If you’re a New Jersey homeowner facing foreclosure, you’re certainly not alone. In fact, New Jersey has among the highest foreclosure rates of any state in the country.
Because of the current moratorium on evictions and foreclosures during the COVID-19 pandemic, many homeowners can stay in their homes longer than in the past. Do not assume, however, that you have plenty of time to find a solution if you’re facing foreclosure. It can take several months to work out a loan modification or come up with a Chapter 13 bankruptcy restructuring plan, for example, and can take longer to save enough money to cure a default.
To ensure you have enough time to find a way to keep your home, you should consult an experienced attorney right away and consider your options as soon as possible.
Cure Your Default
Some states allow nonjudicial foreclosures, and homeowners can file a lawsuit to challenge those actions in court. Under New Jersey law, however, all foreclosures must be judicial, which means they go through the court system (and you can’t file a separate lawsuit to challenge foreclosure). You can stop foreclosure by curing a default on your mortgage payments at any time up until the entry of a final judgment.
A default occurs when you are more than 30 days late on monthly payments. Under the law, when you are more than 120 days delinquent the lender can send you a notice of default or a notice of intent to foreclose. The lender must give you at least 30 days to cure the default before filing a complaint, and you can cure it by making the missed payments or negotiating some other resolution.
If you don’t respond to the foreclosure complaint, the lender can ultimately move for a final judgment. Before filing a motion for final judgment the lender must send you a letter giving you 14 days to let them know if you can cure the default. If you respond to the notice saying you intend to cure the default, the lender must give you an additional 45 days to cure before seeking final judgment. If you answer the complaint and raise valid defenses, your case will be transferred to a judge and you’ll get a trial. If you win, you will stop the foreclosure; if you lose, a final judgment will ultimately be entered against you. Once the lender has a final judgment, it can proceed to a sheriff sale.
In New Jersey, homeowners have the right to delay a sheriff sale of their home for 28 days by paying a fee, and they can exercise that right twice. This will not cancel the sale or stop foreclosure, but it can buy homeowners a little more time when no other option is available.
It is important to remember that even though you can cure the default at any time before final judgment, it’s better to act quickly. If you cure before the deadline given in the first notice and later default again, you’ll be given another chance to cure. If you cure after the deadline, however, you may stop foreclosure at that time, but if you default again in the next 18 months, you may not have the right to cure in the next foreclosure action.
Modify Your Loan
You may be able to stop foreclosure by applying for a loan modification, which must be submitted at least 37 days before the property sale date. While your application is being reviewed, the lender can’t proceed with foreclosure because dual tracking is prohibited under federal law. Dual tracking occurs when the lender pursues a foreclosure sale against a borrower while negotiating for a modification of the loan. This law ensures that you can’t lose your home while the bank is considering your modification or another mortgage workout option.
If you submit all the paperwork required for a loan modification, the lender can’t pursue foreclosure until it determines you aren’t eligible for loss mitigation (and you exhaust your appeals); you reject the workout plan it offers; or you fail to make payments under the terms of the workout plan you accepted.
Note that you can’t avoid foreclosure permanently by submitting one application after another; the lender isn’t required to review multiple applications unless you bring the loan current. If your application is approved, you can prevent foreclosure as long as you make payments under the modified plan.
Seek Temporary Forbearance
Forbearance may be an option to help you stop foreclosure. A mortgage forbearance agreement is an agreement made between you and your mortgage lender that allows you to temporarily reduce, or pause your mortgage payments. In this agreement, you agree to a payment plan while your lender agrees not to exercise its legal right to foreclose on your mortgage while the payment plan is in effect.
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and federal regulations, lenders may not foreclose on a federally backed loan until after February 28, 2021. For Fannie Mae or Freddie Mac loans, lenders cannot foreclose until after January 31, 2021. If you have experienced financial hardship because of COVID-19, you may request forbearance, or a pause in your payment obligations, for up to 180 days. You may also request another 180-day extension after that (360 in total), but you must contact your lender to get these extensions.
Forbearance doesn’t mean that you owe less money; you must repay what you owe later. You should use the time you have to find a way to avoid foreclosure permanently.
File for Bankruptcy
Another way you can stop foreclosure is by filing for bankruptcy. As soon as you file, an automatic stay prevents the lender from pursuing any sort of debt collection, including foreclosure, and stays in effect throughout the bankruptcy process.
If you want to keep your home, filing under Chapter 13 allows you to restructure your debts and cure the mortgage default over a 3 to 5 year repayment plan. It is also possible to try to get a modification while in Chapter 13.
If you don’t have enough income to qualify under Chapter 13 or just want more time to avoid foreclosure while you look into other options, you may want to consider filing under Chapter 7. If the lender has already initiated foreclosure, a Chapter 7 filing probably won’t save your home unless you get a loan modification, but it could eliminate your personal liability for the mortgage debt.
Contact an Experienced Foreclosure Defense Attorney Today
The prospect of losing your home to foreclosure is daunting but an experienced attorney can help you explore your options and help you save your home.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information on this website and blogs is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.