The processing of foreclosures, including foreclosed single family homes, was widely questioned in the U.S., following the robo-signing controversy. Last December, the New Jersey Supreme Court has ordered six lenders to appear in court and provide evidence that will allow them to continue their foreclosure operations.
The procedures used by lenders in processing Trenton foreclosed homes and other foreclosures in the rest of the state are being scrutinized, with the Supreme Court hearing scheduled to be held in March. Although attorneys general from various U.S. states have taken steps to question lenders' foreclosure procedures, housing market experts stated that New Jersey is the first state wherein the Supreme Court has a front line role in the issue of foreclosed properties.
In response to the Supreme Court order, lenders have argued that suspending procedures for foreclosure homes in NJ will do more harm than good, particularly with the area's housing market far from being stable. They also stated that even before the court order, they have already taken steps to resolve documentation irregularities associated with foreclosed properties and suspending procedures now will cause more damage to hard-hit communities.
The lenders also criticized the court order, arguing that it violated due process since it only named six lenders when there are others that have foreclosure operations in the state, particularly within the single family homes market. The six lenders also stated that the Supreme Court should leave public policy concerns to legislators. Meanwhile, court officials have revealed that the six lenders were specifically ordered because they have processed almost 30,000 foreclosure cases in the state last year.
They asserted that this number is almost 50% of the foreclosed homes for sale total recorded in New Jersey in 2010. The court order reportedly stemmed from reports that faulty documents have been allegedly used to process foreclosure cases and employees of mortgage lenders have been signing foreclosure paperwork despite having no personal knowledge of the case in hand.
The lenders cited in the court order have submitted court filings in January, arguing that they have already reviewed procedures used in processing foreclosed single family homes and other foreclosure cases. Amongst the lenders, three argued that they suspended foreclosures last year to complete their reviews.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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