On April 29, 2019 Governor Phil Murphy signed into law a legislative package consisting of nine new statutes aimed at addressing issues in connection with mortgages and mortgage foreclosure. A principal purpose of the new laws is to help people with homes in foreclosure by codifying and funding a foreclosure mediation program and to provide housing counsel at no cost to borrowers. The bill package also contains changes that benefit certain creditors. These include extending the priority of liens filed by planned real estate developments such as condominiums and revisions to the summary action foreclosure process with respect to foreclosing vacant and abandoned properties. The new laws are listed below identified by the bill numbers:
- A664 – New Jersey Foreclosure Mediation Act. This statute codifies and makes permanent an existing mediation program established by the New Jersey Judiciary. The program permits homeowners/borrowers of owner-occupied one to three family residential properties to request mediation any time after receiving a notice of intention to foreclose. The homeowners/borrowers will not be required to pay any fees to participate in the mediation, rather, a portion of the filing fees from foreclosure complaints will be dedicated to funding the program.
- A4997 – Mortgage Servicing Licensing Act. This statute requires that no person shall act as a mortgage servicer without first obtaining a license from the Commissioner of Banking and Insurance. There are several entities that are exempted from the licensing requirement such as federally insured banks, out of state banks, federal credit unions, out of state credit unions, a wholly-owned subsidiary of a bank or credit union, and licensed mortgage lenders.
- A4999 – This statute requires that each creditors instituting a foreclosure proceeding on residential property file certain creditor contact information along with its complaint and lis pendens.
- A5001 – This statute revises the statute of limitations for residential mortgage foreclosure by changing one of the three methods for calculating the time period for when the statute of limitations has expired. The statute now provides that an action to foreclose a residential mortgage shall not be commenced following the earliest of (1) six years from the date fixed for the making of the last payment; (2) thirty-six years from the date of recording of the mortgage; or (3) six years from the date of default.
- A5002 – This new law amends the statute that permits certain common interest communities, in addition to condominiums, to file liens for unpaid assessments, late fees, fines, expenses, and reasonable attorney’s fees against an owner’s unit. The new law provides that the unpaid assessment lien’s super priority in an amount not to exceed the condominium assessment for the six month period prior to the recording of the lien may now be cumulatively renewed for up to 60 months. This means that instead of being paid once for only six months’ worth of assessment fees, the new law extends the community association six month assessment fee super priority to reoccur for six months of maintenance fees for each year up to 5 years.
- S3411 – This statute amends the Fair Foreclosure Act by requiring a residential mortgage lender to resend a notice of intention to foreclose the mortgage to the debtor before commencing a foreclosure if 180 days have passed since a prior notice of intention was sent. It further provides that the debtor is entitled to housing counsel through the Foreclosure Mediation Program at no cost to the debtor. It also provides that if a property is being foreclosed or is the subject of a notice of intention to foreclose and the property is owner occupied or occupied by one of the debtor’s family at time of the loan origination and is not properly maintained and it meets the necessary condition for receivership, the residential mortgage lender shall file an order to show cause to appoint a receiver.
- S3413 – This statute amends that portion of the Fair Foreclosure Act that sets out the procedure for a summary action to foreclose a mortgage debt secured by residential property that is vacant and abandoned by providing an alternate procedure to accelerate the sale process for such properties.
- S3416 – This statute amends the New Jersey Residential Mortgage Act to clarify that it applies to mortgage lenders, mortgage brokers, mortgage loan originators that are out of state, provided that they are otherwise required to be licensed.
- S3464 – This statute revises certain procedures for foreclosure sales. The changes include a requirement that the sheriff conduct a sale within 150 days of receipt of any writ of execution; a requirement that plaintiff’s counsel prepare and submit to the sheriff’s office a proposed deed for the sheriff’s office use at the conclusion of the sheriff’s sale; and it limits the number of adjournments of the sheriff’s sale to five adjournments, two at the request of the lender, two at the request of the debtor, and one by mutual consent of the parties.
On balance, the bill package contains things that helps both debtors and creditors. The codification of the mediation program and providing for housing counsel clearly benefits borrowers and will hopefully reduce the amount of foreclosures through work-outs between the parties. While on the other hand, the extension of the lien priority for planned real estate communities’ assessments and providing for ways to accelerate the foreclosure sales of vacant and abandoned properties benefits certain creditors. Overall, the new laws should help to alleviate the foreclosure crisis that continues in New Jersey.
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