Several years ago, I purchased a house in Princeton, New Jersey. I got laid off from my job last year, and since then, I've had trouble making my mortgage payments. I fell behind, and the bank started a foreclosure. I recently found work, but it doesn't pay as much as my old job. I don't want to lose the house. Can I buy it back from the bank after the foreclosure if I can somehow come up with the money?
Yes, New Jersey law permits you to repurchase or "redeem" the home after the foreclosure. You'll get at least one, and maybe two, opportunities to get the house back following the foreclosure sale.
Foreclosures in New Jersey are "judicial," which means the bank files a lawsuit in court to foreclose. 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:
New Jersey also provides homeowners with the right to redeem if the bank gets a deficiency judgment after the foreclosure.
If the bank 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. Ann. § 2A:50-4). But if you file an answer to the deficiency judgment lawsuit to dispute the amount of the deficiency, you lose this right to redeem. (N.J. Stat. Ann. § 2A:50-5).
To redeem, you must pay the full 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. Ann. § 2A:50-4).
You may deduct from this amount any income the purchaser received from the property, like rent.
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. 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.
You could also redeem the home before the sale by paying the full amount of the mortgage debt. When you redeem prior to the sale, this is known as the "equitable right of redemption."
If you want to locate the statute that discusses your right to redeem the home after a foreclosure sale in New Jersey, go to Title 2A of the New Jersey Statutes. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you're facing a foreclosure.