Back in December, we discussed a fairly novel foreclosure-related development in New Jersey:
In reaction to the robo-signing foreclosure mess, Judge Stuart Rabner, the chief justice of the New Jersey State Supreme Court, announced that he intended to issue a blanket moratorium on foreclosures by all major lenders in the State of New Jersey unless they could come into court and show that they are definitively complying with state law when foreclosing upon New Jersey homeowners. Judge Rabner assigned the matter to Judge Mary Jacobson, who ordered representatives from six major banks (Bank of America, Wells Fargo, JP Morgan Chase, OneWest Bank, Citigroup, and Ally Financial) to testify to the court as to why the state should not suspend foreclosures. These banks were singled out due to a “public record of questionable practice”.
At the time, Judge Rabner commented:
“Today’s actions are intended to provide greater confidence that the tens of thousands of residential foreclosure proceedings underway in New Jersey are based on reliable information. Nearly 95 percent of those cases are uncontested, despite evidence of flaws in the foreclosure process.”
Today, NJ.com reports further developments in this story. The banks that were called to the carpet are accusing the court of violating due process and equal protection clauses because these lenders were singled out amongst hundreds of others. Furthermore, the banks claim that the order doesn’t originate from any specific complaints, but rather general accusations of wrong-doing. Lawyers for GMAC/Ally wrote that the court is attempting to “remedy what it perceives as a public policy issue”, and that “such powers are the province of legislators and regulators.”
There were over 65,000 foreclosures in New Jersey in 2010. Nearly 30,000 were processed by the 6 lenders mentioned above. The lenders claim that they reviewed their foreclosure processes prior to the court order and that all the robo-signing and documentation issues have been resolved.
The court hearing into foreclosure, should it move forward, is scheduled for next month.
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