In 2010, during the peak of America’s high mortgage default rate, New Jersey’s Judiciary commenced a proceeding aimed at a variety of improper foreclosure practices. In the Matter of Residential Mortgage Foreclosure Pleadings and Document Irregularities, MER-F-59553-10. On December 20, 2010, the Supreme Court entered an order for these banks to show cause why their foreclosures, writs of execution and possession and sheriff’s sales due to mortgage default should not be prohibited in light of alleged improper practices. In March, the state’s six largest banks (Bank of America, JPMorgan Chase, CitiBank, Ally Financial, One West Bank and Wells Fargo), which account for the majority of New Jersey’s current foreclosures , agreed to a stipulation that allows residential mortgage foreclosures to continue if there is a default on mortgage.
By virtue of the stipulation, mortgage services had a deadline of April 1, 2011 to convince Retired Appellate Division Judge Richard Williams that all improper practices had been remedied. Also, evidence had surfaced that each of the six banks had engaged in what has become known as "robo-signing". "Robo-signing" is the term used to describe a bank’s assembly-line foreclosure process by which a foreclosure supporting affidavit is signed by an individual without confirming that the contents of the affidavit are true and correct.
By virtue of the stipulation, each bank must show that they now have procedures in place to eliminate “robo-signing” and that those procedures will be followed. Additionally, the banks must address the following: their authority to act when they are not the actual mortgagee; their record-keeping practices; their procedures for assuring that documents filed with the court are correct; and their procedures used to facilitate communication with their own lawyers. Under the terms of the agreement, once foreclosures restart, the Judiciary or its appointed representative will have the power to randomly test foreclosures to monitor compliance.
The speedy and proper foreclosure of a unit and/or home is often crucial to a community’s financial status. The delay in “turning over” delinquent units and/or homes with bank foreclosures, caused by both the backlogged foreclosure unit and the Judiciary order to show cause, continues to burden community associations. New Jersey law provides that upon the conveyance of a unit and/or home via sheriff’s sale, the purchaser of that unit and/or home at the sheriff’s sale must begin the payment of their regular monthly assessment fees, condo fees, maintenance fees, and HOA fees, amongst others, for the common elements in the community going forward.