The Supreme Court of New Jersey issued a significant ruling yesterday on the requirements for a valid mortgage foreclosure proceeding.
The case, US Bank National Association v. Guillaume, is of interest to anyone concerned about how to stop foreclosure in New Jersey.
The court held that a bank seeking to foreclose on a residential mortgage has to give the name of the lender before the bank can take the property.
The case arose out of the foreclosure of a home in East Orange. In May 2008, Emilio and Maryse Guillaume received a notice of intention to foreclose on their home. The notice gave the name of the mortgage servicer, but it did not contain the name of the lender that owned the loan.
The original lender, Credit Suisse, assigned its interest in the loan to US Bank. US Bank later began foreclosure proceedings against the Guillaumes.
The court found, however, that the notice sent by the bank failed to comply with New Jersey’s Fair Foreclosure Act. That Act clearly specifies that the actual lender’s name and address must be included in order for the notice to the homeowner to be valid.
The court’s reasoning was based on the importance of the Act in protecting homeowners. Without clarity about the identity of the lender, a homeowner could make an important mistake when trying to prevent foreclosure.
When facing foreclosure, the automatic stay in bankruptcy is one of the principal ways that people in need of debt relief can try to keep their house. Mortgage modification may be another option.
The court’s ruling means struggling homeowners will be better able to consider these options.
Source: Bloomberg, “Lenders Must Be Named in Foreclosures, New Jersey Court Rules,” David Voreacos and David McLaughlin, Feb. 27, 2012.