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New Jersey man's mortgage debt wiped out by judge

A New Jersey man facing foreclosure decided to fight his mortgage lender in an effort to keep his home. Recently, the judge decided that the lender was not entitled to proceed with the foreclosure because it waited too long to pursue an action to collect the mortgage debt. The statute of limitations to bring an action for foreclosure is six years.

The judge's ruling means that the man is entitled to keep his home, and the $520,000 mortgage loan was nullified. Therefore, he now owns his home free and clear. This may be the first case in New Jersey of a court voiding a mortgage loan based on the statute of limitations. It is not yet known whether the mortgage holder will appeal the court's decision.

At one point this year, the highest foreclosure rate in the nation was in New Jersey. Numerous families across the state are in jeopardy of losing their homes, but they will not be able to avail themselves of this man's defense. If they are unable to obtain a loan modification, their homes could end up in foreclosure.

One way to forestall -- or at least postpone -- that eventuality is to file for bankruptcy. During the course of the proceedings, all efforts to collect on the mortgage debt must cease until and unless the mortgage holder obtains permission from the court to proceed outside the bankruptcy. A homeowner can use the reprieve provided by the filing of a bankruptcy to make some decisions regarding his or her financial situation. When the bankruptcy is complete, the filer could enjoy a fresh start financially with fewer debts, which may allow the filer to keep his or her home.

Source:, "Morris County man facing foreclosure beats creditors, takes ownership of house", Justin Zaremba, Nov. 15, 2014

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