The article in last week’s New Jersey Law Journal entitled “‘Clogging’ and the Dual Collateral Loan,” Vol. 225 No. 42 (Oct. 21, 2019, p. S-3), states that “There is a paucity of New Jersey case law on clogging, but it is comprehensively addressed in Humble Oil & Refining Company v. Doerr, 123 N.J. Super. 530 (Ch. Div., 1973).”

“Clogging” was defined in the article as when a “borrower grants a mortgage on its property to a lender as security for a debt.” But the article also noted that the doctrine originated “when borrowers would give lenders a deed to the mortgaged property to be held in trust but which the lender could immediately record upon a default.” A savvy predatory lender does not wait for a default before recording the deed; other interests might intervene to defeat or minimize the value of the security.