(Part 2 in a series)
Nothing about the foreclosure process is happy or heart-warming. It is stressful and humiliating. But New Jersey is one of the best states to live in if you have to go through this ordeal.
New Jersey is a judicial foreclosure state, and that’s a good thing. You can’t lose your home until the court issues a final judgment – and even then there is hope to get your property back. New Jersey also has laws that favor homeowners and one of the longest timelines before the actual foreclosure occurs. Here’s the process in a nutshell:
Judicial foreclosure vs. non-judicial foreclosure
Some states allow lenders to declare a debtor in default and proceed directly (and rather quickly) to eviction and auction. Under New Jersey’s Fair Foreclosure Act, only a court can authorize foreclosure. There is substantial due process, to ensure that banks and mortgage companies comply with the rules, and to give homeowners a fair opportunity to save their property. Because of these homeowner-friendly protections, the average New Jersey home foreclosure takes about three years.
However, that does not mean you can simply live in a house for three years rent-free. If you stop paying your mortgage altogether, you will accelerate the foreclosure timeline AND you will likely still be on the hook for a deficiency judgment AND you will lose any equity AND you will lose any leverage with the lender to work out a solution. But if you take action – like contacting a foreclosure defense lawyer and making a good faith effort to catch up on payments – you can save your home or buy time.
Key stages of the New Jersey judicial foreclosure process
- Under federal law, the lender cannot commence foreclosure until you are more than 120 days delinquent.
- The lender must send you (by certified or registered mail) a Notice of Intention to Foreclose. You must be given at least 30 days to pay the mortgage arrears.
- If 30 days pass without a resolution, foreclosure can commence. The lender must personally serve you with the summons and complaint, or get court permission to serve you by publication.
- From the date you are served, you have 35 days to file an answer. You may opt to try New Jersey’s foreclosure mediation program, by making the request within 60 days of receiving the complaint. However, mediation does not pause the foreclosure process.
- If you contest foreclosure, your case will be assigned to a superior court judge. A trial date will be set. At trial, you and the lender will present arguments on whether the lender has the right to foreclose.
- If you do not contest it, the lender can ask for an entry of default after 35 days. After an entry of default, the lender can seek an entry of final judgment.
There are several “last chance” opportunities to save your home
- At least 14 days before requesting final judgment, the lender must give you a final chance to cure the default. You must notify the lender with 10 days (certified/registered mail) with an estimate on when you will pay the balance owed. You will get 45 days from the date of your letter to cure. If you are not able to cure the default, the court grants final judgment and issues a writ of execution authorizing a sheriff’s sale (public auction).
- Once a sheriff’s sale is scheduled you can pay a fee to request a two-week extension. Additional extensions require court approval.
- Even after your home is sold at auction, New Jersey offers a statutory redemption period. You still have 10 days from the date of the sale to redeem the property by refinancing or selling it. However, redeeming the property is expensive – you may have to pay fees and costs incurred by the lender and the buyer, plus the amount the property sold for.
Get legal help early. You need time and a strategy.
The Fair Foreclosure Act was established for honest debtors who have fallen behind because of job loss, medical bills or a family crisis. But lenders and judges have little patience for homeowners who are trying to game the system. The paperwork is complex and the deadlines are strict. If you are struggling with your mortgage, contact a lawyer sooner than later. An attorney can negotiate with lenders on your behalf, advocate for you in the judicial foreclosure process, or pursue alternatives.