Change In Judicial Mood On New Jersey Robosigning Scandal Reflected In Recent Rulings

The Metropolitan Corporate Counsel reports:

• New Jersey courts have started clamping down on lenders' ability to enforce mortgage documents by raising concerns when the lender cannot establish that it possesses the original note at the time a foreclosure action is commenced or that it is a holder in due course under the Uniform Commercial Code ("UCC").

• Two recent decisions, one from the New Jersey Superior Court, Chancery Division, General Equity Part, Atlantic County, and a second from the United States Bankruptcy Court for the District of New Jersey, elucidate this change in judicial mood. The teachings of these decisions, which are discussed herein, are that lenders and their counsel need to determine and be sure of certain facts before they start an action to enforce mortgage documents. The failure to take the simple steps discussed in this article could result in such action being substantially delayed or never getting off the ground.

• In Bank of New York v. Raftogianis, ___ N.J. Super. ___, 2010 N.J. Super. Unpub LEXIS 2316 (N.J. Super. Ct. Ch. Div. June 29, 2010), the Hon. W.C. Todd, P.J. Ch., issued a lengthy and scholarly opinion addressing many issues relating to foreclosure litigation, including the applicability of the UCC, how the Mortgage Electronic Registration System ("MERS") operates, and the impact on foreclosures of the securitization or pooling of mortgages. In fact, the opinion could be viewed as a treatise on these subjects.

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• In Kemp v. Countrywide Home Loans, Inc. (In re Kemp) , 2010 Bankr. LEXIS 4085 (Bankr. D.N.J. Nov. 17, 2010), the debtor filed an adversary complaint seeking to expunge the proof of claim filed on behalf of Bank of New York by Countrywide Home Loans, Inc. as servicer.

For more, see New Jersey Courts Place Roadblocks On Lenders' Ability To Enforce Mortgage Documents (for print version, TRY HERE).