A court appointee would review whether banks properly foreclosed on tens of thousands of New Jersey homeowners and whether mortgage lenders have changed how they go about repossessing homes, under a settlement announced today.
The centerpiece of the agreement between a state-designated attorney and six of the country’s biggest mortgage lenders, is the appointment of retired Superior Court Judge Richard Williams, who will determine whether banks have in place a process to ensure their foreclosure proceedings are based on personal knowledge and accurate business records of the loans they are servicing, state-designated attorney Edward Dauber said.
The settlement still needs approval of the Mercer County Civil Court judge overseeing the case. A hearing before Judge Mary Jacobson is scheduled for March 29.
Each bank must answer by April 1 how it satisfies a number of factors in the foreclosure process.
The settlement comes four months after Chief Justice Stuart Rabner issued a three-part order to combat rogue foreclosure filings, citing a staggering increase in foreclosure cases and concerns judges had inadvertently "rubber stamped" foreclosures that had inadequate or incorrect paperwork.
Dauber said he saw no reason for an immediate halt to foreclosures.
"This office believes that this recommended two-step special master process … serves the goals of the (Rabner order), while at the same time also permitting the efficient functioning of the foreclosure process, a process necessary for a healthy housing market and the broader economy," Dauber said in a letter to Jacobson.
In the banks’ response motions, they argued they had already begun changes and were being unfairly targeted by the state. The financial institutions and their home loan servicing divisions are Bank of America, Citibank, GMAC, JPMorgan Chase, OneWest Bank and Wells Fargo Bank.
If Williams finds a bank has not properly implemented these protocols, and Jacobson accepts his decision, all foreclosures for the bank will be suspended until Williams is satisfied new procedures are in place and operational. In addition, he can, within the next 12 months, review a sample of pending or new foreclosures from each bank to decide if the bank is still following protocols outlined in the settlement.