Recent Events In Residential Foreclosures In New Jersey: New Protections For Homeowners And The Lifting Of The Moratorium

As of Wednesday, August 17, 2011 the Superior Court of New Jersey lifted the foreclosure moratorium that prevented Bank of America, JP Morgan Chase, City Bank, Wells Fargo and West One from completing and/or commencing foreclosure actions in New Jersey. Earlier this year, the New Jersey Supreme Court placed a moratorium on these companies from doing foreclosures. As a result, the number of foreclosures filed in New Jersey fell from 58,000 in 2010 to 6,000 through July of 2011. Chief Justice Rabner's Order helped save thousands of homeowners from the threat of their homes being improperly foreclosed.

In the past two weeks, the Appellate Division has decided two cases which will bolster proper adherence to the New Jersey Fair Foreclosure Act N.J.S.A. § 2A:50-1 et seq.

In Bank of New York v. Laks, A-4221-09T3 the Appellate Division held that where a Defendant Mortgagor raises a valid defense that the Notice of Intent was deficient under the Fair Foreclosure Act, N.J.S.A. § 2A:50-53 the foreclosure must be dismissed. In that case, Countrywide Home Loans was the Bank of New York's loan servicer. Countrywide Home Loans acting on behalf of the Bank of New York sent the Notice of Intent to Foreclose.

The notice did not inform the homeowner that the Bank of New York was actually the owner of the Note, nor did it provide the homeowner with the Bank of New York's address and phone number. The Appellate Division held, "a Notice of Intention is deficient under N.J.S.A. § 2A:50-56(c)(11) if it does not provide the name and address of the lender as defined in the Fair Mortgage Foreclosure Act. A defendant who objects to inadequacy of the Notice on that basis prior to entry of judgment is entitled to dismissal of the foreclosure complaint without prejudice". As a result of this case, a Notice of Intent to Foreclose must be clear as to who the homeowner should deal with in resolving default disputes.

In the case of Deutsche Bank National Trust Co. vs. Mitchell, A-4925-09T3, the Appellate Division reversed summary judgment granted to the bank, and vacated the Sheriff's sale. Deutsche Bank filed its Complaint one day before actually obtaining an assignment of the Mortgage and actual Note. Within one month of filing the initial Complaint Deutsche Bank filed an Amended Complaint stating that the Note and Mortgage had been assigned to it. The Appellate Division reversed the trial court's order granting summary judgment, and voided the Sheriff's sale which already occurred. The Appellate Division held, "Deutsche Bank did not have standing when it filed the original Complaint because it did not have an assignment nor did it demonstrate that it possessed a Note at that time."

As a result of these two cases, banks must cautiously adhere to the Fair Foreclosure Act. If a homeowner receives a Letter of Intent from its mortgage company, he or she should contact the mortgage company and request information regarding any assignment and confirmation that the foreclosing bank has possession of the original note. If a homeowner has difficulty understanding the terms of the Notice of Intent it is in his or her best interest to hire an attorney with knowledge of the Fair Foreclosure Act to advise the homeowner and possibly defend the homeowner if the bank commences foreclosure.