If I Lose My Home to Foreclosure in New Jersey, Can I Get It Back?

If you stop making your mortgage payments, your lender may use a legal process called "foreclosure" to sell your home and use the proceeds to repay the amount you borrowed, plus fees and costs. In some states, including New Jersey, after you lose the property at a foreclosure sale, you can get it back by "redeeming" it during a post-sale "redemption period."

New Jersey's redemption laws are explained in further detail below.

What Is the Right of Redemption After a Foreclosure Sale?

In about half of the states, homeowners get one final chance to save their home, even after a foreclosure sale. The right to redeem the property after a foreclosure sale is called a "statutory" right of redemption because it's set out in the state statutes (laws).

Suppose your state provides a statutory right of redemption. In that case, you get a redemption period, which is a limited amount of time to repurchase the home from the person or entity that bought it at the foreclosure sale. Depending on state law, you must either reimburse the purchaser for the price paid at the sale or pay off the full amount you owed on the mortgage loan, plus foreclosure fees and costs.

Basically, the redemption period gives you some additional time after the foreclosure sale to find funding to buy your home back. The length of the redemption period following the sale, if available, varies widely depending on state law and the particular circumstances.

Right of Redemption After Judicial and Nonjudicial Foreclosures

In some states, foreclosures are always judicial, which means they go through the court system. In others, the foreclosure process is typically nonjudicial (out of court), although these states also permit judicial foreclosures.

Right of redemption in judicial foreclosure states. States that use a judicial process to foreclose often give homeowners the right of redemption after a foreclosure. Even if state law doesn't provide an actual redemption period after the sale, some states allow a very limited amount of time for the homeowner to redeem until certain post-sale formalities are completed. For example, the homeowner might be able to redeem up until the court confirms the foreclosure sale.

Right of redemption in nonjudicial states. Except for a few states, there is generally no redemption period after a nonjudicial foreclosure. States that allow nonjudicial foreclosures sometimes have more than one law for redemption periods—one that applies to nonjudicial foreclosures and another to judicial foreclosures. In general, these states tend to provide a redemption period following a judicial foreclosure but not after a nonjudicial one.

What Are the Rights of Redemption in a Foreclosure in New Jersey?

Foreclosures in New Jersey are judicial. Like many other judicial foreclosure states, New Jersey law provides a redemption period after a foreclosure sale, albeit a short one. However, if the lender gets a deficiency judgment, you get a longer redemption period (unless you challenge the amount of the deficiency).

General Right to Redeem After a New Jersey Foreclosure

After the foreclosure sale, the New Jersey Court Rules provide a 10-day period during which the homeowner may file a motion objecting to the sale. (New Jersey Court Rule 4:65-5). After the 10-day period, the court must confirm the sale to finalize it.

The New Jersey Supreme Court has determined that foreclosed homeowners get the right to redeem:

• within the 10-day period after the sale and
• up until the court issues an order confirming the sale if objections are filed under the rule. (See Hardyston Nat. Bank v. Tartamella, 56 N.J. 508 (1970)).

You might be able to extend the redemption period by filing for bankruptcy. Talk to a bankruptcy lawyer to learn more.

Redemption Period After a Deficiency Judgment in New Jersey

New Jersey also gives homeowners the right to redeem if the lender gets a deficiency judgment after the foreclosure. A "deficiency judgment" is a personal judgment against the homeowner for the difference between the total mortgage debt and the foreclosure sale price. However, in New Jersey, if you dispute the deficiency amount, the court may limit the deficiency amount to the difference between the total debt and the property's fair market value at the time of the sale.

If the lender gets a deficiency judgment and you want to redeem, you must bring an action for redemption within six months after the judgment is entered. (N.J. Stat. § 2A:50-4). But you lose this right to redeem if you file an answer to the deficiency judgment lawsuit to dispute the deficiency amount. (N.J. Stat. § 2A:50-5).

What Are the Costs Involved in Redeeming a Foreclosed Home in New Jersey?

To redeem, you must pay the total amount of the judgment plus interest, costs, and all reasonable expenses that the purchaser incurred for taxes, assessments, other prior liens, and necessary repairs after the sale. (N.J. Stat. § 2A:50-4).

You may deduct from this amount any income the purchaser received from the property, like rent.

What Are the Steps to Take to Redeem My Home in New Jersey?

To find out the procedures you need to follow to redeem, contact the New Jersey Office of Foreclosure, which is a unit in the Superior Court Clerk's Office at 609-421-6100. You may also visit the New Jersey Courts website.

If you need help redeeming your New Jersey home after a foreclosure, consider hiring an attorney to help you through the process.

What Is the Equitable Right of Redemption in New Jersey?

New Jersey, like all states, provides an equitable right of redemption before a foreclosure sale. To redeem before the sale, you must pay off the mortgage debt (all of it, not just enough to bring the loan current), including principal, interest, fees, and costs. The equitable right to redeem ends at the foreclosure sale. However, to exercise the equitable right of redemption, you should send the payoff amount to the servicer well before this deadline.

If you can, present the funds in person to the proper contact designated in the payoff quote or wire the money as soon as possible before the sale. If the courier service has a delay or a bank processing error occurs, and your money doesn't arrive in time, the foreclosure sale will happen.

What Happens If I Can't Afford to Redeem My Home in New Jersey?

Rather than counting on redeeming the home, you could catch up on past-due payments before the sale to reinstate the loan. Under New Jersey law, you may reinstate by curing the default at any time up until the entry of a final judgment, and judgment can be delayed to allow some extra time to reinstate. (N.J. Stat. § 2A:50-57, 58).

Or you could pursue other alternatives to foreclosure if you want to keep your house. For example, you might be able to arrange a mortgage modification, forbearance agreement, or repayment plan. But you must work out one of these arrangements before the foreclosure sale.

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Talk to a New Jersey Foreclosure Lawyer

If you're behind in mortgage payments and worried about foreclosure, you might have more options than you think. Consider talking to a foreclosure attorney to learn about alternatives. A lawyer can advise you about loss mitigation options, your legal rights in a foreclosure, and defend you against a foreclosure in court.

Also, consider contacting a HUD-approved housing counselor if you need more information about loss mitigation options or want help with the application process.