Sunday, January 13, 2013

Recent Court Ruling May Signal Go-Ahead For Thousands Of New Jersey Foreclosures

In Paterson, New Jersey, The Record reports:

  • Thousands of New Jersey foreclosures that were held up by faulty paperwork are expected to move forward this year, after a recent decision in Superior Court in Paterson.

    The case involved Wells Fargo, which has been cleared to resume foreclosures on about 3,300 New Jersey homeowners under an order signed by Superior Court Judge Margaret M. McVeigh in Paterson.

    The impact may be felt beyond those 3,300 homeowners because the Wells Fargo case "provided an example for other big lenders to follow procedurally," according to Kristi Jasberg Robinson, a lawyer with the state judiciary. Foreclosure activity could begin this year on 15,000 or more homeowners affected by the same faulty paperwork that was at issue in the Wells Fargo case, she said.
  • The Wells Fargo case hinges on the "notice of intent to foreclose" that mortgage companies send to delinquent borrowers. Many of these notices named the mortgage servicing company — the company that collects the monthly payments — not the actual owner of the mortgage. Since many mortgages were packaged and sold as investments, the servicing company often is not the owner of the loan.

    In a decision last February, the state Supreme Court ruled that the state's Fair Foreclosure Act requires that the notice to delinquent homeowners must name the owner of the loan, not the mortgage servicing company. The ruling came in a case involving Maryse and Emilio Guillaume of East Orange, who defaulted on a $210,000 mortgage but challenged their foreclosure because the paperwork named the mortgage servicing company, a subsidiary of Wells Fargo.

    After the Guillaume case was decided, state Chief Justice Stuart Rabner set guidelines under which mortgage companies could send out corrected notices, so they could move forward with foreclosures. McVeigh and a Trenton judge were appointed to hear arguments as to why the mortgage companies should not be allowed to re-send the corrected paperwork and foreclose in these cases. McVeigh reviewed those arguments with respect to Wells Fargo, and rejected them, writing in her order, "Wells Fargo may resume any foreclosure where the foreclosure defendant has not reinstated the loan."

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