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MEMOrandum
Stewart Title Guaranty Company
GUARDIAN SETTLEMENT AGENTS, INC.
Date: September 3, 2009
From: Andrew J. Pitman, New Jersey Underwriting Counsel
To: All Issuing Offices in New Jersey
RE: Statute of limitations relative to residential mortgage foreclosures
Dear Associates:
The New Jersey Legislature has passed P.L. 2009 Chapter 105 (Senate Bill 250) into law. Effective August 6, 2009, the law has been incorporated as part of the Fair Foreclosure Act and may be found at N.J.S.A. 2A:50-56.1. The new statute applies to residential mortgages and limits the time period under which a lender may commence a foreclosure action. The time periods are as follows:
1. 6 years from the date that the last payment would be due or the stated maturity date.
2. 36 years after the date of the recording of the mortgage (unless the mortgage is for a longer term).
3. 20 years from the date that the debtor defaulted on the loan.
If your search reveals older mortgages which fit within one of the three time periods they may be omitted if you are dealing with residential property. Because the law is a part of the Fair Foreclosure Act, the new statute only applies to residential mortgages (those encumbering a 1-4 family home or condominium that is owner occupied). Prior to the enactment of this statute older mortgages were omitted based upon the principals set forth in Security National Partners v. Mahler 336 NJ Super 101. Under this analysis a 20 year time period was applied based upon the statute of limitations for adverse possession (see N.J.S.A. 2A:14-6 & -7). This analysis will still hold true for commercial mortgages
It should be noted that if there has been a written extension (whether recorded or unrecorded) the above time periods will be modified accordingly. The concern for underwriters of course would be the unrecorded modification extending the term of the loan. While it is possible that a non equity line mortgage may have had its terms modified and the instrument not turn up in the search, this would be an atypical scenario.
We expect that the new statute will be of great assistance in circumstances where a current owner’s policy is not available on residential transactions.
Feel free to call the state office should you have any questions.
Note: Please distribute this memorandum to the appropriate associates.
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