Finally Some Clarity on the Statute of Limitations for New Jersey Foreclosures.

There has been much confusion about the statute of limitations for residential foreclosures in New Jersey.  Finally, now, we have some clarity.  The New Jersey Assembly voted to modify the terms of the Fair Foreclosure statute to limit the filing of foreclosure cases to six years after default in some cases.

This bill reduces the statute of limitations in residential mortgage foreclosure actions from 20 years to six years from the date on which the debtor defaulted, in situations in which the date of default is used as the method to determine when the statute of limitations has expired.

Thus, the bill revises the alternative methods under the “Fair Foreclosure Act” for determining when the statute of limitations for the foreclosure of a residential mortgage has expired by providing that an action shall not be commenced following the earliest of: (1) six years from the date fixed for the making of the last payment; (2) thirty-six years from the date of recording of the mortgage; or (3) six years from the date on which the debtor defaulted.

This is great news for those homeowners that have been trying to resolve a home foreclosure for at least six years before the bank files for foreclosure.  The bill leaves a few unanswered questions which will no doubt come up in cases filed after the date of this bill.

Here is the Text of Assembly Bill No. 5001

ASSEMBLY, No. 5001
STATE OF NEW JERSEY
218th LEGISLATURE

INTRODUCED FEBRUARY 7, 2019

Sponsored by:
Assemblyman ANTHONY S. VERRELLI
District 15 (Hunterdon and Mercer)
Assemblyman RAJ MUKHERJI
District 33 (Hudson)
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Senator TROY SINGLETON
District 7 (Burlington)
Senator STEVEN V. OROHO
District 24 (Morris, Sussex and Warren)
Senator DAWN MARIE ADDIEGO
District 8 (Atlantic, Burlington and Camden)

Co-Sponsored by:
Assemblywoman Murphy, Assemblymen Houghtaling and McKeon

SYNOPSIS
Revises statute of limitations for residential mortgage foreclosures.

CURRENT VERSION OF TEXT
As introduced.

An Act concerning certain mortgage foreclosures and amending P.L.2009, c.105.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2009, c.105 (C.2A:50-56.1) is amended to read as follows:
1. An action to foreclose a residential mortgage shall not be commenced following the earliest of:
a. Six years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage or the note, bond, or other obligation secured by the mortgage, whether the date is itself set forth or may be calculated from information contained in the mortgage or note, bond, or other obligation, except that if the date fixed for the making of the last payment or the maturity date has been extended by a written instrument, the action to foreclose shall not be commenced after six years from the extended date under the terms of the written instrument;
b. Thirty-six years from the date of recording of the mortgage, or, if the mortgage is not recorded, 36 years from the date of execution, so long as the mortgage itself does not provide for a period of repayment in excess of 30 years; or
c. [Twenty] Six years from the date on which the debtor defaulted, which default has not been cured, as to any of the obligations or covenants contained in the mortgage or in the note, bond, or other obligation secured by the mortgage, except that if the date to perform any of the obligations or covenants has been extended by a written instrument or payment on account has been made, the action to foreclose shall not be commenced after [20] six years from the date on which the default or payment on account thereof occurred under the terms of the written instrument.
(cf: P.L.2009, c.105, s.1)

2. This act shall take effect immediately and apply to residential mortgages executed on or after the effective date.