Bulletin: NJ000040

Dear Associates:

A new law, which provides for alternate methods to cancel mortgages of record, was signed by Governor Whitman on March 12, 1999. The new law will be effective on June 10, 1999. The new law was Assembly Bill 161 (the "Bill"). (For a copy of the Bill, contact the New Jersey District office.) It provides that mortgages may be cancelled of record by entities and individuals other than mortgagees of record. A mortgage servicer, an unrecorded assignee, or an attorney or title insurance producer may all discharge mortgages of record subject to specific requirements contained in the Bill.

A servicer of a mortgage may discharge a mortgage of record so long as the discharge meets the requirements of the N.J.S.A. 46:15-1.1 (the "Recording Act"), and contains the following wording in the body of the document: "__________ is authorized to execute this instrument pursuant to the terms of a written agreement dated _______, between _____________, as owner or holder of the mortgage, and _______________, as servicer thereof."

The holder of a mortgage by unrecorded assignment may discharge a mortgage of record so long as the discharge meets the requirements of the Recording Act, and it contains wording setting forth the particulars of all assignments of the mortgage, whether recorded or not.

A New Jersey attorney or a New Jersey licensed insurance producer may discharge a mortgage so long as she/he has paid the mortgage in full, the mortgage has not been cancelled in accordance with N.J.S.A. 46:18-11.2 and the discharge of mortgage is accompanied by an affidavit setting forth the circumstances of payment in substantially the form attached hereto.

As with any new law, I am sure this statute will raise many questions as it is implemented. Please feel free as always to call the state office for assistance and we shall keep you advised as to any matters relative to the new law that come to our attention.