As per Nancy Koch, Esq., NJ State Counsel for Old Republic National Title Insurance Company, please be advised that Governor Corzine recently signed into law an amendment to the Fair Foreclosure Act which establishes a statute of limitations for certain mortgage foreclosures. Enacted as P.L. 2009, c. 105, this law was effective August 6, 2009.
As a reminder, a statute of limitations is a law which sets the time in which a lawsuit may be filed. (There are different statutes of limitations for different actions or charges and they apply to both criminal and civil matters.) If the limitations period set by the statute expires without a lawsuit or charges being filed, such suit or charges may no longer be filed.
You will recall that prior to this enactment, New Jersey did not have a codified statute of limitations specifically applicable to mortgage foreclosure actions. Courts in New Jersey had generally applied a 20 year limitation period to mortgage foreclosure actions meaning that a lender had to institute a foreclosure action within 20 years from the date of default or be barred from instituting the foreclosure action.
It is important to note that the limitations periods established by this law apply only to residential mortgages which are defined in the Fair Foreclosure Act as mortgages on owner-occupied one-to-four family houses or condominium units.
The new law provides that an action to foreclose a residential mortgage shall not be commenced once the earliest of the following time periods have expired:
a. Six (6) years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage or the note . . . except that if the date fixed for the making of the last payment or the maturity date has been extended by recorded or unrecorded agreement the six year period shall run from the extended date; or
b. Thirty-six (36) years from the date of recording of the mortgage (as long as the mortgage does not provide for a repayment period in excess of 30 years); or
c. Twenty (20) years from the date on which the mortgagor defaulted.
While the Inter-Underwriter Indemnification Agreement continues to allow insuring without exception to many prior owner mortgages, the enactment of this law will allow title insurers to insure without exception to some mortgages where the Agreement may not apply.