State of New Jersey - Motor Vehicle Commission
It sounds like a past owner lost or mislaid the MCO (Manufacturer's Certificate of Origin) which is the initial "title" document that accompanies a new motor vehicle. I don't know if the USCG retains it during documentation.
I'd suspect NJ DMV is very much like NY DMV. Unless you are at an office which handles a lot of boats, the folks working there have absolutely NO idea how to handle the paperwork on them. It pays to use an office where they handle boats every day.