The state’s Supreme Court ordered the biggest lenders to prove they are acting lawfully in processing foreclosures. While that only seems like common sense, Supreme Court Chief Justice Stuart Rabner told the Wall Street Journal he believes this is the first case in which the state courts have placed that particular ball where it belongs, in the bankers’ court.

“It’s important that the judiciary ensures that judges are not rubber-stamping questionable documents that may not be reliable,” Rabner said. “The steps we’ve taken today are designed to ensure the integrity of that judicial process.”

The six biggest mortgage outfits in the state – Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Ally Financial and OneWest – have till Jan. 19 to file “documents proving their internal foreclosure application processes are up to standards, or the applications will be suspended,” the Star-Ledger reports.

The move comes after three months of revelations about banks playing fast and loose with the legal documents that establish homeownership and their right to take back a house when a borrower fails to keep up with loan payments.

Facing an avalanche of bad publicity, the banks suspended foreclosure sales and promised to improve their practices. But fixing the broken robosigning model has proved costlier and more complicated than the bankers might have liked, which has added to the fog hanging over an already decrepit housing market.

Bank of America said this month it was restarting some foreclosures, after a lengthy delay. But it and the government-sponsored mortgage investors Fannie Mae and Freddie Mac have touchingly called for a Christmas season foreclosure holiday, so the New Jersey order won’t have a huge impact on the pace of bank-owned properties moving through BofA’s already bursting books.

Other efforts to nibble away at the edges of the foreclosure mess continue apace as well. Wells Fargo said Tuesday it reached a settlement with California under which borrowers with some of the most egregious bubble-era loans will be able to earn some loan forgiveness by staying current on payments.

But it’s clear that much more will need to be done over coming years to fix the deeply dysfunctional U.S. mortgage system, starting with the rules governing what’s an acceptable loan and how the banks might handle it.

To that end, a group of 50-odd economists, investors and policy wonks sent a letter Tuesday to Treasury Secretary Tim Geithner, Fed chief Ben Bernanke and FDIC Chairman Sheila Bair, among others, urging them to clean up this swamp by mandating national standards for mortgage servicers.

The letter comes as U.S. regulators face an April deadline for writing new rules called for by last summer’s Dodd Frank Act.

“The chaotic situation in the mortgage market today demands immediate action to ensure all parties are treated fairly and to restore the confidence needed to support a recovery in real estate markets and the entire U.S. economy,” the letter reads. “The time to act is now.”