New legislation and court rule changes have created an expedited procedure for foreclosure of abandoned properties.
The Supreme Court ordered relaxations to Rule 4:64-1, providing for summary foreclosure proceedings, on May 23.
In order to qualify, a property must be proven by clear and convincing evidence to be “vacant and abandoned,” as defined by N.J.S.A. 2A:50-73, signed into law on Dec. 3.
Lenders may file an action seeking summary foreclosure proceedings or file an application to proceed in a summary manner in an existing foreclosure case. Applications for summary proceedings must be filed with the Administrative Office of the Courts’ Office of Foreclosure, which may recommend entry of final judgment.
The lender must plead facts demonstrating vacancy and include the affidavit or certification that’s normally required to show the amount due for establishing the judgment amount — also to be served to the defendant.
In order to obtain judgment, the lender must attempt to provide notice of summary proceedings and demonstrate two unsuccessful attempts to serve the mortgagor — 72 hours apart and at different times of the day.
For properties found to be abandoned, notices of motion for entry of judgment and of tenants’ rights are no longer required.
The court may enter final judgment on the return date of the order to show cause or order to proceed summarily as long as there are sufficient proofs.
The court may not enter final judgment if the residence is found to be occupied or if a defendant has filed an answer, entered an appearance or otherwise challenged the foreclosure in writing.
Courts must find that the property is unoccupied and that two or more conditions exist:
•Overgrown or neglected vegetation.
•Accumulation of mail, newspapers, flyers or circulars.
•Accumulation of hazardous, noxious of unhealthy substances.
•Junk, litter, trash or debris on the property.
•Absence of blinds or other window treatments.
•Absence of furnishings or other personal items.
•Third-party statements that the property is abandoned.
•Boarded or broken windows.
•Broken, unhinged or unlocked doors.
•Risks to public health or welfare, including vandalism or criminal conduct.
•Municipal code violations.
•Security or winterization measures indicating vacancy.
•A written statement by the mortgagor indicating intent to abandon the property.
•Any other “reasonable indicia of abandonment.”
Unoccupied buildings that are actively undergoing construction, are seasonal residences or are involved in an ownership dispute may not be considered vacant and abandoned.
The sheriff must sell the abandoned property within 60 days of receiving the writ of execution.
The AOC’s Civil Practice Division developed model pleadings for summary foreclosure proceedings. They are not mandatory but should be reviewed by counsel, the court said.
The court directed its Civil Practice Committee to develop permanent rule amendments. Those amendments will conform with the rule relaxations and be developed in the 2012-2014 rules cycle, says Kristi Jasberg Robinson, chief of the Civil Practice Division.
The legislation was drafted with the AOC’s help and introduced last July. In October, it passed the Senate 35-2 and passed the Assembly unanimously.
The legislation’s sponsor, Sen. Raymond Lesniak, D-Union, says neighborhood blight is “a drag on the entire economy, which needs the housing market to rebound.”
“As long as you have this huge inventory of foreclosed homes, that problem is going to persist,” he adds.
Lesniak calls the legislation “one half of a solution to get foreclosed homes back into occupancy,” referring to two versions of a companion bill that Christie vetoed.
The companion legislation would have created a state program to provide loans for redevelopment of foreclosed properties. The governor expressed concerns over state funding for the program, contending that officials should instead rely upon the $300 million in federal aid the state received in 2010 to aid financially distressed homeowners.
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Warning! We hear a lot about Mortgage Re modification scams and debt renegotiation scams. Scam artists look real and prey on people that need help.
It is our opinion that you’re best way to renegotiate debt and/or modify your mortgage is with the assistance of a trained and experienced attorney.
Most of the time Mortgage re modifications is not your best answer. And debt consolidation and renegotiation scams leave you holding even worse consequences like increased taxes. I know that I would rather owe visa then the IRS. Don’t be tricked. Be on guard. Scammers are not really helping you. They are helping themselves.
Call us if you need help. We are here for you. 800-709-1131
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Wells Fargo Bad Faith a Good Defense To Mortgage Foreclosure, Judge Says
A homeowner fighting foreclosure can raise the defense that Wells Fargo Bank did not act in good faith in handling her mortgage-modification request.
Given the bank's "apparent unreasonable actions, ... equity demands that she be able to proceed ... with her defenses against foreclosure," Bergen County Assignment Judge Peter Doyne wrote in an opinion released Monday.
Though homeowner Vicki Schultz might not have a right to receive a modification, "she does have the equitable right to be treated with fairness," Doyne wrote in Wells Fargo Bank v. Schultz, BER-F-17720-12.
Instead, she was met with "months of frustrating and conflicting responses, or lack thereof" from Wells Fargo, including "form letters, duplicative requests for documentation, misleading information, and what appears, at least at first blush, generally unfair treatment regarding the available loan modifications," he said.
Doyne added that "even though it is not evident at this point whether [Wells Fargo] is guilty of unclean hands, its behavior toward Vicki is at the least highly suspect."
In 2004, Schultz borrowed $506,250 from World Savings Bank, which later became Wachovia Mortgage and is now a division of Wells Fargo. The loan was secured by a mortgage on her Oakland home. Her husband, J. Stuart Schultz, did not sign the note but his signature appeared on the mortgage.
In June 2010, Stuart lost his job as CEO of Longview Financial Group Inc. when the company folded, leaving both spouses unemployed. They defaulted on Dec. 6, 2010.
After being accepted to Wachovia's "Unemployment Program," Vicki was put on a modification plan that required six monthly payments of $1,508 starting in February 2011 and came with the promise that as long as she complied, her home would not be foreclosed.
In May 2011, the bank asked for proof of unemployment benefits by June 6, 2011, so the plan could be extended past October.
Vicki certified she faxed the documents on May 26 and spoke with a bank representative who confirmed receipt.
But on June 9, 2011, she got a "Final Decision" letter denying the extension for failure to send the information.
Vicki called the bank on June 22 and was told she needed to dispute the termination in writing and did so that same day.
Advised by the bank to also enroll in the federal Home Affordable Modification Program (HAMP), she applied by telephone, sent in documents and twice re-sent them and additional ones at the bank's behest.
In August 2011, the bank again refused to extend the original plan because the July payment was late, which Vicki claimed was the result of being denied the extension.
The bank also refused a HAMP modification, saying she failed to provide requested documents.
A series of telephone messages she left with her contact at the bank allegedly met with no answer, and the next month she got a letter advising her that the person she called was no longer handling her account.
But not long after that and shortly after Vicki received a notice of intent to foreclose — "almost cruelly," said Doyne, noting it was the second such letter — that same employee sent her a letter saying the bank was committed to helping her retain her home.
Vicki reapplied for HAMP, faxed the asked-for information and, after being told she hadn't, did so again.
After several more rounds of calls, letters and faxed documents, Vicki says she was told on March 22, 2012, that her file was complete. But a week later, the bank denied the modification and said it could not proceed with her request.
For six more months, Vicki went back and forth with bank employees by telephone, fax and mail, but she asserts that she never heard back after the last batch of documents submitted, in September 2012.
"Incredibly, after almost a year of submitting documents and generally "getting the runaround" ... , Vicki finally was informed she had submitted all the necessary documents, only to be informed that the loan modification she applied for was 'not available at this time,'" wrote Doyne. "Again, while Vicki may not have a legal right to the HAMP modification, she does have the equitable right to be treated with fairness" and the bank "has apparently failed in this regard."
In Monday's ruling, Doyne blocked some defenses, granting the bank's motion to enforce a 2010 national class action settlement against Wells Fargo over its "Pick-A-Payment" adjustable rate mortgages.
Under the settlement in Mandrigues v. World Savings, Inc., N.D. Cal. Case No. 07-cv-4497, Wells Fargo was supposed to provide $67 million in loan modifications. Vicki received $178.
Thus, any defenses or claims based on the origination of the loan were precluded, although her husband could raise them because he was not a party to the settlement, Doyne found.
Wells Fargo lawyer Elizabeth Kim of Reed Smith in Princeton did not respond to a request for comment. The Schultzes' lawyer, David Schrader of Schrader & Schoenberg in South Orange, was out of the office and could not be reached.
Schultz is the second recent opinion by Doyne addressing good faith in the context of mortgage modification.
On Feb. 5, he held in Hudson City Savings Bank v. Colyer, BER-F-1214-12, that following its own procedures in denying a mortgage modification does not necessarily establish the lender's good faith.
Link to Article by New Jersey Law Journal
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In a ruling that's good news for buyers of property at sheriffs' sales, a state appeals court says state fire code penalties are wiped out by a foreclosure judgment. The precedential ruling in Pitman v. Monroe Savings Bank, A-3113-10, reaffirms the principle that property purchased at a sheriff's sale comes free of any interest or judgment that is not recorded even if the purchaser had notice of it. The Appellate Division affirmed a trial judge's ruling that barred the Borough of Pitman's claim for payment of the penalties because it recorded its lien after the final foreclosure judgment, finding the penalties did not enjoy the same statutory priority as municipal tax liens, which survive foreclosure.
FIRE CODE PENALTIES ON PROPERTY ARE PURGED BY FORECLOSURE
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River East Plaza, LLC v. LNV Corp.
Court: U.S. 7th Circuit Court of Appeals
Docket: 11-3263Opinion Date: January 19, 2012
Areas of Law: Bankruptcy, Real Estate & Property Law
The debtor's single asset is a commercial building. The lender promptly started foreclosure proceedings in state court, prevailed, and a foreclosure sale of the property was scheduled, but was stayed when the debtor filed for bankruptcy, 11 U.S.C. 362(a)(4). The lender became a participant in the bankruptcy The bankruptcy court rejected the debtor's plan to exchange the mortgage for an "indubitable equivalent," lifted the stay, and dismissed the bankruptcy. The Seventh Circuit affirmed, noting that the lender has waited years to enforce its lien and that the court was not required to further stretch the wait. The lien on Treasury bonds proposed by the debtor would not be equivalent to the lender retaining its lien on the building.
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Home seizures may jump 25% this year as foreclosures resume
Banks may seize more than 1 million U.S. homes this year after legal scrutiny of their foreclosure practices slowed actions against delinquent property owners in 2011, RealtyTrac Inc. said. About 1.89 million properties received notices of default, auction or repossession last year, down 34 percent from 2010 and the lowest number since 2007, the Irvine, California-based data seller said Thursday in a statement. One in 69 U.S. households received a filing. The number of home repossessions is likely to rise about 25 percent from the more than 804,000 properties seized last year as lenders resume foreclosure actions, a spokesman for RealtyTrac said.
New Jersey Law Journal
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ANOTHER ATTORNEY GENERAL TAKES AIM AT BANKS OVER FORECLOSURE, MORTGAGE PRACTICES
A lawsuit filed by Massachusetts Attorney General Martha Coakley against five national banks and a national mortgage registration system for allegedly illegal foreclosure practices is one of a handful of public law enforcement cases challenging banks' mortgage practices. Similar cases have been brought by the attorneys general of Delaware, Nevada and Arizona. The suit, Commonwealth of Massachusetts v. Bank of America N.A., filed in state court on Dec. 1, claims the banks used fraudulent documentation in foreclosures, including so-called "robo-signing"; foreclosed without the actual mortgage documentation; failed to uphold loan modification promises to homeowners; and undermined the state's land recording system through the use of the Mortgage Electronic Registration System (MERS).
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PROPOSAL WOULD LIMIT FORECLOSURES TO RECORDED MORTGAGE INTEREST HOLDERS
Changes afoot to the state's mortgage recording statute and other laws would clarify who has the right to foreclose on a mortgage when the debt has been assigned by the original lender and the paper trial is incomplete or unclear. The proposals, now on the state Law Revision Commission's Nov. 17 meeting agenda, would limit who can bring a foreclosure action to an "established holder" of a mortgage ... who is owed a debt secured by that mortgage." An "established holder" is defined as the mortgage holder identified in records on file with the recording officer for the county where the property is located. Absent established-holder status, a person who is owed a mortgage debt, even with the note to prove it, would be treated like an unsecured creditor.
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CHRISTIE CONDITIONALLY VETOES FORECLOSURE RESCUE FRAUD BILL
Gov. Chris Christie on Thursday conditionally vetoed a measure to protect homeowners from foreclosure rescue scams, saying it was "well intentioned" but might hurt people it is designed to help. The Foreclosure Rescue Fraud Prevention Act, A-359, which passed both houses unopposed, would require foreclosure consultants and rescue firms to register with the state and limit their fees, among other safeguards. Christie balked at a provision that anyone buying a home from an owner facing foreclosure must pay at least 82 percent of the fair market value. He called it too broad and capable of curtailing legitimate transactions and said it might increase foreclosures.
For additional information on this article, http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202520771716&slreturn=1
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