Gonzalez v. Wilshire Credit Corp.
207 N.J. 557
| N.J. | 2011Background
- Gonzalez and Diaz owned a home as tenants in common; Diaz borrowed $72,000 from Cityscape, secured by a mortgage naming Gonzalez as a borrower.
- Cityscape assigned the note/mortgage to U.S. Bank (as trustee) with Wilshire as servicing agent; Diaz died in 1999; Gonzalez continued payments.
- Foreclosure filed in 2003; 2004 chancery judgment granted foreclosure; sheriff's sale planned but forbearance agreements were negotiated.
- May 2004 forbearance with lump sum and monthly payments extended to 2006; October 2005 second forbearance extended to 2006, written in English to Gonzalez.
- Gonzalez, largely English‑not speaker and with limited education, was represented only on the first agreement; subsequent agreement negotiations occurred directly with her.
- Force-placed insurance charges totaling $3,346.48 were added to Gonzalez’s account after the 2004 judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the CFA apply to post-foreclosure-forbearance extensions of credit? | Gonzalez asserts post-judgment extensions are covered as extension of credit. | Wilshire/U.S. Bank contend post-judgment settlements are outside CFA scope. | Yes; post-foreclosure extensions fall within CFA coverage. |
| Are post-judgment servicing actions 'subsequent performance' under CFA? | Defendants’ collection actions after judgment exploit forbearance; CFA applies. | Post-judgment actions are merely settlements, not CFA-covered conduct. | Yes; servicing actions related to the post-judgment extension fall under CFA as 'subsequent performance'. |
| Did the forbearance agreements constitute extensions of credit identical to the original loan? | Agreements recast the loan terms and kept the loan alive; CFA covers exploitation. | Agreements are settlements/forbearances, not new loans. | They constituted extensions of credit with continued loan characteristics; CFA applicable. |
| Should the CFA be limited to general settlements, not post-judgment workouts? | CFA remedies apply to wrongful post-judgment practices targeting vulnerable borrowers. | Applying CFA would hamper settlements in foreclosure contexts. | CFA applies to post-judgment forbearances; not all settlements are CFA claims, but forbearances can be. |
| Does the record show unconscionable or deceptive practices by Wilshire in the post-judgment context? | Evidence of excessive fees, force-placed insurance, miscalculated arrears, and English-only agreements. | Arises concerns about workouts; record insufficient for summary judgment. | Record supports CFA claim; remand for trial to determine unconscionable practices. |
Key Cases Cited
- Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255 (N.J. 1997) (broad CFA interpretation; extend coverage to loan-related schemes)
- Cox v. Sears Roebuck & Co., 138 N.J. 2 (N.J. 1994) (liberal CFA construction for consumer protection)
- Gennari v. Weichert Co. Realtors, 148 N.J. 582 (N.J. 1997) (broad CFA remedial scope; consumer protections)
- Lee v. Carter-Reed Co., 203 N.J. 496 (N.J. 2010) (establishes CFA private rights and remedies framework)
- Kugler v. Romain, 58 N.J. 522 (N.J. 1971) (unconscionable practices standard and damages framework)
- Perth Amboy Iron Works, Inc. v. American Home Assurance Co., 226 N.J. Super. 200 (App.Div. 1988) (privity and CFA applicability without strict privity requirement)
- Furst v. Einstein Moomjy, Inc., 182 N.J. 1 (N.J. 2004) (counsel fees and deterrence under CFA)