Limiting Foreclosures to the Holder of the Original Note

If someone wants to foreclose on property, should they be required to prove that they are the holder of the mortgage, i.e. the mortgagee? That question has plagued New Jersey for a number of years. It has resulted in many court battles, including 46 orders to show cause since April of 2012 that were filed for the purpose of correcting foreclosures that had been filed with erroneous documentation.

A proposed statute (which has not yet reached the Governor’s desk) would seek to correct some of these problems. Most notably, it would require that a mortgagee who was foreclosing produce documentation proving that it was the holder of the original note. Under that proposed law (S-1346) there would be an enhanced standard for proving that the mortgagee was the owner of the note. Further, mortgage servicers would need to provide contact information, and if they did not, any payments that went to the wrong person or entity would nevertheless be deemed valid.

The bill was voted out of the Senate Community and Urban Affairs Committee on May 19, 2014.

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