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New Jersey’s Judiciary May Allow Banks to Foreclose Despite 2010 Order Halting Foreclosures (Part 1)

Short Sales, Information, News, Data, Defense, Lawyer, Pre-Foreclosure Christine’s note: This is the first in a three part series about my work on a New Jersey foreclosure defense matter.

Last week I worked with New Jersey attorney Dennis Scardilli on a foreclosure defense matter there. I learned a lot in two days, so I’m going to share what I’ve learned in a series of blog posts about the 2010 New Jersey Order to Show Cause, which made headlines because it halted foreclosure sales.

So, let’s back up a bit. You may remember that in 2010, the judiciary in New Jersey issued this Order to Show Cause, titled:

“Order Directing the Named Foreclosure Plaintiffs to Show Cause Why the Court Should Not Suspend the Ministerial Duties of the Office of Foreclosure and the Superior Court Clerk’s office Regarding the Processing of Certain Uncontested Residential Mortgage Foreclosure Actions, Stay Sheriffs’ Sales in Those Foreclosure Actions, Appoint a Special Master Pursuant to Rule 4:41-1 to Investigate Questionable Foreclosure Practices, and Appointing an Attorney to Appear in Support of the Proposed Relief.”

This may be the longest Motion title I’ve ever seen. I’m not making this up, either.

In that motion, the judiciary, sua sponte (means the Court did it on its own Motion) Order to Show Cause by the Court stated,

“This Court, in consultation with the staff of the Office of Foreclosure, has become increasingly concerned about the accuracy and reliability of documents submitted to the Office of Foreclosure. The court has therefore determined that immediate action in the form of an Order to Show Cause is necessary to protect the integrity of the foreclosure process in New Jersey and to assure the public that the process going forward will be reliable.”

A lot of bloggers were hailing this as a Christmas miracle in that it effectively halted foreclosures for a lot of homeowners during the 2010 Christmas season.

Fast forward to 2012: It’s been almost two years, and the banks have asked permission to foreclose on uncontested foreclosure cases from 2010. They filed this Order to Show Cause asking that they be allowed to essentially pick up where they left off in uncontested foreclosure cases.

In case you’re thinking, “Well, they’re uncontested, so what’s the big deal?” Well, this is frightening because in New Jersey, ‘uncontested’ doesn’t mean what you think it means.

Foreclosures are uncontested when:

(c) Definition of Uncontested Action. An action to foreclose a mortgage or to foreclose a condominium lien for unpaid assessments pursuant to N.J.S.A. 46:8B-21 shall be deemed uncontested, if, as to all Defendants,

(1) A default has been entered as a result of failure to plead or otherwise defend; or

(2) none of the pleadings responsive to the complaint either contest the validity or priority of the mortgage or lien being foreclosed or create an issue with respect to Plaintiff’s right to foreclose it;

(3) All the contested pleadings have been stricken or otherwise rendered noncontesting.

An allegation in an answer that party is without knowledge or information sufficient to form a belief as to the truth of an allegation in the Complaint shall not have the effect of a denial but rather of leaving the Plaintiff to its proofs, and such an allegation in an answer shall be deemed noncontesting to the allegation of the complaint to which it is responsive.

R. 4:64-1(c)

Why is this a problem? Stay tuned for Part 2!

What’s Hiding in Your Loan and Foreclosure Documents? Find out in Loan Audit School™!

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Loan Audit School™ Lesson 1: How to Prepare for Your Audit

Don’t forget, there’s a coupon code valid until 10/16/12 on all products at DIY Mortgage Review!

Go here to get the handout for this lesson.

Please note that I misspoke at 8:09. I meant to say that the Borrower should receive the Good Faith Estimate and TILA disclosure within three days of applying for a loan, instead of at closing.

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