NJ Law Revision Commission Agenda Proposal Limiting Foreclosures to Recorded Mortgage Interest Holders, MERS

Proposal Would Limit Foreclosures to Recorded Mortgage Interest Holders

Mary Pat Gallagher

New Jersey Law Journal

Changes afoot to the state’s mortgage recording statute and other laws would clarify who has the right to foreclose on a mortgage when the debt has been assigned by the original lender and the paper trial is incomplete or unclear.

The proposals, now on the state Law Revision Commission’s Nov. 17 meeting agenda, would limit who can bring a foreclosure action to an “established holder” of a mortgage … who is owed a debt secured by that mortgage.”

“Established holder” is defined as the mortgage holder identified in records on file with the recording officer for the county where the property is located.

Alternatively, established-holder status would have to be found by a judge in a civil action where the record holder, the mortgagor and any other person known to have an interest in the mortgage are joined as defendants.

Absent established-holder status, a person who is owed a mortgage debt, even with the note to prove it, would be treated like an unsecured creditor.

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