New Jersey Enacts Escrow Agent and Foreclosure Provisions
By Linaldo Donovan
New Jersey Enacts Provisions Regarding Escrow Agent Evaluation Services
The state of New Jersey enacted provisions by making it an unlawful practice under its Consumer Fraud Act for an escrow agent evaluation service to prepare a report for use by a mortgage lender in evaluating the capacity of an escrow agent to perform real estate settlement services, in exchange for a fee charged to that escrow agent. These provisions are effective immediately.
“Escrow agent” is defined as either: a) an independent person, including an independent bonded escrow company; b) an independent financial institution whose accounts are insured by a governmental agency or instrumentality; an independent licensed title insurance agent, or c) an attorney licensed to practice law in this State.
Unlawful practice is punishable by a monetary penalty of not more than $10,000 for the first offense and $20,000 for any subsequent offenses. Violations may result in cease and desist orders issued by the Attorney General followed by an assessment of punitive damages and an award of treble damages with costs to the injured party.
New Jersey Enacts Provisions Regarding Foreclosure of a Mortgage
The state of New Jersey enacted provisions regarding the recording of mortgages and foreclosure of a mortgage. The provisions are effective on February 18, 2016.
The newly enacted provision provides established holders of a mortgage to take action to foreclose. A person or entity is the “established holder of a mortgage,” if that person or entity is: a) record holder of the mortgage as established by the latest record of assignment or by the original mortgage recording in the records of the county clerk or the register of deeds and mortgages, or b) holder of the mortgage in a civil action joining as defendants the record holder of the mortgage.
Failure to comply with the applicable provisions will result in written notice of the noncompliance sent by either mortgagor or the mortgagor’s agent or purchaser or purchaser’s agent. The mortgagee will have 15 business days to become compliant. An assessment of a $50 fine per day will follow for each day after the 15-day period. Each fine is payable in full to the private citizen instituting the action.
Failure by the mortgagee to apply to the county recording officer to cancel the mortgage of record within the 15-day period will result in the mortgagee being liable to either the mortgagor or purchaser for the greater of actual damages or the sum of $1000, less any fines recovered. Any successful action to recover damages will result in the reimbursement for the cost of the action including attorneys’ fees.
It is the responsibility of a mortgage servicer to advice, in writing, each mortgagor whose mortgage the mortgage servicer is servicing, of the name, address, and telephone number of the mortgage servicer. If a payment is made to mortgage servicer as a result of the mortgagor being misinformed in error or fraud, then a mortgagor is not required to make additional payments to the actual mortgage servicer. It is the responsibility of the mortgage servicer to seek payment from the unjustly enriched mortgage servicer. Payments made to the wrong mortgage servicer due to fraud or misinformation is not to be included as the basis for any foreclosure action.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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