Breaking News

France's Iliad Offers About $33 Per Share for T-Mobile U.S. Stake
Tweet TWEET

BofA, Other Banks Can Resume Servicing of New Jersey Mortgages, Court Says

Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and two other mortgage lenders and loan servicers received approval from a New Jersey judge to resume uncontested foreclosures in the state.

Citigroup Inc. (C) and Wells Fargo & Co. (WFC) also won permission in an order yesterday by Superior Court Judge Mary Jacobson in Trenton, New Jersey. Each had to show they have processes and procedures in place to ensure that information in uncontested foreclosures is based on a personal review of records. The judge ordered the four lenders to undergo monitoring.

The lenders were among six whose practices came under scrutiny Dec. 20, when Chief Justice Stuart Rabner of the New Jersey Supreme Court said they were implicated in “robo- signing,” in which foreclosure documents were automatically signed without personal verification of the contents.

Jacobson set a hearing at the time on whether to suspend uncontested foreclosures in the state. The move “is necessary to protect the integrity of the judicial foreclosure process in New Jersey and to assure the public that the process going forward will be reliable,” Jacobson said in a court order.

The banks agreed to undergo a review by a special master. That official, retired judge Richard Williams, found the banks’ practices would ensure that documents are submitted by those authorized to act for the plaintiff in the foreclosure action and that paperwork is based on personal review of records, according to reports filed yesterday.

Foreclosure Recommendation

Williams recommended that the banks be allowed to resume foreclosures.

The judge’s decision “reflects the court’s recognition of the significant work we undertook beginning last fall to enhance processes designed to ensure foreclosures are being processed correctly,” Dan Frahm, a spokesman for Bank of America, said in an e-mail.

“We appreciate having had the opportunity to present details about our procedures, and we are pleased with the result announced yesterday,” a Citigroup spokesman, Mark Rodgers, said in an e-mail.

Theresa Schrettenbrunner, a Wells Fargo spokeswoman, said that when the bank can’t help homeowners stay in their homes, foreclosures prevent problems with vacant and unkempt dwellings.

‘We Will Resume’

“Now that the New Jersey court has validated Wells Fargo’s foreclosure processes, we will resume these practices for the benefit of New Jersey’s communities,” she said by e-mail.

Tom Kelly, a JPMorgan spokesman, declined to comment immediately.

Attorneys general from all 50 states in October started probing mortgage servicers after revelations that they may have acted illegally in having employees sign affidavits that they didn’t review. State and federal officials are negotiating a settlement with the five largest mortgage servicers.

In announcing the review last year, Rabner said New Jersey was the first U.S. state to take such an action. The state’s courts received 21,752 new foreclosures in 2006 and 65,222 in 2010 through late December. Only 6 percent of cases were contested last year, meaning 94 percent lacked “any meaningful adversarial proceeding,” a court order said at the time.

Banks Not Included

The orders didn’t affect two banks subject to the review, Ally Financial Inc. and OneWest Bank. Williams hasn’t provided his reports on the two companies to Jacobson, according to Winnie Comfort, a spokeswoman for the New Jersey courts.

The case is In the Matter of Residential Mortgage Foreclosure Pleading and Document Irregularities, Superior Court of New Jersey, Chancery Division-General Equity Part, F-59553- 10, Mercer County (Trenton).

To contact the reporters on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.