The Chief Justice of the New Jersey Supreme Court, Stuart Rabner, has set a hearing on January 19 which could lead to a suspension of foreclosures for all of the state’s leading servicers. Judge Rabner basically wants the servicers to show cause for why foreclosure processes should not be suspended, which puts the onus on them. Judge Mary C. Jacobson has been designated by Judge Rabner to hear this case.

This is from the press release from the New Jersey Supreme Court:

“Today’s actions are intended to provide greater confidence that the tens of thousands of residential foreclosure proceedings underway in New Jersey are based on reliable information. Nearly 95 percent of those cases are uncontested, despite evidence of flaws in the foreclosure process,” said Chief Justice Rabner.

“For judges to sign an order foreclosing on a person’s home, they must first be able to rely on the accuracy of documents submitted by lenders. That step is critical to the integrity of the judicial process,” said Rabner.

In a separate administrative order, Judge Glenn Grant has directed all lenders and servicers who have filed more than 200 foreclosure actions in 2010 to prove that there were no irregularities in those proceedings. Given the scope of foreclosure fraud, this is nearly impossible. And, Judge Rabner issued an edict similar to what has been issued by the Supreme Court in New York, essentially requiring the plaintiffs’ attorneys to certify the information filed in foreclosure proceedings.

The documents released by the courts can be viewed here and here. It’s really a simple case – here’s the evidence, and now the servicers must prove they are following the existing laws of the state courts, and if they’re not, the courts will stop the proceedings, period.

This is the first state court to undertake such a sweeping action against lenders and servicers since the revelations about robo-signers and foreclosure fraud emerged. Considering that New York has gone at least part of the way down this road already with the certification for lawyers, I’d expect Judge Rabner’s actions to be only the first.

David Dayen

David Dayen