The Not So Short “Short Sale”: New Legislation in New Jersey Helps Expedite the Short Sale Process
The New Jersey Legislature recently amended New Jersey’s Fair Foreclosure Act to require loan servicers on residential mortgages to engage in consultations on short sales with prospective buyers, and to respond to short sale offers from buyers within certain periods. See A2060. Under the bill, which will take effect on September 19, 2017, a mortgage loan servicer is required to respond to a good faith offer from a seller, seller’s agent, or authorized third party to purchase the property through a short sale within 60 days of the date of the offer. A response would include an approval, a denial, or a request for further information. If the servicer does not approve a short sale or does not respond to the offer within 60 days, any deposit made by the potential buyer in connection with the purchase of the property will be refunded and the buyer will have no further obligation with respect to the property. The bill further amends the Fair Foreclosure Act to define “short sale” as “the sale of real property in which the lender or servicer agrees to release the lien that is secured by a residential mortgage on the property upon receipt of a lesser amount than is owed on the mortgage.” This amendment will not affect the servicer or debtor’s ability to participate in mediation or settlement regarding the mortgage at issue.