Global InformationNew Jersey Fair Foreclosure Act information
The Fair Foreclosure Act (FFA), N.J.S.A §§ 2A:50-53 to 2A:50-73, is a state law that protects residential mortgage debtors and establishes a uniform statutory framework under which courts can more clearly identify the rights and remedies of the parties involved in foreclosure proceedings throughout New Jersey.[1] The FFA was approved by the New Jersey State Legislature on September 5, 1995, and signed into law by Governor Christine Todd Whitman on December 6, 1995—nearly two years after the bill was first introduced in the State General Assembly on January 24, 1994.[2] The New Jersey Legislature amended the FFA on September 19, 2017, to require mortgage servicers to consider debtors' good faith short sale offers and respond within 60 days of receiving them (as discussed in Subsection 2A:50-56.2 below).[3]
New Jersey is a judicial foreclosure state, meaning that before a creditor with a lien on residential property may foreclose on that property, they must file suit in the New Jersey Superior Court, Chancery Division—the court of general equity in New Jersey.[4] As a result of this limitation on the means of foreclosure available to creditors, the Garden State has one of the longest foreclosure processes in the United States, averaging nearly three and a half years or 1,262 days between the time a notice of default has been issued to a debtor and the time that the property is sold at auction.[5] It is because of this lengthy foreclosure process and the fact that residential mortgage debtors often lack bargaining power that the New Jersey Legislature has established a broad statutory framework to protect debtors and their property interests.[6]
The FFA protects debtors by providing them with "every opportunity" to pay off their mortgages and prevent their homes from being seized by lenders in foreclosure.[7] The Act provides such opportunities by imposing substantial notice requirements on lenders before they may institute foreclosure proceedings and by providing debtors with the right to cure defaults on their mortgage, thereby stalling the foreclosure process and returning their mortgage loans to performing status.[8] Because the FFA is legislation intended to protect residential mortgage debtors, the Act's provisions only apply to residential foreclosures, not commercial foreclosures.[9] Residential mortgage debtors will always be entitled to the protections of the FFA because § 2A:50-61 of the Act voids any waiver of the debtor's statutory rights prior to a default on their mortgage.[10] A borrower defaults on their mortgage when they fail to make payments as required by the terms of the promissory note they signed concurrently with their mortgage.[11]
Although the New Jersey Legislature's main objective in enacting the FFA was to protect residential mortgage debtors, the Act was also intended to benefit residential mortgage lenders by expediting New Jersey's historically slow judicial foreclosure process.[12] While there is debate as to whether the FFA has actually shortened the judicial foreclosure process in New Jersey, § 2A:50-63 of the Act empowers mortgagors to bypass that process entirely under specific circumstances, such as when the mortgaged property has been abandoned or when the parties have agreed to execute a deed in lieu of foreclosure.[13]
- ^ See Wells Fargo Home Mortgage, Inc. v. Stull, 876 A.2d 298, 302–03 (NJ. Super. App. Div. 2005) ("the Fair Foreclosure Act was designed to make clear the rights and remedies of both borrowers and lenders prior to and throughout the foreclosure process.")
- ^ New Jersey State Law Library, Legislative History Checklist ("Fair Foreclosure Act"), Bill No. A1064, Chapter 244, Laws of 1995.
- ^ Amendment to New Jersey’s Fair Foreclosure Act Imposes Deadline on Mortgage Servicers Reviewing Short Sale Offers, Practical Law Legal Update w-010-3059 (Sept. 18, 2017).
- ^ Judicial Foreclosure, Practical Law Glossary Item 3-502-0039.
- ^ NJ.com, Craig McCarthy | NJ Advance Media for (2016-10-25). "How long it takes to complete a foreclosure in N.J. by county". nj. Retrieved 2023-04-03.
- ^ See New Jersey State Law Library, Legislative History Checklist, Pg. 32, New Jersey Office of the Governor News Release, https://repo.njstatelib.org/bitstream/handle/10929.1/8937/L1995c244.pdf?sequence=1&isAllowed=y (Issued Sept. 6, 1995).
- ^ See Spencer Sav. Bank, SLA v. Shaw, 949 A.2d 218, 221 (App. Div. 2008) (“The FFA is remedial legislation intended to provide protection to residential mortgage debtors.”); The Fair Foreclosure Act, N.J. Stat. Ann. § 2A:50-54 (1995) ("The Legislature hereby finds and declares it to be the public policy of this State that homeowners should be given every opportunity to pay their home mortgages, and thus keep their homes.")
- ^ The Fair Foreclosure Act, N.J. Stat. Ann. § 2A:50-57 (1995) ("the debtor, or anyone authorized to act on the debtor's behalf, shall have the right at any time, up to the entry of final judgment or the entry by the office or the court of an order of redemption…to cure the default, de-accelerate and reinstate the residential mortgage by tendering the amount or performance specified in subsection b. of this section.")
- ^ The Fair Foreclosure Act, N.J. Stat. Ann. § 2A:50-62 (1995) ("The provisions of sections 1 through 9 of this act1 shall not apply to the foreclosure of a non-residential mortgage nor to collection of the obligation by means other than enforcing the lender's lien on the residential property.")
- ^ The Fair Foreclosure Act, N.J. Stat. Ann. § 2A:50-61 (1995) ("Waivers by the debtor of rights provided pursuant to this act are against public policy, unlawful, and void, unless given after default pursuant to a workout agreement in a separate written document signed by the debtor.")
- ^ DEFAULT, Black's Law Dictionary (11th ed. 2019).
- ^ New Jersey State Law Library, Legislative History Checklist, Pg. 32, New Jersey Office of the Governor News Release, https://repo.njstatelib.org/bitstream/handle/10929.1/8937/L1995c244.pdf?sequence=1&isAllowed=y (Issued Sept. 6, 1995) ("This legislation will help lenders to complete the residential foreclosure process in a more timely manner, bringing New Jersey in line with its neighboring states.")
- ^ The Fair Foreclosure Act, N.J. Stat. Ann. § 2A:50-63 (1995).