Monday, December 12, 2011

New Jersey Foreclosures Slow To A Crawl While Lenders Wait For Ruling In Court Case Now Being Considered By State Supremes

In Newark, New Jersey, the Star Ledger reports:

  • In the nearly five months since the state Supreme Court effectively allowed six of the country’s biggest banks to begin filing foreclosures again, attorneys and court officials have been expecting a flood of new filings to hit the courts. Except it hasn’t happened.

  • Foreclosure filings are down 83 percent as of October this year, compared with the same time period last year, according to court figures, and there are at least 100,000 cases either pending in the system or waiting to be submitted.

  • Attorneys involved in the work in New Jersey point to at least one reason for the significant delay: a court case that has reached the state Supreme Court, with oral arguments on Wednesday.

  • The case, US Bank National Association v. Guillaume, is important because the court is asked to determine who must be named as a point of contact on the document that initiates the foreclosure process, known as the Notice of Intent to Foreclose. The state Fair Foreclosure Act requires identifying the lender and its contact information.

  • But because the original lender has often bundled and sold the loans to investors, the current lender lists the servicer, a third party that collects monthly payments and dispurses it to the mortgage holder. In this situation, the lender’s attorney argued it was unnecessary to name his client on the notice because the servicer had been assigned the mortgage rights.

  • Attorneys for the homeowners, Maryse and Emilio Guillaume, said listing the servicer is not sufficient, should the homeowner want to work out a solution and stay in the house, and any foreclosure judgment without the lender having been named should be voided.


  • The [New Jersey] appellate and trial courts have ruled in favor of the trust, deciding it was appropriate to list the servicer. But in August, a separate appellate panel determined in a ruling known as "the Laks decision" that the statute requires the financial institution to name the actual mortgage holder, and if it does not, the foreclosure complaint should be dismissed.

  • With its Guillaume decision, the Supreme Court is in effect resolving the conflict between the two appellate rulings. The Guillaume case was expedited through the courts, but there is no deadline for a decision.

  • And in the meantime, foreclosure filings to the court have all but ground to a halt. There are an estimated 60,000 cases pending in the courts, according to bank figures, and more in the pipeline.

For more, see Future of foreclosures in N.J. hinges on state Supreme Court decision.

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