New Jersey Legislature Weighs In on Recording Assignments of Mortgage
Prior to Instituting Foreclosure Proceedings
Attorneys who represent institutional lenders in the State of New Jersey have taken
notice of SB 1346 (the “Bill”), which became effective in February of 2016.
The primary thrust of the Bill is the legislative mandate that only the “established holder of a
mortgage” may institute foreclosure proceedings. An established holder of a mortgage is
defined as one who:
1. Is the record holder of the mortgage as established by the latest recorded assignment of
2. Found to be the holder of the mortgage in a civil action, joining as defendants the record
holder of the mortgage, the mortgagor and any other person known to have an interest in
Thus, the Bill signifies a change to prior guidance from the New Jersey Office of Foreclosure
which merely required execution of an assignment into a foreclosing plaintiff prior to the
filing of a complaint in mortgage foreclosure.
The New Jersey Senate and Assembly found that “there are difficulties in proving that the
plaintiff is the proper party to foreclose. The provisions of this bill would address these
concerns by stating that only the established holder of a mortgage may foreclose a
mortgage.” It would therefore appear that this legislation was intended to provide a “bright
line” test for standing in foreclosure actions.
The effectiveness of the Bill in achieving the desired legislative intent, however, remains to be
seen. Pursuant to the Uniform Commercial Code as enacted in the State of New Jersey, only a
person entitled to enforce the note may prosecute a foreclosure proceeding. How Judges in
the State of New Jersey apply the Bill and the Uniform Commercial Code in determining
challenges to standing is something we will continue to monitor and report upon.
Nevertheless, it is now clear that the recording of an assignment of mortgage into the
foreclosing entity is a pre-requisite to the institution of foreclosure proceedings in the
overwhelming majority of cases. Where an assignment of mortgage is unobtainable (or
extremely difficult/time consuming to obtain), the action may proceed so long as the most
recent recorded assignee is joined in the complaint.
Stern & Eisenberg, PC, is a regional law firm that provides an array of services to institutional
lenders and private clients alike. To the extent we may assist you in navigating or
understanding the Bill specifically or the New Jersey foreclosure process generally, please
contact Steven Eisenberg (firstname.lastname@example.org) or David Lambropoulos
(email@example.com) at your convenience.
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