The law, A-3269, gives a mortgage lender 20 years from the date of a borrower's default to bring a specific foreclosure action. It ensures that decades-old defaults – which under previous law could still be acted against – do not remain as clouds on a property's title, something that can grind a sale to a halt.
"Given the current volatility in the housing market, there is no room for ambiguity," said Assemblyman John Wisniewski (D-Middlesex), a co-sponsor of the legislation. "A distinct path to a clear title can be the difference between allowing a property to be sold or requiring it to languish in legal purgatory.""Past defaults, even if they never lead to a formal action of foreclosure, shouldn't be allowed to hang over a property in perpetuity," said Assemblyman Gary Schaer (D-Passaic), a co-sponsor. "This is an area of law that should have been settled decades – if not a century – ago."
The law provides the time limits between when a lender defaults on a loan and when the mortgage holder can bring an action of foreclosure:
- Six years from the date of maturity on the mortgage, matching the statute of limitations in current contract law;
- 36 years from the date of recording or execution of the mortgage, provided the mortgage itself does not provide for a period of repayment in excess of 30 years; or
- 20 years from the date of default.
"As we look to jumpstart the housing market and give new homeowners the keys to their future, especially in cities hard-hit by the foreclosure crisis, creating this legal certainty is more import ant than ever," said Assemblywoman L. Grace Spencer (D-Essex).
– TOM HESTER SR., NEWJERSEYNEWSROOM.COM