The foreclosure process in NJ is well documented and follows a strict set of guidelines thanks to the New Jersey Fair Foreclosure Act. Because of this rigidity, it is easy to identify where you are in the foreclosure process and therefore it can be useful to know what your options are at this junction.
Below, I’ll detail what the steps are in the foreclosure process so that you can understand where you are. The foreclosure process will be detailed below using fictional characters Suzy Homeowner, Larry Lender, and Sheriff Bob. Hopefully, armed with this information you can make the best decision possible to resolve the problems that have arisen.
Default
Suzy Homeowner has been laid off from work and has been unable to pay her mortgage. Suzy Homeowner is late on her mortgage payments, which is known as ‘being in default.’
Now that some time has passed and Suzy Homeowner is more than 120 days late on her mortgage, which means under federal law Larry Lender can now begin the foreclosure process.
Notice of Intention to Foreclose
Larry Lender sends Suzy Homeowner a letter via registered or certified mail stating that she has 30 days to repay her overdue mortgage or else Larry Lender will file a Complaint in Court (begin the foreclosure process).
Larry Lender must send this letter of intent 30 days prior to filing a Complaint in Court. This Letter will detail how much Suzy Homeowner must pay and presents Suzy Homeowner with her first set of choices. From here, Suzy Homeowner has a few options.
Her first option and best option is to pay back the amount that she owes and continue on paying her mortgage as she originally was. Unfortunately, due to her loss of work, Suzy Homeowner is unable to afford her mortgage and therefore, this option is not the most probable outcome.
However, if Suzy Homeowner has prospects of a legitimate job opportunity in the near future then Suzy Homeowner should begin to consider a Loan Modification. A loan modification is when Suzy Homeowner negotiates a new mortgage with Larry Lender in order to cover the costs of the late payments, but the interest rate is also renegotiated and most likely this will lead to higher monthly payments than the original mortgage.
Suzy Homeowner also has the opportunity to sell her home at this point, assuming that the home is worth more than owed on it. Suzy Homeowner can list the property with a realtor if the house is in good condition. Suzy Homeowner would ideally reach out to Move in Philly and find out who the best realtor is near her. However, if the house needs a lot of work this option becomes less plausible. In this situation, it would be ideal to sell to an investor, which Suzy Homeowner could also do by contacting Move in Philly.
Suzy Homeowner can also participate in the New Jersey Foreclosure Mediation Program. Suzy Homeowner has to pronounce her interest in the mediation program within 60 days of the first offering.
Foreclosure Complaint Filed
Larry Lender has officially filed his Complaint in Court and now Suzy Homeowner has been served. Suzy Homeowner has 35 days to file an answer. Larry Lender does not have to physically serve Suzy Homeowner, instead, Larry Lender publishes the notices in the local newspaper.
Suzy Homeowner answers by admitting to or denying any allegations appropriately.
If Suzy Homeowner decides to file a ‘contesting’ answer, then the case will go to the superior court in Suzy Homeowner’s County. From there, a trial will be set and Suzy Homeowner will defend her position that Larry Lender does not have the right to foreclose on her. Some common defenses that Suzy Homeowner may use can be found here.
If Suzy Homeowner files ‘non-contesting’, or if she does not answer the summons, then she is admitting to the allegations and the foreclosure may proceed. Suzy Homeowner can still join the New Jersey Foreclosure Mediation Program or she can sell her property, but now that time is becoming more of a factor, Suzy Homeowner is probably looking at selling her home quickly for cash.
Entry of Default
35 Days have passed Larry Lender served Suzy Homeowner and Suzy Homeowner did not answer the serving. Now Larry Lender asks the court to enter default.
Suzy Homeowner has the opportunity to answer the entry of default, but if she does not then Larry Lender will ask the court to enter Final Judgment. 14 days prior to Larry Lender asking the court to enter Final Judgment, he must send Suzy Homeowner a final notice with an opportunity to clear the debts.
Suzy Homeowner CAN answer this Final Notice prior to Final Judgment and state that she can pay the debts. In this scenario, she is given 45 days to cure the default. If she does not have the money, then she will most certainly want to sell the house and QUICKLY.
If Suzy Homeowner does NOT pay her debts, then the court will grant Larry Lender Final Judgement, which basically means that the court will issue a writ of execution. The Writ of Execution authorizes Sherriff Bob to sell Suzy Homeowner’s house at public auction. Suzy Homeowner will be given a date for the auction.