The Supreme Court of New Jersey upheld an appellate decision Monday morning on one of the cases experts say is holding up the state's foreclosure processing — but the timing may work out in the state's favor.
In the case of U.S. Bank National Association v. Maryse and Emilio Guillaume, the court affirmed the decision by the appellate court to reject the Guillaumes' motion to vacate a default judgment of foreclosure.
The Guillaumes had contested the foreclosure on their East Orange property because the notice of intention was not issued correctly under the guidelines of the Fair Foreclosure Act, as well as several alleged violations of the Truth in Lending Act.
The trial court threw out the TILA argument and ordered the mortgage servicer, America's Servicing Co., reissue its notice of intention with the correct information for the lender, U.S. Bank.
The Supreme Court ruled that the order to reissue the notice of intention was an appropriate cure by the trial court, and overruled an earlier decision that stated the only remedy for a violation of the statute is dismissal of the foreclosure without prejudice.
Reed Smith LLP, in Princeton, represented Wells Fargo in the case. Mark Melodia, a partner in the office, said the case could be a significant step in restoring "order to New Jersey's real estate market, and is expected to help put the state's economy on track to recovery."
Jeffrey Otteau, president of the Otteau Valuation Group, said foreclosures in New Jersey were already on the rise in January, but the court decision could "accelerate" the process of clearing the backlog.
Otteau said the majority of foreclosures will arise from urban and rural areas, where housing prices are likely to continue to decrease — but that doesn't mean the state isn't ready for the influx of foreclosed homes.
"From a timing standpoint, this is really a much better time for this to all move forward than a year or two ago would've been, because the housing market is strengthening significantly," Otteau said.
Melodia said the decision is "a key step toward resolving the many thousands of foreclosures that have been in limbo."
"Although they cleared Wells Fargo to reinitiate foreclosure activities last summer, until the court's decision today in Guillaume, it had been impossible to do so," Melodia added.