In response to the foreclosure crisis in this country, many states implemented mediation programs to assist borrowers in finding ways to avoid foreclosure. If you're a homeowner facing foreclosure in New Jersey, you might be eligible to participate in the state’s 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.)
Read on to learn more 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 often helps homeowners avoid foreclosure by coming up with an alternate solution that benefits both the borrowers and the lender. Mediation consists of a meeting between:
At the meeting, 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. By working together, the parties are often able to reach an agreement.
Potential outcomes of mediation include:
(To get more information about foreclosure mediation in general, see How to Stop a Foreclosure With Mediation.)
New Jersey has established a mediation program to provide certain homeowners in foreclosure with the right to mediation. (Learn more about the New Jersey Foreclosure process.)
In 2019, New Jersey Governor Phil Murphy signed a bill (A-664) into law, which made the state's foreclosure mediation program permanent.
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.
You'll get 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 initiate mediation. (Also, a court may order mediation if you file an answer to the foreclosure complaint.)
You may not participate in mediation unless you get a certification document signed by a trained foreclosure prevention and default mitigation counselor, verifying that you're cooperating with the counselor, and you submit it to the court.
There is no fee to participate in New Jersey’s foreclosure mediation program.
Even though participating in New Jersey’s foreclosure mediation program doesn't guarantee that a foreclosure will be avoided, it doesn't hurt to participate in the program. 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 the mediation process or you need information about the foreclosure process in New Jersey, including whether you have any potential defenses to the foreclosure, consider talking to a foreclosure attorney.