The legal framework for foreclosures is often complicated and requires a great deal of specialized knowledge, as legal requirements and regulations can present significant differences from state to state. In New Jersey, the foreclosure process is expected to take a year or more in the case of uncontested foreclosures, with timelines able to run for significantly longer if a borrower appeals the procedure. As a judicial foreclosure state, New Jersey handles foreclosures through the court system with rules and regulation defined in the New Jersey Fair Foreclosure Act.
Although lenders in New Jersey will usually initiate foreclosure proceeding after three missed payments, legally, a lender may consider a mortgage delinquent as soon as one payment is missed.
Required by the New Jersey Fair Foreclosure Act, N.J.S.A. 2A:5—56, a notice of intent to foreclose must be served to the delinquent homeowner by the mortgage holder no less than 30 days before filing a foreclosure complaint with the court. It must contain the outstanding amount, the date by which it must be cured before foreclosure proceeding are filed, the contact details of the lender, options for aid through NGOs or state and federal assistance programs, the right to seek legal council both through a private attorney or the New Jersey Bar Association or other similar organizations, the reason for foreclosure, details of what will follow if the debt is not cured, and a statement that the owner may sell or transfer the property during foreclosure proceedings.
Filed by the mortgage holder or a representative, the foreclosure complaint asks the court for the mortgage holder or their representative to recover the property as per the terms of the mortgage agreement. The foreclosure complaint is filed with the Office of Foreclosure of the Superior Court of New Jersey, in the county where the property is located.
The summons and complaint must also include information on New Jersey’s mediation program. If the borrower is interested in pursuing this avenue, they must file a request for mediation within 60 days of receiving the foreclosure complaint, and submit an answer to the foreclosure notice. It is important to note that entering a mediation process does not halt foreclosure proceedings, and the two may unfold concurrently.
The complaint is hand-delivered to the borrower, but may additionally be served to any individuals who may have a legal interest in the property, such as a spouse or tenant. It is especially important for delinquent borrowers to not avoid being served, as the lender may ask the court to serve them via newspaper publication, meaning vital notices regarding the foreclosure process and the borrower’s ownership of the property will not reach them directly.
Per New Jersey law, a homeowner served with a foreclosure complaint has 35 days to answer, starting with the day the papers were received. The answer must contain objective and legally valid reasons for the homeowner becoming delinquent for the courts to deem the process a contested foreclosure.
Overall however, most New Jersey complaints are declared uncontested foreclosures by the courts, meaning the court has found no legal ground to object to a lender curing a defaulted mortgage via foreclosure. If a delinquent borrower chooses not to answer within the 35-day timeframe, the mortgage holder or servicer will be issued an entry of default. This will allow the foreclosure to continue as uncontested, however the delinquent borrower may still pursue multiple avenues to cure debt.
In the case of uncontested foreclosures, the mortgage holder’s next step is to seek a final judgement against the delinquent borrower. Filed with the New Jersey Office of Foreclosure, at the county court where the property is located, the final judgment application is often also sent to delinquent property owner. Before the application is filed with the court, one last notice is sent to the homeowner advising them of their rights and that they will lose property rights if a final judgement is issued.
The notice proceeding the notice of final judgement provides the homeowner with a last chance to cure their balance. If a final judgement is issued, but the delinquent borrower qualifies for Chapter 13 bankruptcy – or Chapter 11 –, they may be allowed to cure the default through a payment plan lasting between 36 and 60 months. However, overwhelmingly, foreclosure cases in New Jersey move to a writ of execution after a final judgement. If the mortgage holder’s application for a writ of execution at the is approved, the County Sheriff is given legal jurisdiction to sell the property during a sheriff’s sale.
Often, a lender will file a motion for summary judgement before a foreclosure trial starts, usually as soon as the borrower files an answer. This mean the lender is asking the court to decide in their favor and skip and additional legal procedures. If the borrower does not provide a written answer to the motion, the lender will automatically win the case to foreclose. The judge will also issue a summary judgement if the lender and borrower agree on the major facts of the case, or if the judge finds the law to be fully on the lender’s side. If the motion for summary judgement is dismissed, the case proceeds to trial.
If a case proceeds to trial, a discovery period will be declared during which both parties will have to produce facts and evidence supporting their respective cases. A judge may also require both parties to enter a case management conference to streamline discovery, or explore reaching a settlement without a trial.
When the mortgage holder has received a final judgement against the delinquent borrower, as well as a writ of execution, they may move forward with a sheriff’s sale. The delinquent owner must receive both court decisions as well as a notice with the sale date, while the property’s sale must be advertised in a local paper of general circulation for a minimum of 4 consecutive weeks. However, the homeowner has the legal right to apply for 2 two-week sale adjournments with sheriff’s office. Further adjournments are possible only if the owner files for bankruptcy, the mortgage holder agrees, or via court order.
Per New Jersey law, a homeowner’s right to ownership of foreclosed property ends after the “gavel has fallen” at the sheriff’s sale. This means that the homeowner loses any right of redemption or to cure the debt after a sale is made at the foreclosure auction. The owner does have 10 days in which they may file an objection to the sale – conditions for which are difficult to meet – or redeem the property by paying the full amount on the foreclosure judgement as well as the cost of the sale. However, if the home sells for an amount larger than what is owed to the lender, the borrower is entitled to the difference.
The foreclosure complaint only seeks to recover the property tied to the mortgage without any additional damages. But the state of New Jersey does give lenders the legal option to seek a deficiency judgement against delinquent borrowers when the property’s sale price is lower than the outstanding debt. However, this rarely happens in New Jersey in the case of delinquent mortgages secured by the debtor’s home.
Once a sheriff’s sale has occurred, and the 10-day window for objection has passed, the property’s ownership is transferred to the buyer who may now order the former owners to vacate the property. If the former owner refuses, the new owner may evict them. Enforcing eviction orders takes at least two weeks but can run on for as much as 90 days, if the court finds that the former owner needs an extended period of time to secure new housing.
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