ASSEMBLY FINANCIAL INSTITUTIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 2321

STATE OF NEW JERSEY

DATED: OCTOBER 7, 1996

      The Assembly Financial Institutions Committee reports favorably Assembly Bill No. 2321.

      Currently, the assignee of a mortgage takes the mortgage subject to all set-offs and other defenses allowable against the assignor. This bill provides that if the underlying mortgage is evidenced by a negotiable instrument, such as a promissory note, the assignee shall be a holder in due course of the instrument and shall be afforded the rights and protections of a holder in due course. A holder in due course as defined in N.J.S.12A:3-302, is a holder who takes a negotiable instrument under circumstances which legally entitle the holder to protection against certain defenses which could be raised by the maker of the instrument or a third party.