Many states have implemented mediation programs to assist borrowers who’re facing foreclosure. New Jersey, for instance, offers a statewide mortgage foreclosure mediation program. (To learn what to do—and what not do—if you’re facing a foreclosure, see Foreclosure Do's and Don'ts.)
In this article, you’ll get information about how New Jersey's foreclosure mediation program works and how you might be able to benefit from the process.
Foreclosure mediation is a process that can help homeowners avoid foreclosure by coming up with an alternate solution. Mediation consists of a meeting between the borrowers, their lender (or servicer), and an impartial third-party (the mediator).
At the meeting, which can occur by phone, the parties discuss the borrower's financial situation and try to work out a way for the homeowner to keep the home or give up the property without going through a foreclosure. Potential outcomes of mediation include:
(To get more information about foreclosure mediation in general, see How to Stop a Foreclosure With Mediation.)
While some states' foreclosure mediation programs have expired or are set to expire, New Jersey's program is permanent. Here's how it works.
New Jersey homeowners in foreclosure are generally eligible for mediation if the property is an owner-occupied one- to four-dwelling unit residence, one of which is occupied, or is planned to be occupied, by the homeowner-borrower, or a member of the homeowner-borrower’s immediate family. (N.J. Stat. Ann. § 2A:50-75).
There is no fee to participate in New Jersey’s foreclosure mediation program. (N.J. Stat. Ann. § 2A:50-77).
You'll get a written notice about the option to participate in the foreclosure mediation program at the time you receive a notice of intention to foreclose, and when the foreclosure complaint is filed.
You may initiate mediation by submitting a mediation request to the court, along with any required documents. You'll get no fewer than 60 days after receiving the foreclosure complaint and summons to start the process. (N.J. Stat. Ann. § 2A:50-77). Go to the New Jersey Courts website to find links to the forms you'll need to request mediation.
Also, a court may order mediation if you file an answer to the foreclosure complaint. (N.J. Stat. Ann. § 2A:50-77).
You can’t participate in mediation unless you submit to the court a signed certification about your eligibility. A trained foreclosure prevention and default mitigation counselor also has to sign the certification, verifying that you’re cooperating with the counselor. (N.J. Stat. Ann. §§ 2A:50-77, 2A:50-78). (Learn more about using a HUD-approved housing counselor to avoid a foreclosure.)
If you don’t provide housing counselor information along with your mediation request form, you’ll be directed to the New Jersey Housing and Mortgage Finance Agency (NJHMFA). You can find a counselor in your area by visiting the NJHMFA website.
Even though going through New Jersey’s foreclosure mediation program doesn't guarantee that you’ll be able to avoid a foreclosure, it doesn't hurt to participate. The lender might be more likely to agree to a nonforeclosure solution during mediation than if you approach it outside of the program. Or you might qualify for a loss mitigation option that you hadn’t previously considered.
If you want representation during mediation or in the foreclosure process, consider hiring a foreclosure attorney. The court system and foreclosure process can be confusing, and it's a good idea to get a lawyer if you can. If you can’t afford a lawyer, you might qualify for free legal services through a legal aid program.