On December 6, New Jersey Gov. Chris Christie signed into law an Act permitting lenders to file a summary action to foreclose mortgages on vacant and abandoned residential property. The Act's purpose is to mitigate the foreclosure crisis in New Jersey by creating an expedited foreclosure process for abandoned homes. Proponents of the Act hope that it will help stabilize the residential real estate market by reducing the time it takes to complete a foreclosure and thereafter return the property to an occupied status, by permitting the lender to have the sheriff conclude a sale in short order.
The bill that Gov. Christie signed into law was sponsored by Senate Economic Growth Committee Chairman Raymond J. Lesniak (D-Union). It has a narrower focus than a bill Sen. Lesniak introduced in February 2012, the Residential Foreclosure Transformation Act. That bill would have established a state-run corporation under the New Jersey Housing and Mortgage Finance Agency to purchase and rehabilitate abandoned foreclosed homes and use them as affordable housing. Gov. Christie vetoed the bill, citing budget concerns.
The Act's General Provisions
The Act allows lenders to bring a summary action in the Superior Court of New Jersey to foreclose a mortgage debt secured by residential property that is vacant and abandoned. Additionally, a lender may file an application to proceed in a summary manner at any time after filing a foreclosure action if the residential property that is the subject of the foreclosure action is believed to be vacant and abandoned. Under the Act, a court may enter a final residential mortgage foreclosure judgment if it finds, by clear and convincing evidence, that the residential property is vacant and abandoned as defined by the Act and that a review of the pleadings and documents filed with the court supports the entry of such a judgment. A court will not enter a final residential mortgage foreclosure judgment under this Act if the court finds that the property is not vacant or abandoned, or that the mortgagor or any other defendant has filed an answer, appearance, or other written objection that is not withdrawn, and the defenses or objection asserted by the mortgagor or other defendant provide cause to preclude the entry of a final judgment.
Definition of "Vacant and Abandoned"
The Act defines "vacant and abandoned" residential property to mean "residential real estate with respect to which the mortgagee proves, by clear and convincing evidence, that the mortgaged real estate is vacant and has been abandoned." Real property will be deemed "vacant and abandoned" if the court finds that the mortgaged property is not occupied by a mortgagor or tenant and at least two of the following conditions exist:
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