Interaction of New Jersey Lack of Prosecution Dismissals with Federal COVID-Related Foreclosure Moratorium

Recently, S&E Attorney Lucas Anderson, Esquire, advised a client that a lack of prosecution warning had been received on one of their federally-backed mortgage foreclosure cases. The client asked: “How can the New Jersey state court dismiss this action if it is on hold because of the moratorium on foreclosure of federally-backed mortgages?” This question highlights one of the many issues facing mortgage lenders and servicers: state courts, where most foreclosures are prosecuted, are not obligated to recognize holds placed by entities such as Fannie Mae and Freddie Mac.

New Jersey Court Rules (Rule 4: 64-8) provide that a foreclosure action shall be dismissed if no required action (e.g. the filing of an answer, motion for default, or motion for judgment) has been taken within 12 months. The federally-backed foreclosure moratorium has effectively halted the prosecution of federally-backed mortgage foreclosure actions for months, thus leaving these cases subject to dismissal under Rule 4: 64-8. Unfortunately, there is no way to avoid these dismissals, as the New Jersey State Court does not recognize the federally-backed foreclosure moratorium as a reason to avoid a lack of prosecution dismissal. However, the cases can be reinstated by motion once the moratorium has been lifted. Stern & Eisenberg’s attorneys are here to assist our clients with getting their cases reinstated and moving once the federal holds have been lifted. For questions, please reach out to Lucas Anderson.

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