IN NEW JERSEY
Shown here are typical documents seen in a foreclosure case: notice of intent, foreclosure complaint, notice of sheriff sale
-The foreclosure process is unique in NJ
-There are many steps involved
-The process allows for ample time to come up with a plan to avoid foreclosure
-See below for information on the foreclosure process in NJ
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The foreclosure process differs from state to state, and general information that one finds on the internet may not apply to every state.
New Jersey is a judicial foreclosure state, meaning the bank has to go to court to try to take your home. New Jersey is also one of only two states that has a separate Chancery Court intended to handle suits which seek equitable relief, such as foreclosure.
Equitable relief is distinct from monetary relief. A foreclosure in New Jersey is brought in the Chancery Court because the bank is seeking an equitable remedy - to sell the collateral property.
The Foreclosure Process in New Jersey typically involves the following steps
1. "Default" in making your loan payment - You miss making your mortgage payments, and often a notice of default is sent out by your bank or mortgage company.
2. Notice of Intent to Foreclose - a notice that the lender is required to send out pursuant to New Jersey Law. This notice must contain certain information.
3. Foreclosure Complaint is filed in court. This is a type of law suit that the lender begins after time has passed since the Notice of Intent to Foreclosure. Along with the Complaint, a Lis Pendens is filed with county clerk where the property is located.
4. The Foreclosure Complaint is Served. Generally, the bank must effectuate "personal service" of the complaint, through delivery in person to you or a household member. If the bank cannot find you, they will try to use "substitute" service, such as service through publication in a newspaper. Therefore, if you did not receive a complaint in hand, it is still possible that a complaint was filed and that the foreclosure case has already begun.
5. Once the Complaint is served on the homeowner (who is the "Defendant"), there is time allotted for to file an "Answer" in response.
6. It is important to file an Answer and obtaining counsel to represent you prior to this will help ensure that they can assist you with filing an effective Answer.
7. If no Answer is filed, Entry of Default (not the same as "Default" mentioned earlier) is made with the Court.
8. Next, a "Notice to Cure" is issued, giving time for the homeowner to cure the arrears. If no cure is made, an application for Final Judgement is made by the bank which sets the amount owed.
9. A Final Judgement application is submitted to the "Foreclosure Unit" in Trenton, which is a part of the court tasked with handling foreclosures. If the proofs submitted are sufficient, Judgment is entered in favor of the bank and a Writ of Execution Issued. The Writ is what instructs the local county sheriff to sell the property on behalf of the bank.
10. A Sheriff Sale is scheduled by the local county sheriff. Foreclosures are a source of income for the sheriff, which makes a commission from the sale.
11. Sheriff Sale occurs, with either a 3rd party purchasing the property or the your bank/mortgage company taking the property. The bank/mortgage company typically takes the house in cases where the debt owed on the mortgage is greater than the value of the house. In any case, you no longer own the home at this point.
12. Eviction. After the sheriff sale is concluded, the new owner will schedule an eviction or ejectment. When the day of eviction arrives, the sheriff will physically remove the occupants and belongings from the house.
During the process outlined above, there are a number of things that can be done to defend against the foreclosure including:
1) contact and negotiation with the mortgage company or loan servicer to correct errors (where applicable)
2) negotiate with the lender to restructure payments (loan modification)
3) answering the foreclosure complaint and asserting applicable counterclaims
4) filing motions where appropriate and necessary
5) applying to the court to delay a sheriff sale or eviction
Navigating the foreclosure process is challenging and stressful!
We strongly recommend enlisting an attorney to help protect you and to fight on your behalf to help you attain the best possible result.