,

    Plaintiff-Respondent,

              v.

TAMILYNN WILLOUGHBY,

    Defendant-Appellant.

    Argued March 21, 2017 – Decided July 31, 2017

         On certification to the Superior Court,
         Appellate Division.

         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. Fisher argued 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.

    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

                                1
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 never accepted in writing any of GMAC’s proposals to

                                  2
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 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.

                                 3
                                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.

     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

                                 4
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

Completion Report” on which he checked off two boxes:

“Provisional Settlement -- No Need to Reschedule Mediation (Case

Not Dismissed)” and “Loan Modification.”

    In accordance with the Settlement Memorandum, Willoughby

                                   5
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

                                 6
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.

       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.

       As the deadline for accepting GMAC’s offer neared,

1   Willoughby apparently failed to serve the motion on GMAC.
                                   7
Willoughby provided cashier’s checks for the down payment and

verbally indicated that she accepted GMAC’s terms.     Ultimately,

however, she did not execute the loan modification documents

forwarded by GMAC.    GMAC then revoked the offer.

       Some time before this revocation, GMAC had received

$132,682.66 in insurance proceeds for extensive damage caused to

Willoughby’s home as a result of Hurricane Sandy.2    Willoughby

claimed that, although she made repairs to her home, she never

received any part of the insurance proceeds or credit against

the monies owed on the loan.

                                 B.

       In August 2013, the chancery court granted GMAC’s motion to

have FRT2001-1 Trust (the Trust) substituted as plaintiff in the

foreclosure action because the loan and mortgage had been

transferred to the Trust.    The court, however, denied

Willoughby’s motion to enforce the May 2010 Loan Modification

Agreement, finding that it was a “provisional settlement” as

evidenced by Willoughby’s submission to subsequent mediation

sessions.    Additionally, the court apparently believed that the

May 2010 Agreement was not signed by Willoughby.     Last, the

court rejected Willoughby’s motion to compel release of

insurance proceeds held by GMAC.

2   GMAC maintained insurance on Willoughby’s premises.
                                   8
    Later, the chancery court denied Willoughby’s motion to

reconsider the enforceability of the May 2010 Agreement.       The

court also declined Willoughby’s request for an accounting of

the money owed on the 2007 final judgment of $205,915.30.

Willoughby asserted she was entitled to credit against the loan

for the monies she paid since the May 2010 Agreement and for the

insurance proceeds received by GMAC.

    On November 4, 2013, Willoughby’s home was sold to GMAC at

a Sheriff’s sale for $100.     The Sheriff had set the redemption

figure at $292,691.92.     Willoughby moved to set aside the

Sheriff’s sale on the ground that she did not receive proper

notice of the sale date.     She also claimed that the redemption

figure was inaccurate because it did not account for her

payments on the loan or GMAC’s receipt of the insurance

proceeds.

                                  C.

    In an unpublished opinion, a panel of the Appellate

Division affirmed the chancery court’s determination that the

May 2010 Agreement was unenforceable.     The panel asserted that

the May 2010 Agreement was provisional -- “a temporary agreement

to be replaced by a permanent mortgage modification signed by

the parties.”   According to the panel, because Willoughby never

signed a permanent modification agreement offered by GMAC, the

parties never achieved a meeting of the minds for an enforceable

                                   9
agreement.   The panel also concluded that the chancery court did

not err in declining to vacate the Sheriff’s sale based on

Willoughby’s lack-of-notice argument.   The panel found it

telling that Willoughby did not file a certification “asserting

that she had sufficient funds to bid at the sale whenever it was

held.”

     We granted Willoughby’s petition for certification.     GMAC

Mortg., LLC v. Willoughby, 227 N.J. 146 (2016).   We also granted

the motions of the Seton Hall Law Center for Social Justice, the

Housing and Community Development Network of New Jersey, New

Jersey Citizen Action, and La Casa de Don Pedro, collectively,

to appear as amici curiae.3

                                II.

                                A.

     Willoughby argues that the May 2010 Foreclosure Mediation

Settlement Memorandum is a binding and enforceable contract.

That is so, says Willoughby, because the Memorandum reveals that

the “parties mediated, agreed upon material terms, memorialized

the terms and executed the document.”   She claims that GMAC

reneged on the Agreement after she made $58,790.69 in payments.

3 The Seton Hall Law Center for Social Justice filed an amicus
curiae brief in support of Willoughby’s petition for
certification. The Housing and Community Development Network of
New Jersey, New Jersey Citizen Action, and La Casa de Don Pedro
filed a joint brief authored by the Seton Hall Law Center for
Social Justice.
                                 10
Willoughby indicates that she rejected GMAC’s subsequent

“permanent” mortgage modification offers because the terms were

materially different from those contained in the May 2010

Agreement.    She further contends that the Judiciary’s policy of

encouraging negotiated settlements will be undermined if courts

do not honor and enforce agreements reached through the

mediation process.

    Willoughby additionally maintains that the chancery court

erred in denying her request for an accounting of the balance of

the loan.    She submits that the redemption figure at the

Sheriff’s sale should have been reduced by her payments of

$58,790.69 on the May 2010 Agreement and by the $132,682.66 of

insurance proceeds received by GMAC for damage caused to her

home by Hurricane Sandy.

                                 B.

    Amici curiae, collectively or individually, submit that

GMAC’s failure to honor a valid settlement agreement brokered

through the Judiciary’s Foreclosure Mediation Program -- and the

chancery court’s failure to enforce the agreement -- undermines

the public policy embodied in the Program.    Amici state that,

despite a fully executed mediation agreement, GMAC “repeatedly

and unilaterally altered the material terms of [that]

agreement.”   Amici assert that Willoughby did not abandon the

May 2010 Agreement and was not a truly willing participant in

                                  11
the October 2012 court-ordered mediation.

    Amici criticize the chancery court not only for “condoning

[GMAC’s] repudiation of the settlement,” but also for leaving

“Willoughby no choice but to re-enter mediation and accept

whatever new terms [GMAC] imposed or suffer the loss of her

home.”   Finally, amici recommend that the Judiciary’s

Foreclosure Mediation form include a category indicating “Final

Settlement (Case Not Dismissed)” and that compliance with the

agreement’s terms be monitored with final action to occur by a

specified time.

                                C.

    GMAC counters that Willoughby’s appeal is moot because the

Sheriff’s sale resulted in the transfer of ownership of her home

to a purchaser, and therefore she no longer has any vested right

to the property.   GMAC also argues that it did not enter into a

final, enforceable loan modification in May 2010.   That is

clear, GMAC submits, because “[b]y continuing to negotiate long

after May 2010, both parties demonstrated their intent not to be

bound by [the May 2010] agreement.”   Indeed, GMAC asserts that

the counteroffer made by Willoughby during the October 2012

mediation sessions acted as “a clear rejection of any offer

which preceded it because her intention to be bound by different

terms was plainly expressed.”   In that connection, GMAC argues

that by making the down payment on the October 2012 agreement,

                                 12
Willoughby created a novation, nullifying any previous agreement

reached by the parties.

    Last, GMAC stresses that an accounting of the redemption

amount set by the Sheriff was not warranted.   GMAC insists that:

(1) the redemption amount reflected “the accrual of six years of

post-judgment interest” as well as various costs related to the

listing of the property for sale; (2) GMAC properly did not

credit the insurance proceeds against the foreclosure judgment

because the proceeds compensated for “loss of value” to GMAC’s

“collateral”; and (3) Willoughby “clearly knew both the amount

required to redeem and the amounts she was claiming as a

credit.”

                                III.

    The primary issue in this case is whether GMAC and

Willoughby entered into a permanent or provisional loan

modification agreement in May 2010.    At its core, we are dealing

with a contractual dispute, and, like all such disputes, the

language of the agreement typically governs.   The issue here,

however, also implicates our Residential Mortgage Foreclosure

Mediation Program -- a Program intended to bring homeowners and

lenders to amicably mediated resolutions, if possible, and not

to foster endless rounds of mediation or litigation.   The

Program’s salutary goals can only be met if our chancery courts

enforce mediated settlements.

                                 13
    We begin by noting the standard of review.       In determining

the meaning or validity of a contract, our review is de novo.

Morgan v. Sanford Brown Inst., 225 N.J. 289, 302 (2016) (citing

Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 445-46

(2014), cert. denied, ___ U.S. ___, 135 S. Ct. 2804, 192 L. Ed.
2d 847 (2015)).   We accord no special deference to the trial

court’s or Appellate Division’s interpretative analysis and

“look at the contract with fresh eyes.”       See Kieffer v. Best

Buy, 205 N.J. 213, 223 (2011).    Our only charge is to give a

faithful and logical reading to the words chosen by the parties

to the agreement.

                                  A.

    The public policy of this State favors the settlement of

disputes through mediation.    Willingboro Mall, Ltd. v. 240/242

Franklin Ave., L.L.C., 215 N.J. 242, 253-54 (2013).      Parties who

are risk averse settle disputes because they are spared not only

the potential of an unfavorable outcome, but also the certainty

of protracted litigation with oftentimes skyrocketing costs.

Ibid.   Our Court Rules encourage mediation, which has become an

integral part of our civil justice system through Complementary

Dispute Resolution Programs.     R. 1:40-1.   Under Rule 1:40-4(a),

Superior Court judges are empowered to order “parties to attend

a mediation session at any time following the filing of a

complaint” in matters involving the family part, R. 1:40-5;

                                  14
civil, probate, and general equity, R. 1:40-6; and even minor

disputes in municipal court, R. 1:40-8.

    In response to the unprecedented foreclosure crisis in this

State caused by the crash of the housing market in 2007-2008,

the New Jersey Judiciary created the Residential Mortgage

Foreclosure Mediation Program.   In the wake of the crash,

thousands of families who could no longer meet their mortgage

payments faced foreclosure actions and the loss of their homes.

See Hon. Glenn A. Grant, J.A.D., Residential Mortgage

Foreclosure Mediation Program – Rule Relaxation Order 1 (Nov.

17, 2008),

http://www.judiciary.state.nj.us/notices/2008/n081120a.pdf

(“[T]he number of residential mortgage foreclosure actions

recently filed in the Superior Court of New Jersey demonstrates

that New Jersey is suffering a mortgage foreclosure crisis.”).

    The Residential Foreclosure Mediation Program mandates

mediation in all cases in which homeowners, who occupy their

residences, contest foreclosure actions.   Press Release, New

Jersey Courts, Judiciary Announces Foreclosure Mediation Program

to Assist Homeowners at Risk of Losing Their Homes (Oct. 16,

2008), http://www.njcourts.gov/courts/assets/scco/pr081016c.pdf.

Through the auspices of the Program, homeowners and their

lenders “meet in a neutral forum to talk frankly and earnestly

about how they might restructure a mortgage that will let

                                 15
homeowners remain in their homes.”    New Jersey Courts Annual

Report 2009-2010, at 2,

http://www.judiciary.state.nj.us/public/assets/annualreports/ann

ual%20report%202010.pdf.

    After GMAC secured a foreclosure judgment against

Willoughby for defaulting on her loan and scheduled a Sheriff’s

sale of her home, the chancery court ushered the parties into

the Foreclosure Mediation Program in response to a motion filed

by Willoughby.

                                 B.

    Mediation sessions in April and May 2010 led to a

settlement agreement between GMAC and Willoughby that was

reduced to writing on a judiciary form document entitled

“Foreclosure Mediation Settlement Memorandum.”   The parties do

not dispute whether they entered a settlement; they dispute

whether it was a provisional or permanent loan modification

agreement.

    Contract law governs the interpretation of a settlement

agreement.   Thompson v. City of Atlantic City, 190 N.J. 359, 379

(2007).   Like any contract, a valid settlement agreement

requires an “offer and acceptance” by the parties, and the terms

of the agreement must “be sufficiently definite [so] ‘that the

performance to be rendered by each party can be ascertained with

reasonable certainty.’”    Weichert Co. Realtors v. Ryan, 128 N.J.
16
427, 435 (1992) (quoting West Caldwell v. Caldwell, 26 N.J. 9,

24-25 (1958)).

    Although the Agreement in this case is not free of all

ambiguity, the terms are nevertheless sufficiently definite and

detailed to indicate, with reasonable certainty, that the

parties intended a permanent loan modification.    Significantly,

GMAC’s attorney handwrote the key provisions into blank spaces

on the Settlement Memorandum.    See In re Estate of Miller, 90
N.J. 210, 221 (1982) (“Where an ambiguity appears in a written

agreement, the writing is to be strictly construed against the

draftsman.”).    GMAC cannot complain about the language it penned

in the Settlement Memorandum.    See Kieffer, supra, 205 N.J. at

224 (“[W]here one party chooses the term of a contract, he is

likely to provide more carefully for the protection of his own

interests than for those of the other party.” (alteration in

original) (quoting Pacifico v. Pacifico, 190 N.J. 258, 268

(2007))).   Our task is to enforce the contract according to its

terms, giving those terms “their plain and ordinary meaning.”

Id. at 223 (quoting M.J. Paquet, Inc. v. N.J. Dep’t of Transp.,

171 N.J. 378, 396 (2002)).    We cannot “rewrite a contract for

the parties better than or different from the one they wrote for

themselves.”    Ibid.

    The Memorandum denominated the Agreement as “a trial to

permanent modification plan contingent on signed modification

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documents and an initial down payment.”    (emphasis added).

Willoughby signed the documents and paid the $6000 down payment.

The Memorandum, moreover, set forth the precise terms of the

Agreement:     (1) the estimated principal balance ($215,365.30);

(2) the length of the loan (480 months); (3) the amortization

rate (five percent); (4) the estimated monthly payments

($1678.48); and (5) the balloon payment due on maturity of the

loan ($71,736.39).     The Agreement stated that if Willoughby made

“all trial payments,” GMAC would “make modification permanent.”

(emphasis added).    Willoughby made all the trial payments.

Last, Willoughby and GMAC’s attorney both signed the “mediation

settlement memorandum,” which the parties agreed was “final,

binding and enforceable upon all parties.”    Willoughby also

signed the “Forbearance Agreement” forwarded by GMAC’s servicing

agent.

    The Settlement Memorandum has all of the indicia of a

permanent and binding agreement.    Willoughby relied on a

reasonable interpretation of the Agreement in making payments to

save her home.    The mediated settlement between GMAC and

Willoughby conformed to the dictates of Rule 1:40-4(i) and

Willingboro.    Rule 1:40-4(i) requires that a mediation agreement

that “results in the parties’ total or partial agreement . . .

be reduced to writing, signed by each party, and furnished to

each party.”    Willingboro, supra, further elucidated that “a

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‘signed agreement’ would include ‘a handwritten agreement that

the parties have signed.’” 215 N.J. at 257 (quoting Uniform

Mediation Act § 6(a)(1) cmt. 2 (Nat’l Conference of Comm’rs on

Unif. State Laws, 2003)).

    Nothing in this Agreement suggested that, after a period of

twelve months, GMAC could unilaterally demand that Willoughby

agree to a new loan modification on different terms than those

that appeared in the Settlement Memorandum.   GMAC claims that it

reserved to itself the right to reduce the length of the loan,

to require higher monthly payments, and to set an increased

amortization rate -- even after Willoughby had paid $58,790.69

under the May 2010 Agreement.   The language of the Settlement

Memorandum, however, does not give GMAC carte blanche to compel

Willoughby to accept new proposed loan modification agreements

and continued mediation sessions.

    Beginning in June 2011, a different servicing agent for

GMAC forwarded to Willoughby three different proposed loan

modification agreements -- all three at variance with the terms

of the May 2010 Agreement.   The new proposals had shorter

maturity dates and higher monthly payments, and two had

increased amortization rates.   Apparently fearing that GMAC

would restart the foreclosure action, Willoughby began making

increased monthly payments of $1814.78 instead of the $1678.48

payment required by the May 2010 Agreement.   Willoughby,

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however, did not sign any of the new loan modification

agreements.   In response, GMAC refused to accept any further

payments and referred her case for foreclosure.

    Willoughby then looked to our courts for protection.     She

filed a pro se motion to enforce the May 2010 Agreement.

Instead of conducting a hearing on the motion and enforcing that

Agreement, the chancery court returned the case to mediation.

That is the point at which this case went awry.    Willoughby was

compelled to proceed with mediations and negotiations with GMAC

in a effort to save her home.

    In Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 582

(2011), we recognized that, in the same unprecedented

foreclosure crisis that overwhelmed Willoughby, citizens in

last-ditch efforts to save their homes entered into unfavorable

agreements for the extension of credit.   We also acknowledged

the plight of unsophisticated homeowners “bowed down by a

foreclosure judgment and desperate to keep their homes under

seemingly any circumstances.”   Id. at 584.   Gonzalez, unlike the

present case, dealt with predatory lending practices.    But, in

her own way, Willoughby struggled, perhaps not deftly, to save

her home by continuing with mediations and negotiations because

of her failure to secure the relief to which she was entitled by

the chancery court.

    We do not find that a novation of the May 2010 Agreement

                                 20
ever occurred.   A novation is when the parties agree to

substitute a new validly executed contract for a previous

contract.    Wells Reit II--80 Park Plaza, LLC v. Director, Div.

of Taxation, 414 N.J. Super. 453, 466 (App. Div. 2010).

Critically, a novation requires that the parties intend to

“extinguish the old contract.”    Ibid.

    Here, the record establishes that Willoughby never

voluntarily abandoned the May 2010 Agreement.    Having failed to

enforce the valid May 2010 Agreement in the chancery court,

Willoughby desperately tried to keep her home from foreclosure -

- she made a counteroffer to one of GMAC’s proposals, which GMAC

rejected, and then made a down payment on the GMAC proposal.

But, in the end, Willoughby did not sign the documents necessary

to execute a contract superseding the May 2010 Agreement.

Willingboro, supra, 215 N.J. at 256-57 (noting that mediated

settlement requires “signed agreement”).    Indeed, before the

Sheriff’s sale, Willoughby renewed her efforts to enforce that

Agreement with the guiding hand of counsel.

                                 C.

    In this case, through the medium of the Judiciary’s

Foreclosure Mediation Program, GMAC and Willoughby entered into

a loan modification agreement, which provided that if Willoughby

made all the trial payments, the agreement would become

permanent.   Willoughby carried out her part of the bargain.     The

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chancery court should have granted Willoughby’s pro se motion to

enforce the agreement.   As we have said before, homeowners

facing foreclosure -- many of whom do not have the benefit of

counsel -- are particularly vulnerable when mired in financial

difficulties.   Our chancery courts are courts of equity and

therefore must take pains to ensure that such homeowners receive

the protection of the law from lending institutions and

servicing agents who may seek unfair advantage.    We do not

suggest that GMAC and its servicing agents acted in bad faith.

Both the chancery court and Appellate Division erred, however,

in not enforcing the agreement as a permanent loan modification.

                                D.

    We agree with amicus curiae Seton Hall Law Center for

Social Justice that the Mediation Program Completion Report

should provide a check-off category entitled “Final Settlement

(Case Not Dismissed).”   Such language, or similarly styled

language, would make clear the type of agreement reached in this

case where the final settlement was contingent on the homeowner

making trial payments over a period of time.   If the homeowner

complies with the contingent terms of the agreement, as occurred

here, the foreclosure action would be dismissed.

                                IV.

    We remand to the chancery court to fashion a suitable and

equitable remedy.   Willoughby will not be entitled to specific

                                 22
performance if her home has been sold to a bona fide, good faith

purchaser.   See Dean v. Anderson, 34 N.J. Eq. 496, 508 (Ch.

1881); cf. Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588,

611 (App. Div. 2005).     One wrong cannot be remedied by

committing another one.    In the absence of specific performance,

however, Willoughby is entitled to damages, if any, for breach

of contract.   In performing that calculation, the chancery court

may consider all relevant facts, including the $58,790.69 in

payments made by Willoughby under the May 2010 Agreement, the

$132,682.66 in insurance proceeds GMAC received for damage

caused to Willoughby’s home, and the time Willoughby spent in

her home without making any monthly payments.     We leave to the

sound discretion of the chancery court the determination whether

Willoughby suffered financial damages and, if so, the amount.

                                  V.

    For the reasons expressed, we reverse the judgment of the

Appellate Division and remand to the chancery court for

proceedings consistent with this opinion.

     CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE ALBIN’s
opinion.

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