New Jersey and New York Legislative Update

October 15, 2019

New Jersey has enacted a foreclosure mediation act, effective November 1, 2019.  New York has amended the laws regarding servicing transfers and loan modifications, effective November 12, 2019.




The New Jersey legislature enacted the New Jersey Foreclosure Medication Act (“Act”) which codifies the state’s foreclosure mediation program.  The Act is intended to ensure the continuation of the mediation program and assist homeowners and lenders in pursuing a mutually agreeable alternative to foreclosure litigation.


The Act applies to owner-occupied one-to-three family residential property that is the homeowner-borrower’s primary residence.


Lenders must provide the borrower with written notice of the option to participate in the foreclosure mediation program at the time the borrower receives the notice of intention to foreclose and again when filing a mortgage foreclosure action. 


The court may order mediation or the borrower may request mediation.  The borrower may not be required to pay any fees to participate in the mediation program.  The party filing the foreclosure action, however, must pay a fee of $50, in addition to the filing fee, which will be used to fund the foreclosure mediation program.


The parties must participate in mediation in good faith.  This includes, but is not limited to, the mortgage lender or its servicer attending the mediation session in person or by telephone through a person with the authority to consider alternatives to foreclosure so that the parties may reach a mutually acceptable loan modification, loan workout, refinancing agreement, or other resolution.  If any party or attorney for a party fails to attend a mediation session or to make a good faith effort to mediate, the court may impose a civil penalty of up to $1,000 on a party or its attorney or allow a party to recover reasonable attorney’s fees and/or litigations expenses in addition to any other sanction the court deems appropriate.




The New York legislature amended its banking laws to provide additional safeguards for homeowners whose loans are transferred or sold while in the process of a loan modification.


The law now provides that if a mortgage is sold or transferred during the loan modification process, the bank or financial institution selling or transferring the mortgage must provide the borrower with a written list of all documents relating to the modification that were provided to the bank or financial institution to which the mortgage was sold or transferred.


Further, if a borrower has been approved in writing for a modification and the servicing of the loan is transferred or sold to another servicer, the new servicer must honor the terms of the approved modification.


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Diane Jenkins

Director, National Mortgage Compliance Practice Group, AsurityDocs Of Counsel, Sandler Law Group

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