Avoiding Foreclosure in New Jersey: A Complete Resource

If you're a New Jersey homeowner struggling to make mortgage payments, you're not alone. Economic challenges, job loss, medical emergencies, or unexpected expenses can quickly create financial hardship. The good news is that foreclosure is not inevitable, and New Jersey offers several protections and resources for homeowners facing difficulty.

This guide outlines the foreclosure process in New Jersey and provides practical strategies to help you keep your home or exit with minimal financial damage.

Understanding the New Jersey Foreclosure Process

New Jersey is a judicial foreclosure state, meaning lenders must go through the court system to foreclose on a property. This process typically follows these steps:

1. Missed Payments and Default

Most lenders won't start foreclosure proceedings until you've missed 3-4 months of payments. During this pre-foreclosure period, you'll receive multiple notices and calls from your lender.

2. Notice of Intent to Foreclose

Before filing a foreclosure complaint, New Jersey law requires lenders to send a Notice of Intent to Foreclose at least 30 days before filing with the court. This notice must include:

• The amount required to cure the default
• The name and contact information for someone who can discuss loan modification options
• A statement of your right to cure the default

3. Foreclosure Complaint

If the default isn't cured, the lender files a complaint with the county court where the property is located. You'll be served with this complaint and have 35 days to file an answer.

4. Mediation Program

New Jersey offers a Foreclosure Mediation Program where homeowners can meet with lenders to try to reach a resolution. You can request mediation up until the time a judgment is entered.

5. Sheriff's Sale

If mediation is unsuccessful and the court grants a final judgment of foreclosure, a sheriff's sale is scheduled (usually 30-60 days later). The sale can be postponed twice at the homeowner's request, each time for 30 days.

6. Right of Redemption

Even after the sale, New Jersey homeowners have a 10-day right of redemption period where they can still save the home by paying the full judgment amount plus interest and costs.

Early Intervention Strategies

The earlier you address potential foreclosure, the more options you'll have:

1. Contact Your Mortgage Servicer

As soon as you know you'll have trouble making payments, contact your mortgage servicer. Many lenders offer hardship programs that aren't advertised. Document all communications and get any agreements in writing.

2. Assess Your Financial Situation

Create a comprehensive budget showing all income and expenses. This will help you determine how much you can realistically afford to pay toward your mortgage and will be required for most assistance programs.

3. Seek Free Housing Counseling

New Jersey has HUD-approved housing counselors who provide free assistance to homeowners. They can help you:

• Understand your options
• Communicate with your lender
• Apply for assistance programs
• Develop a budget and action plan

Contact the New Jersey Housing and Mortgage Finance Agency (NJHMFA) at (800) 654-6873 or visit their website to find an approved counselor near you.

Mortgage Modification and Assistance Programs

Several programs can help New Jersey homeowners avoid foreclosure:

1. New Jersey HomeKeeper Program

This program provides financial assistance to homeowners who are at risk of foreclosure due to unemployment, underemployment, or financial hardship.

2. Hardest Hit Fund

New Jersey received federal funding to help homeowners in counties most severely affected by economic downturns. These funds can be used for mortgage payment assistance, principal reduction, or transition assistance.

3. Loan Modification Options

Depending on your situation, your lender might offer:

• Repayment Plan: Adds missed payments to future payments
• Forbearance: Temporarily reduces or suspends payments
• Loan Modification: Changes loan terms (interest rate, term length, or principal)
• Principal Reduction: Reduces the amount owed on the mortgage

4. Refinancing Options

If you have equity in your home but are struggling with high interest rates, refinancing might be an option. Programs like HARP (Home Affordable Refinance Program) and FHA Streamline Refinancing are designed for homeowners who might not qualify for traditional refinancing.

Legal Protections and Defenses

New Jersey homeowners have several legal protections:

1. Foreclosure Fraud Prevention Act

This New Jersey law helps protect homeowners from foreclosure rescue scams. Be wary of any company that:

• Asks for upfront fees
• Promises to save your home
• Tells you not to contact your lender
• Asks you to transfer your deed

2. Common Legal Defenses

Some potential defenses in foreclosure cases include:

• Predatory lending practices
• Servicer not following proper procedures
• Errors in mortgage documentation
• Violations of the Truth in Lending Act
• Violations of the New Jersey Consumer Fraud Act

3. Legal Representation

If you can't afford an attorney, New Jersey's Legal Services offers free legal assistance to qualifying low-income residents. Contact them at (888) 576-5529 or visit their website.

Alternative Solutions to Foreclosure

If keeping your home isn't possible or desirable, consider these alternatives:

1. Short Sale

A short sale allows you to sell your home for less than you owe on the mortgage, with the lender agreeing to accept the proceeds as full or partial satisfaction of the debt. Benefits include:

• Less damage to your credit than foreclosure
• Potential for relocation assistance
• Possibility of debt forgiveness

2. Deed in Lieu of Foreclosure

This involves voluntarily transferring ownership to the lender in exchange for release from the mortgage obligation. Like a short sale, this typically has less negative impact on your credit than foreclosure.

3. Cash for Keys Programs

Some lenders offer cash incentives for homeowners to vacate the property in good condition, rather than proceeding with a lengthy foreclosure process.

4. Sell to a Cash Buyer

For homeowners who need to exit quickly, selling to a reputable cash buyer can provide a fast solution. Benefits include:

• Closing in as little as 7-10 days
• No need for repairs or improvements
• No commission or closing costs
• Avoiding foreclosure on your credit history

Creating an Action Plan

If you're facing potential foreclosure in New Jersey, follow these steps:

1. Don't ignore the problem – the longer you wait, the fewer options you'll have
2. Open all mail from your lender – important notices have timelines attached
3. Contact a HUD-approved housing counselor
4. Gather financial documents (pay stubs, bank statements, tax returns, bills)
5. Review all assistance programs you might qualify for
6. Consider all alternatives if keeping the home isn't possible
7. Watch for scams – verify any company's credentials before working with them

Conclusion

Facing foreclosure is stressful, but New Jersey homeowners have multiple options and protections. By acting early and exploring all available resources, you can often find a solution that minimizes financial damage and helps you move forward.

If you're considering selling your home to avoid foreclosure, we can provide a no-obligation cash offer and information about your options. Our team understands the urgent nature of pre-foreclosure situations and can work within your timeline to help you avoid the foreclosure process entirely.

*This article is for informational purposes only and does not constitute legal advice. Please consult with an attorney for legal advice regarding your specific situation.