Foreclosure Defense Law Blog

New Jersey Legislature Contemplates Setting Statute of Limitations for Residential Foreclosure Actions

Proposed Legislation: Currently pending in the New Jersey Legislature is bill A2263.  This bill seeks to codify previous caselaw and to amend the Fair Foreclusure Act to delineate the appropriate statute of limitations for lenders to institute residential mortgage foreclosures.  It provides that an action must be commenced upon the earlier of: (a) six years from the date that the last payment under the mortgage was supposed to have been made; or (b) twenty years from the date that the debtor defaulted on the mortgage obligations, if he has not properly cured that default. 

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New York Court Refuses Foreclosure Action Based on Improper Assignment

New York Caselaw:  In an unpublished opinion, the Kings County Supreme Court recently held that Wells Fargo could not proceed to foreclose on certain real property, based on the fact that it lacked standing to bring such an action.  The Court noted that "a 'foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity.'"  In the instant case, Wells Fargo was seeking to foreclose on property based on a mortgage originally entered into by Argent Mortgage Company, LLC.  Wells Fargo apparently asserted that Argent had assigned that mortgage to Ameriquest Mortgage Company who then had assigned it to Wells Fargo.  The Court determined that these assignments were invalid, and that Wells Fargo therefore had no standing to pursue the foreclosure.  This determination was based on a few factors.  First, was that the assignments had not been recorded for more than fourteen months, and once recorded, they were recorded at the same time.  The Court also noted that the assignments were defective because they failed to include the required corporate resolution.   In addition, the Court noted that both assignments listed the same individual as the "agent," but both lacked a power of attorney showing that the individual had been granted the requisite authority to act on the companies'  behalfs. 

This case emphasizes the importance of adhering to corporate governance procedures and ensuring that all transactions are properly "papered" in accordance with state law.  It also demonstrates a valuable defense to a foreclosure action:  we strongly recommend that all of the recorded documents relating to the subject mortgage be scrupulously reviewed to ensure that they properly meet the law's requirements.

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New Jersey Appellate Court Holds that Foreclosure May Proceed Based on Defendant's Failure to Timely Respond

New Jersey Caselaw:  The New Jersey Appellate Division recently upheld the foreclosure of real property located in Phillipsburg, New Jersey.  The foreclosure was brought based on the owner's failure to pay property taxes.  The total unpaid taxes amounted to $3,281.04.  The City had placed a lien on the property, and when they remained unpaid, the City then held a tax sale to recoup the amount owed.  Thereafter, the tax sale certificate was sold, and a future purchaser of that certificate proceeded to commence foreclosure action to collect on the certificate.  Notably, the foreclosure action was commenced almost ten years after the accrual of the taxes for which the certificate was based. An order was entered, and the defendant then arrived to try to pay the balance at the last hour.  However, when he did so, he tried to pay with checks that were stale and a certified check that was in an improper amount. 

Over a year later the property was foreclosed upon and title was transferred pursuant to a default judgment.  The defendant tried to vacate that judgment even though (a) certain time periods to reconsider part of the matter had passed and (b) there did not appear to be a good basis to reconsider the balance of the claim. Therefore, the Court refused to vacate the judgment, and the foreclosure stood.  This decision appears to be based primarily on the fact that the defendant was well aware of the action and had proper opportunity to address it prior to the judgment being entered, and prior to the property being sold to a new bona fide purchaser.  The lesson here is clear:  you cannot delay or otherwise ignore a foreclosure proceeding.  If you do so, you can waive your rights.  Once that has occurred, you may not be able to go back and "fix it."  It is critical that you respond quickly and properly to a threatened foreclosure action, and to properly answer any court documents.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com