By Justin Liva, Mojo House BuyersA foreclosure letter is frightening, and the legal language makes it worse. The good news, if there is any, is that foreclosure in New Jersey has to go through the courts in defined steps, and at several of them you still have real choices. Here's how the process works, based on what the courts and state agencies publish.
I'm not a lawyer, and this isn't legal advice. If you've been served, talk to a foreclosure attorney or a housing counselor soon.
New Jersey foreclosures go through a court
The New Jersey Courts put it simply: New Jersey is a judicial foreclosure state, so foreclosure actions must go through the court. A lender can't just schedule an auction. It has to file a case and get a judgment first.
Before any case is filed
Two rules apply before a case can start.
The federal 120-day rule. The Consumer Financial Protection Bureau says your servicer can't make a first notice or filing for foreclosure until you're more than 120 days behind on payments.
The Notice of Intention to Foreclose. New Jersey requires residential mortgage lenders to give borrowers at least 30 days' notice before starting a foreclosure, and lenders file a copy of that notice with the Department of Community Affairs. According to the courts, the notice has to spell out several things, including:
- the reason for the intended foreclosure and the lender's contact information
- the amount needed to cure the debt
- what happens if the debt isn't cured
- a statement that you can sell or transfer the title
- your right to hire an attorney
- information about the foreclosure mediation program
The courts say debtors have 30 days from receiving the notice to pay off the debt or make other arrangements with the lender. Read that notice carefully. The cure amount on it is the number you'd need to catch up.
The complaint and the 35-day window
If the debt isn't cured in that 30-day period, the courts say the lender files a foreclosure complaint with the Office of Foreclosure. The defendant then has 35 days to file an answer.
If the defendant accepts the complaint or doesn't respond within 35 days, the courts consider the case uncontested. The courts explain that uncontested cases don't go to a judge and stay with the Office of Foreclosure. A contested case is assigned to a Superior Court judge in the county where the property sits.
The courts strongly recommend hiring an attorney if you intend to challenge the complaint, and whether you have a defense worth raising is a question for that lawyer.
Free foreclosure mediation
New Jersey runs a foreclosure mediation program for eligible residential cases, and the courts say it's free. Applying means filing the mediation form along with a checklist and a financial worksheet. Eligibility is set by Court Rule 4:64-1B, and the courts recommend working with a free HUD- or NJHMFA-certified housing counselor.
The courts describe mediation as a neutral third party hearing your case; the mediator doesn't decide anything but guides both sides toward an acceptable outcome. The lender can keep pursuing the foreclosure while mediation goes on, so the courts urge you to request it as soon as possible after a notice. If you haven't been through the earlier options, my guide on what to do when you're behind on your mortgage covers the choices a servicer may offer.
Final judgment and the sheriff's sale
When the case ends in the lender's favor, the court enters a final judgment and issues a writ of execution. That writ tells the county sheriff to sell the property at public auction.
Here's where the timeline gets specific. The courts say the sheriff has 150 days from the writ to hold the sale. During that window, the debtor and the lender can each request two stays to delay it, and a fifth is possible if both sides ask for it. After the auction, the debtor has 10 days to redeem the property. The courts explain that redeeming means buying the property back or selling it, and that if the auction brings in more than the mortgage debt, the remainder goes to the debtor.
Stays can push the auction date back. They don't make the debt go away.
Where selling fits in
The Notice of Intention has to include a statement that you can sell or transfer the title. Selling is one of your options, and the more time you leave before an auction date, the more room you have to plan it.
If the house is worth more than you owe, selling before the auction lets you pay off the loan and keep the difference yourself. If you owe more than the house is worth, a regular sale won't cover the payoff, and you'd need the lender to approve a short sale.
Timing is the hard part. You want the sale closed before the auction date. My guide on how fast you can sell a house in New Jersey explains what sets that pace.
I'll be straight with you about where I fit. If you have time and the house is in good condition, an agent can usually get you a higher price. When the clock is short or the house needs work, I can make an as-is offer and close on your timeline. A house that's fire-damaged or unlivable is one I'll still look at, because I buy in any condition. There's no commission, and the offer is free. Who pays closing costs depends on the deal, and my guide to seller closing costs lists the usual ones.
You can read more on my stop foreclosure page or request an offer to see where you stand. Either way, call a housing counselor or an attorney now rather than after the sale is scheduled.