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New Jersey Foreclosure Blog Information and Resources Related to New Jersey Foreclosure Law

Credit Report Not Notice of Unrecorded Mortgage

Posted in Commercial Foreclosure Law, Mortgage Foreclosure, New Jersey Foreclosure

A New Jersey appeals court has recently upheld the priority of a recorded mortgage over a prior unrecorded mortgage disclosed by the credit report obtained by the second lender.  Under New Jersey law recorded instruments take priority as a general matter.  One exception is where the second lender has actual knowledge of the existence of the prior mortgage that is not recorded.  In the present case, the first lender failed to record and the credit report obtained by the second lender revealed the existence of the prior mortgage loan.  Nonetheless, the appeals panel concluded that the notice was not sufficient to overcome the first in time recording rule, because the purpose for obtaining the credit report was to examine credit history and credit score to establish creditworthiness, and not to identify pre-existing liens on the property.  The case is Metropolitan Bank v. Jamal, decide September 23, 2013.