It is in both the borrower and the lender's economic and legal interest to be aware of foreclosure laws. Failing to make mortgage payments will result in the lender taking legal action against the borrower. Each state has its own rules, so NJ foreclosure laws may not apply to those living in other areas of the United States.
New Jersey law specifies that any foreclosure dispute must be settled in court if the borrower defaults on his payments. The property cannot be repossessed outside the judicial system, making New Jersey a judicial foreclosure state.
The rules are specified inside the New Jersey Fair Foreclosure Act.
If someone purchases a property via a mortgage loan and fails to make payments, the loan will be considered in default. There are variations, but the average default period is considered to be about three months of late or missing payments. However, the lender can attempt to initiate the process after just a single month.
Federal law specifies that a foreclosure complaint cannot be filled until 120 days are passed. For a more detailed explanation of the proceedings, click here.
The legal code specifies that certain steps must be taken before a lender files a complaint against the borrower.
NJ foreclosure laws, Notice of Intention to Foreclose
Before any official complaint can be registered, the homeowner must receive an official certified email that contains a Notice of Intention to foreclose. This requirement is one of the main protections afforded to homeowners that defaulted on their mortgage.
This notice must precede the main complaint by at least 30 days, or at most 180 days. Borrowers will be notified of their defaulted status and will be offered the opportunity to pay the owed amount over a period of 30 days.
According to the NJ foreclosure laws, the notice must include the following:
Details regarding the lender's stake in the home. Said lender must declare ownership over a mortgage on the home. Also, contact details for both the lender and its legal representative must be provided.
The reason that triggered the foreclosure process will be mentioned. Missed payments represent the most common cause, yet there can be other reasons provided.
The notice must present an option to cure the default, a chance to pay what is owed over a pre-determined period. NJ foreclosure laws specify that if the homeowner manages to cover the defaulted amount, the lender is obligated to reinstate the mortgage. It is not legal for the lender to charge court fees or legal representation costs during this interval.
Notice will include a declaration of the amount that must be paid in order to cancel the foreclosure process. The amount of time given can vary, but the regular period is 30 calendar days.
Details regarding what will happen if the owed amount is not cured.
A declaration that it is possible to halt the foreclosure proceedings even if the complaint was already filed.
A declaration that the owner has the possibility to transfer title or sell the home during the ongoing foreclosure process.
Details about how to contact the county referral service, in addition to a notification that explains the importance of hiring an attorney. The NJ foreclosure laws can be challenging to penetrate and understand without legal counsel.
Details about how to contact the NJ Department of Banking, along with several noted resources that could help the borrower to cure the defaulted amount.
If there is any doubt regarding the defaulted amount, the notice will provide contact information for the lender institution or one of their legal representatives. Should the borrower disagree with the number and the calculated amount, it is legal to contact the lender.
NJ foreclosure laws specify that once the notice is given, the lender is free to file the foreclosure complaint. This situation results from the failure to reach an agreement within the standard 30 days set by the notification.
All complaints are handled by the Superior Court of New Jersey, namely its Office of Foreclosure. This Office will delegate the process unless an answer is filed. Then, the foreclosure must be sent to a county judge's office.
In this situation, the lender is referred to as the plaintiff. The plaintiff's complaint must detail all reasons why the foreclosure should proceed.
Serving the NJ foreclosure complaint
After the plaintiff successfully files the foreclosure complaint, the borrower must be notified and personally presented with the said complaint. In a legal context, the borrower is known as a defendant. Also, the defendant must receive an exact copy of the complaint and the court summons. These documents can arrive via mail.
In some cases, the lender will not be able to contact the homeowner to serve him/her. As a result, a request must be filed for permission to serve you via publication. If granted, the permission enables the lender to indirectly serve by publishing the notices using the local newspaper.
The complaint will remind the defendant of his/her legal options. The New Jersey foreclosure mediation program remains on the table. Borrowers had a 60 day period to make a request.
Participating in the program after those 60 days was prohibited, except for special cases.
However, since 2019, the limit has been removed, and the Mediation program has been made a permanent fixture of the process.
Responding to the Summons and Complaint
NJ foreclosure laws specify that the defendant has 35 days to file an Answer after receiving the foreclosure summons and complaint. As its name suggests, it is supposed to be a legal document that responds to the summons.
Borrowers are free to deny untrue claims and validate true statements. In general, you are expected to present your case against the allegations.
Court authorities will review your Answer. On their decision hinges your entire case. They can either declare it to be a non-contesting or a contesting answer.
If you manage to construct a valid argument against the foreclosure attempt, the Office of Foreclosure will pass on the case to your county's superior court. As soon as the case transfer is completed, a trial date will be set.
During the trial, the plaintiff will try to convince the judge of his/her case's legitimacy, soliciting approval for the foreclosure process. As the defendant, you will attempt to argue the opposite case.
Once the court has considered the arguments on both sides, a decision will be reached.
Yet, this process will follow a contesting answer. If your initial answer to the summons and the complaint is deemed to be non-contesting from the start, the trial will be skipped. The defendant's case will not be sent to a judge.
There will be occasions when the homeowner doesn't provide an answer to the summons. As a result, the plaintiff can solicit entry of default after a period of 35 days has passed. In this regard, a lack of an answer or a non-contesting answer is functionally the same in the court's eyes.
If the entry of default is not answered, the institution that issued the mortgage loan can solicit the court to pass the final judgment. Yet, this request must be preceded by a final notice.
The lender must send a final notice to the borrower, giving him/her the chance to pay what is owed. If 14 days pass and the request is not answered, the lender can solicit the final judgment.
If the borrower can pay the specified amount, he/she must respond via registered or certified email. From the moment that the response is sent, you will have 45 days to pay the sum.
Should this 45-day period go by without any received payment, the legal authorities will grant final judgment in favor of the plaintiff. A court-issued writ of execution will permit the local sheriff to auction the home.
Under NJ foreclosure laws, the current owner will be informed regarding the date of the auction.
The court approval of a sheriff's auction is one of the final steps towards re-selling your property. However, even in this late stage, there is something that can be done by an owner who doesn't wish to lose his/her house.
The owner can choose to pay a fee in order to postpone the auction. Yet, the delay period can stretch for a maximum of two weeks. After this period, only a written request to the court, coupled with another payment, will be recognized.
The NJ foreclosure law has changed recently, bringing some changes that promise to help the owner. For example, a 120-day time slot was allotted for the sheriff to make the sale. Now, that period was extended to 150 days.
Also, a total of five adjournments can be made by the officials who are charged with coordinating the sale.
Two can be made by the borrower, two by the mortgage loan provider, and a final adjournment if both parties agree to it.
Occasions to redeem the lost property
If the sale resulted in your property being sold-off, there is still a chance to recuperate what was lost. NJ foreclosure laws specify a ten-day period during which the former owner can sell or refinance the home.
If the court proclaims a deficiency judgment against the mortgage loan provider, the former homeowner will have six months to redeem what was lost.
After the home is sold
If the right to redeem is not exercised and the ten days pass, the sale will be considered final. The entire amount of money will go towards covering the cost of the mortgage. However, the property can sell for more than the mortgage's value.
In that case, the money left over after the mortgage is paid in full will go towards the previous owner.
The opposite case can occur, where the property is sold for less than the amount owed. In that situation, the party that provided the loan can sue the borrower for the difference.
A decision that requires the former owner to pay the difference after the foreclosure is called a deficiency judgment.
In essence, under NJ foreclosure laws, it is still possible to still owe money even after you lose your home, along with the mortage payments made so far.
Complete ownership over the property will be passed on to the lender that provided the mortgage loan if no solution is found.
Finding counsel and aid
The term legalese exists for a reason. NJ foreclosure laws can get a little arcane, especially for those who never had to deal with these issues. It almost seems like a foreign language for many outside this field.
As is the case with any legal problem, you should contact an attorney within your price range. He/she can present you with viable options to push back against foreclosure. Options such as loan modification and loss mitigation will be explained to you by a legal professional.
There are lawyers whose bread and butter consists of foreclosure cases.
Besides, housing counselors are excellent sources of information.
Whatever you may choose to do, panicking and attempting to solve the problem on your own will do more harm than good.
Cases are as unique as the people that take part in them. However, it is helpful to analyze general trends. They may not apply to everyone, but they will give you a good indication of reality.
In most cases, none of the parties involved benefit from a foreclosure. The owner will lose a home, while the lender will have to settle for a quick and unprofitable sale.
NJ foreclosure laws give the owner a chance every step of the way. Legal notices must highlight options to pay back the owed amount. Also, even after you lose the court case, you can fight to recuperate your property.
You can pay for delays, argue against foreclosure, and present your case in front of a court.
An astute legal counselor is often required, as he/she can present you with the options at your disposal.
Regardless of which side of the argument you find yourself on, NJ foreclosure laws will always try to mitigate the damage caused by this regrettable situation.
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