In the State of New Jersey, if you fail to make your mortgage payments, the mortgage lender can foreclose on your property, but not without following certain specified procedures. New Jersey is a judicial foreclosure state which means that if you default on your mortgage, the lender must go to court in order to repossess your home. (Some states use nonjudicial foreclosures, which do not go through court. You can learn about the difference in Judicial v. Nonjudicial Foreclosures.) The New Jersey Fair Foreclosure Act provides the rules that lenders must follow before and during foreclosure.

To learn more about New Jersey's foreclosure process, read on.

When Does the Foreclosure Process Begin?

If you do not make your mortgage payments, you will be considered in default. In the past, the mortgage lender typically started the foreclosure process when you had missed three or more payments, but could initiate foreclosure proceedings after just one missed payment. Now, under federal law, in most cases, the lender can't officially begin the process by filing the foreclosure complaint until you're more than 120 days delinquent. (To learn more about federal mortgage servicing laws, see Federal Laws Protecting Homeowners: Foreclosure Protections.)

Under the New Jersey Fair Foreclosure Act, before your lender can file a foreclosure complaint against you, there are certain things it must do.

Notice of Intention to Foreclose

Prior to filing a complaint in foreclosure, the mortgage lender must send the homeowner, via registered or certified mail, return receipt requested, a Notice of Intention to Foreclose. This is one of the most important protections that the Fair Foreclosure Act gives to homeowners. The lender must send the notice 30 days before filing a complaint. The notice notifies you that you are behind in your mortgage payments and gives you 30 days to cure the default. The law also requires that the following information be included in the notice:

• A description of the lender's interest in the property. This includes notification that the lender has a mortgage on the property and the name and address of the lender and its representative, if any.
• The reason that the lender is trying to foreclose on the property. For example, you have missed mortgage payments.
• Information about your right to cure the default, and how to do so. Under the right to cure, if you pay the full amount owed, the mortgage lender must accept it and reinstate the mortgage. During this time, the lender cannot charge attorneys' fees or court costs.
• A statement of how much you must pay to cure and the deadline to pay to avoid foreclosure. The lender must give you at least 30 days to pay.
• An explanation as to what will happen if you do not cure the default.
• A statement that you may stop the foreclosure process even after the filing of the foreclosure complaint.
• A statement that you have the right to sell or transfer title to the property during the foreclosure process.
• A statement advising you of the importance of contacting an attorney along with contact information for the county lawyer referral service and Legal Services.
• A list of all available resources to help your cure the default along with contact information for the New Jersey Department of Banking and Insurance.

The Lender Files the Foreclosure Complaint

If you are unable to cure the default on the mortgage and have not been able to come to an agreement with your mortgage lender within 30 days of receiving the Notice of Intent to Foreclose, the lender may then file a foreclosure complaint.

The lender files the complaint with the Office of Foreclosure, which is a part of the Superior Court of New Jersey. The Office of Foreclosure handles the foreclosure unless you file an answer to the complaint. In that situation, the foreclosure is sent to a judge in your county. The complaint must set forth all of the facts that would give the mortgage lender (called the plaintiff in the complaint) the legal right to foreclose.

The Lender Serves You With the Foreclosure Complaint

After filing the complaint, the lender must personally serve you with the summons and complaint. You will be called the defendant in the complaint. The lender may also send you a copy of the summons and complaint by regular and certified mail. If the lender is not able to personally serve you, it can request permission from the court to serve you by publication. This means that you will no longer receive notices directly. Instead, the lender will publish all notices in your local newspaper.

When you get the summons and complaint, you will also receive information about New Jersey's foreclosure mediation program. If you want to participate in the mediation program, you must make your request within 60 days of the date you received the complaint. If you do not request mediation within that 60 day time period, you will not be permitted to participate absent "exceptional circumstances." The mediation program does not stop the foreclosure process from continuing.

Filing an Answer to the Foreclosure Complaint

You have 35 days from the date you are served with the summons and complaint in which to file an Answer. An answer is the formal legal document that you prepare in response to the complaint. In your answer you admit to the allegations in the complaint that are true and deny those allegations that you believe are false. You also set forth any defenses that you have to the foreclosure and state why you believe that the plaintiff does not have a valid case.

You must file your answer with the Office of Foreclosure which then reviews it to determine if it is a contesting or non-contesting answer. The type of answer you file will determine how your case will proceed.

If you file a contesting answer. If your answer opposes the foreclosure and sets forth valid defenses to the complaint, the Office of Foreclosure will transfer your case to the superior court in the county where the property is located and your case will be assigned to a judge. Once your case has been transferred, a trial date will be scheduled. At the trial, the lender will try to convince the court that it does have the legal right to foreclose. You, however, will try to convince the court that the mortgage lender does not have the right to foreclose on the property for the reasons you described in your answer.

(To learn more about possible defenses to foreclosure, see Defenses to Foreclosure.)

If you file a non-contesting answer. If you admit to all of the lender's allegations, your case will not be transferred to a judge in your county.

Notice of Entry of Default and Entry of Final Judgment

In cases where no answer is filed, or if an answer is determined to be non-contested, the mortgage lender can ask the court for entry of default. The lender can do so after 35 days have elapsed since you received service of the summons and complaint. If you do not respond the request for entry of default, the lender can then ask the court to enter final judgment.

However, 14 days prior to filing a request for entry of final judgment, the mortgage lender must send you a notice offering a final chance to cure the default. If it is possible for you to cure the default, you must respond via certified or registered mail, return receipt requested with a good faith estimate within ten days of your receipt of the motice. You will then be given 45 days from the date of the letter to cure the default.

If you are not able to cure the default, and the court grants final judgment to the mortgage lender, the court will issue a writ of execution ordering the sheriff to sell your house at public auction. You will get notice telling you when your home will be scheduled for sale.

Sheriff's Sale

When your home is scheduled for a sheriff's sale, you can request a two-week delay of the sale provided you pay a fee. The postponement is temporary only. If you want additional postponements of the sale, you must file a written request with the court. A court order with a new date for the sale is required, even if the mortgage lender agrees to the postponement.

Your Right to Redeem the Property

After your property is sold, you have 10 days to redeem (get back) the property. During this 10-day period, you can arrange to keep the property by refinancing or selling the property. (To get general information about the right to redeem, see Right of Redemption After Foreclosure: Getting Your Home Back.)

If the lender gets a deficiency judgment (see below), you get six months after the entry of the deficiency judgment to redeem. (Learn more about the right to redeem in New Jersey.)

Proceeds of the Sale & Deed Transfer

If you do not redeem the property within 10 days, the proceeds from the sale will be paid to the mortgage lender for the amount owed. if the property sells for more than the amount owed on the mortgage, the difference will be paid to you. If the house sells for less than that which is owed on the mortgage, the lender does have the right to sue you and get a judgment for the additional amount owed. This is called a deficiency judgment. (To learn more about deficiency judgments, see Deficiency Judgments: Will You Still Owe Money After the Foreclosure?)

The deed to the property will be transferred to the lender two weeks from the date of sale.

Talk to an Attorney

If you're facing a foreclosure in New Jersey and want information about different ways to fight the foreclosure in court or avoid foreclosure with a loss mitigation option, like a loan modification, consider talking to a local foreclosure attorney.

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