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New Jersey Courts Take Steps to Ensure Integrity of Residential Mortgage Foreclosure Process
By David Darland

On December 20, 2010, the New Jersey Judiciary issued an Administrative Order announcing a number of steps that were being taken in an effort to combat foreclosure irregularities and restore integrity to the process. The announcement followed a detailed report prepared by Legal Services of New Jersey for the New Jersey Supreme Court, alleging industry-wide deficiencies in foreclosure filings. The report raised serious questions about the accuracy of documents submitted to courts by lenders and service-providers in support of foreclosure requests. Additionally, a congressional oversight panel had also released an in-depth report concluding that “[t]he foreclosure documentation irregularities unquestionably show a system riddled with errors.”

Among other findings, these reports revealed instances of pervasive “robo-signing” in foreclosure and bankruptcy filings. “Robo-signers” are mortgage lender/servicer employees who sign hundreds -- in some cases thousands -- of affidavits submitted in support of foreclosure claims without any personal knowledge of the information contained in the affidavits. In some instances, there were also improper notarizing practices or document backdating.

In recent years, New Jersey’s courts have witnessed an enormous expansion in foreclosure filings. From 2006 to 2010, the number of foreclosure filings has tripled from 21,752 to 65,222. Moreover, most of these proceedings were uncontested. A recent review of foreclosure proceedings indicated that only 6 percent of foreclosure proceedings were contested and 94 percent proceeded in the absence of any meaningful adversarial proceeding. The significance of this disparity was even more striking because many of the contested proceedings were defended pro se.

In response to these reports and a request by the New Jersey Chief Justice, the Honorable Glenn A. Grant, Acting Administrative Director of the Courts, issued the December 20 Administrative Order addressing three significant steps that were being taken by the Judiciary in an effort to ensure the integrity of the residential mortgage foreclosure process.

First, the Order announced that, in a separate proceeding, Judge Mary C. Jacobson, Presiding Judge of the General Equity Division, Mercer County, would be issuing an order directing six lenders and service providers, who have been implicated in irregularities in connection with their handling of foreclosure matters, to show cause why the processing of uncontested residential foreclosure matters they have filed should not be suspended. In her order to show cause, Judge Jacobson indicated her intention to appoint a Special Master to inquire into the document preparation practices of those entities and to review any remediation plans they may be directed to submit.

Second, the Administrative Order required 24 other lenders and servicers who filed more than 200 residential foreclosure actions in 2010 to demonstrate within 45 days that there are no irregularities in their handling of foreclosure proceedings. To that end, they were to detail the processes they follow and, in particular, outline the manner in which documents are handled, reviewed, and verified, in Order to demonstrate the reliability and accuracy of documents and other submissions to the court in foreclosure proceedings. As appropriate, they were to describe the practices of their subsidiaries and all related servicers and outsource firms acting on their behalf. In addition, they should confirm their full compliance with the Rules of Court and applicable statutes. The lenders and servicers were instructed to make these submissions to retired Superior Court Judge Walter R. Barisonek, who was recalled to temporary judicial service and assigned as a Special Master.

The Order noted that foreclosure actions involving the 24 institutions will continue to be processed by the Superior Court Clerk’s Office and the Office of Foreclosure during the 45-day period during which materials are to be submitted. If the Special Master finds that the submitted documents sufficient to establish that an institution has not engaged in irregular practices, then foreclosure actions involving those institutions will continue to be processed by the Superior Court Clerk’s Office and the Office of Foreclosure in the normal course.

However, if the Special Master finds the documents provided to be insufficient or finds they raise concerns that an institution has engaged in irregular practices, the Special Master may refer the matter to Judge Jacobson for appropriate action, including conducting a hearing and, depending on her findings, ordering the suspension of processing residential mortgage foreclosure actions involving a particular institution.

To date, it appears that neither Judge Jacobson nor Special Master Barisonek has issued a finding in their respective proceedings.

As a third measure to ensure the integrity of residential mortgage foreclosure process, the Order adopted, on an emergent basis, amendments to Rules of the Court 1:5-6, 4:64-1 and 4:64-2. These amendments became effective immediately on December 20, 2010.

The rule amendments require plaintiff’s counsel in all residential mortgage foreclosure actions to file with the court: (1) an affidavit or certification executed by the attorney that the attorney has communicated with an employee or employees of the plaintiff who (a) personally reviewed documents for accuracy and (b) confirmed the accuracy of all court filings in the case to date; (2) the name(s), title(s), and responsibilities of the employee(s) of the plaintiff who provided this information to the attorney; and (3) an affidavit or certification executed by the attorney that all the filings in the case comport with all requirements of Rule 1:4-8(a).

The Order required plaintiff’s counsel to file the above documents: (1) immediately upon the commencement of any new residential mortgage foreclosure action, as to the accuracy of the information contained in the complaint; (2) within 60 days in any residential mortgage foreclosure action currently pending and awaiting judgment, as to the accuracy of the complaint and of any proofs submitted; (3) within 45 days in any residential mortgage foreclosure action in which judgment was entered but no sale of the property has yet occurred; and (4) with the motion to enter judgment in all future foreclosure actions in which judgment is sought, as to the accuracy of any submitted proofs.

Subsequent to the above Order, on January 31, 2011, Director Grant announced that the Supreme Court of New Jersey was seeking public comment on its rule amendments. The emergent nature of those amendments did not provide the opportunity for public comment prior to their adoption, and the Court is now seeking public comment on those amendments consistent with the ordinary rule adoption process.

During the comment period, certifications of diligent inquiry would still be required for pending actions to proceed to judgment or sale. Additionally, the requirement to include a certification of diligent inquiry with new residential mortgage foreclosure complaints and with new motions to enter judgment were not affected.

However, the court did suspend application of the amended rules with regard to uncontested residential mortgage foreclosure cases pending judgment as of December 20 and uncontested residential mortgage foreclosure cases in which judgment was entered but no sale of the property had occurred by December 20. Application of the amended rule to these proceedings was suspended pending the new comment period and the Court’s consideration of any comments received.

Written comments concerning the proposed Rule amendments should be submitted by February 28, 2011, and directed to: Hon. Glenn A. Grant, Acting Administrative Director of the Courts, Comments on Mortgage Foreclosure Rule Amendments, Hughes Justice Complex, P.O. Box 037, Trenton, New Jersey 08625-0037. Comments also may be submitted by e-mail to

David Darland is a partner in the Washington, D.C., office of Hudson Cook, LLP. David can be reached at 202-327-9707 or by email at

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