Understanding the foreclosure process in New Jersey is an important part of navigating your own home foreclosure.
Before we dive in… we wanted to take a moment to tell you that we understand how confusing and stressful this process has probably already been for you. We’re sorry you or someone you care about might be going through it.
We know most people wish that there was an Understanding the foreclosure process for dummies book, but we created the below guide to try to fill in the gaps!
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world. You can bounce back!
When you know how foreclosure in NJ works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible… even if it seems bleak right now.
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are judicial sale or power of sale.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction in New Jersey?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at We Buy Jersey Shore Houses LLC to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
Still With Us?
We know Understanding the Foreclosure Process can be a difficult one to take in. Again, we’re here to help with anything that we can.
If you need to sell a property near the Jersey Shore, we can help you.
We buy houses in the Jersey Shore New Jersey area like yours from people who need to sell fast.
Give us a call anytime (732) 456-7580 or
fill out the form on this website today! >>
Another Foreclosure Resource For Jersey Shore New Jersey HomeOwners:
How It Works