N.J. top judge pushes for measures to target bad foreclosure practices

By Sarah Portlock / The Star-Ledger

Citing a staggering increase in filings and voicing fears of inaccurate applications, New Jersey’s top judge announced a series of initiatives Monday to combat rogue foreclosure filings.

“It’s our hope that these three steps will provide greater confidence” in the foreclosure process, Chief Justice Stuart Rabner said in a conference call with reporters. “It is important the judiciary ensures that judges are not rubber-stamping questionable documents that may not be reliable.”

The state’s actions are intended to address problems with “robo-signing,” a practice where mortgage lender employees sign hundreds, if not thousands, of affidavits submitted in support of foreclosure claims without any personal knowledge of the information included in the application.

This year, there were more than 65,000 applications filed statewide, up from nearly 22,000 four years ago. And the vast majority of foreclosure actions – 94 percent – are uncontested, Rabner said.

The judge ordered six mortgage lenders, including Bank of America, JPMorgan Chase and Citibank, to file to the court by Jan. 19 documents proving their internal foreclosure application processes are up to standards, or the applications will be suspended. The other companies are the mortgage divisions of Wells Fargo, OneWest Bank and Ally Financial. Rabner appointed General Equity Judge Mary Jacobson, who sits in Trenton, to oversee foreclosure matters in the state.

Rabner also ordered 24 lenders who have filed more than 200 residential mortgage foreclosure actions this year to document there are no irregularities in those processes within 45 days. The reports must outline how the companies handle, review and verify foreclosure applications to demonstrate the reliability and accuracy of what is submitted to the courts, according to the administrative order.

And lawyers were reminded their signature on foreclosure filings certifies they know what is listed in the paperwork, Rabner said. Filings going forward must include an affidavit the bank’s attorney has spoken with an employee at the lender who personally reviewed the foreclosure documents.

The announcement comes after a report prepared by Legal Services of New Jersey alleged industry-wide deficiencies in foreclosure filings, according to court documents.

“The mortgage servicing and foreclosure industry really is rife with this certification without personal knowledge,” said Melville Miller, president of Legal Services. The group published a 28-page report detailing information found in depositions and testimony about foreclosure proceedings in November, which was presented to Rabner.

“From the best we can tell, at a national level and also in New Jersey, it’s a widespread practice.”

Other states have issued similar orders, according to the order.

In October, New York directed attorneys filing residential foreclosure actions to certify they have personally reviewed the documents’ accuracy. And at least four state attorneys general and the attorney general for Washington D.C., have required certain lenders, including those named in New Jersey’s order, to prove the validity of their residential mortgage foreclosure processes, the order states.

Messages left with law firms representing the six mortgage companies were not immediately returned.

Statehouse Bureau reporter Chris Megerian contributed to this report.

Editor’s Note: An earlier version of this story incorrectly referred to lawyers’ new responsibilities. They are required to speak with the mortgage lender’s employee who personally reviewed the documents.

The story also incorrectly referred to the practice of robo-signing. It is when employees at mortgage lenders sign foreclosure claims without any personal knowledge of the application’s contents.

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