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Housing
The Foreclosure Process

The term foreclosure refers to the court-ordered sale of property that was used as collateral for a debt. A lender cannot automatically take a house away from you, even if you have not paid the debt (mortgage) and are in default.

The Process Before Going to Court

Step 1: You default on your loan

You are considered to be in default as soon as you miss one loan payment (or if you break your loan agreement in some other way). The lender might contact you by letter or telephone after the first missed payment to remind you that a payment is due.

Step 2: The lender sends you a Notice of Intention to Foreclose

The lender usually waits until you have missed at least three mortgage payments before sending this notice. The New Jersey Fair Foreclosure Act requires the lender to send this notice to you. The law also requires certain information to be included in the notice. Use the checklist in the section Laws that Can Protect You From Foreclosure to make sure that the lender gave you all of the information that you are entitled to. If not, then you may include the lender’s failure to do so in your Answer or in a Motion (written request) to the court asking the court to dismiss the foreclosure action. The lender must send you this notice at least 30 days before the lender files a complaint.

If you can cure the default (make the payments you missed), the lender must accept your payment and cannot charge you attorney’s fees at this point.

The Process in the Office of Foreclosure

Step 1: The plaintiff (lender) files a foreclosure complaint

The court process of foreclosing on property begins no sooner than 30 days after you receive the Notice of Intention to Foreclose, when the plaintiff (the lender or company filing the complaint) files a complaint against you, the defendant (homeowner), with the Office of Foreclosure. The Office of Foreclosure is a part of the Superior Court of New Jersey, and it is located in Trenton. The Office of Foreclosure handles the foreclosure, and the foreclosure is never reviewed by a judge in your county unless you file an Answer.

The Complaint for foreclosure must set out all the facts that would give the plaintiff the legal right to foreclose.

Step 2: The plaintiff serves you with a Summons and Complaint

The lender must have a copy of the Summons and Complaint hand-delivered to you. The lender also may send a copy of the Summons and Complaint to you by regular and certified mail. If the lender cannot reach you, the lender will ask the court for permission to serve you by publication. This means that important notices won’t be delivered to your house. Instead, they will only be published in the newspaper.

Notice of information about the state’s mediation program. Along with the Summons and Complaint, you should receive information about the state’s mediation program. You must request mediation within 60 days of the date you receive the complaint. You must request mediation and file an answer to the complaint if you want to fight the foreclosure. If you fail to request mediation within 60 days, you will not be allowed to participate. If you miss the deadline, you may ask the court to allow you to participate, but you must be able to show "exceptional circumstances." If you cannot show a very special reason why you should be allowed a late chance for mediation, the court will deny your request. However, mediation will not stop the foreclosure process from continuing. It is important to file an Answer even if you request mediation.

Step 3: You file an Answer to the Complaint

You, the homeowner, have the right to defend against the foreclosure lawsuit in court. To do so, you must present your defenses to the Complaint in a written Answer filed with the court. (An Answer is a written response from a defendant to a complaint). In your Answer to a foreclosure complaint you must explain to the court why the lender does not have the legal right to foreclose.

For a sample Contesting Answer With Defenses and Counterclaims, see the section, Foreclosure Forms.

Deadline for filing Answer. You have 35 days from the date you received the Summons and Complaint to file a written Answer. An Answer that is filed on time is the homeowner’s best opportunity to fight the mortgage foreclosure.

Step 4: The Office of Foreclosure reviews your Answer to determine if it is a Contesting or Non-Contesting Answer

The Office of Foreclosure reviews every Answer to determine if it is a Contesting Answer or a Non-Contesting Answer. This is because the kind of Answer that you file determines how the case will proceed.

Contesting Answer. A Contesting Answer is one that questions whether the mortgage is legal or correct or questions whether the lender has a legal right to foreclose on your property.

What must be included in a Contesting Answer? In a Contesting Answer, you must include a response to each of the lender’s claims (admitting the lender’s claims are true, denying they are true, or stating that you do not have enough information to know whether the lender’s claims are true). Your Answer should also include Defenses (explanations about why you should not lose your home to foreclosure) and Counterclaims (your complaints against the lender claiming that the lender’s actions may have violated other laws). If other people were involved in making your loan a predatory loan, you may need to file a Third-Party Complaint and add those parties to the lawsuit.

An Answer that admits all of the lender’s accusations or states that you do not have enough information to know whether the accusations are true for every paragraph may be deemed a Non-Contesting Answer. A Non-Contesting Answer will not be sent to a judge.

For a more detailed description defenses and counterclaims to foreclosure and an explanation of the laws that the lender may of have violated, see the section, Laws that Can Protect You from Foreclosure.

For a sample Contesting Answer with Defenses and Counterclaims, see the section, Foreclosure Forms.

Step 5: The Office of Foreclosure transfers the court case to the county where the property is located

If the Office of Foreclosure decides that you have filed a Contesting Answer, the Office of Foreclosure will transfer the case to the Superior Court in the county where the property is located, and the matter will be assigned to a judge.

The Process in the Superior Court in the County Where the Property is Located

After the case is transferred to a Superior Court judge in the county where the property is located, you must get ready to have a trial. The lender will try to convince the court either by a motion (written request) or at a trial that it has the right to foreclose on the property. You must convince the court that the lender does not have the right to foreclose on the property for the reasons you described in your Answer.

Before trial

(a) Motion for Summary Judgment

  • Lender’s Motion for Summary Judgment. A Motion for Summary Judgment is a special kind of motion. In a Motion for Summary Judgment, the lender asks the court to decide the case in its favor without a trial or any further legal proceedings. Many times, the lender will file a Motion for Summary Judgment as soon as you file an Answer. To win a summary judgment motion, the lender must show the court that:

    • The lender and homeowner agree to all of the important facts that would affect the judge’s decision in the case, and
    • The law is completely on the lender’s side.

  • Your Response to Motion for Summary Judgment. The defendant/homeowner must file and serve a written response to the Motion for Summary Judgment. If the homeowner does not file and serve a written response to the Motion for Summary Judgment, then the lender will win automatically—whether the lender is right or wrong.

  • Court’s decision on Summary Judgment Motion. To decide a Summary Judgment Motion, the court looks at the lender’s motion and your response to decide whether or not you have any legal defenses to foreclosure. After the court receives the papers, the court may also decide to hold a hearing before making a decision.

  • Decision for lender. If the court decides that you do not have legal defenses to foreclosure, the court will usually decide the Summary Judgment in favor of the lender. This means that the lender now has the right to proceed to foreclose on your property.

  • Decision for you (homeowner). If the court decides that the defendant homeowner does have legal defenses to foreclosure, the court will probably decide the motion in your favor and deny summary judgment to the lender. This means that you and the lender will now proceed towards a trial.

Sample forms for responding to a Summary Judgment Motion are available on the New Jersey Judiciary’s Web site.

(b) Discovery

Discovery is another activity that takes place before the trial. Discovery is the process by which the parties (plaintiff and defendant) use several types of tools to ask for facts, documents, and other information before the trial takes place. In a foreclosure case, each may ask the other to provide information that may help prove or disprove the right to foreclose.

  • Demand for production of documents. One of the most common types of discovery tools used in foreclosure cases is the Demand for Production of Documents (Document Demand). For a sample Demand for Production of Documents, see Foreclosure Forms. If you are a homeowner representing yourself, you may send the Document Demand to the lender’s attorney together with your Answer or as soon as possible after you file and serve your Answer. The lender then has 35 days to give you the documents you asked for. If the lender does not respond, you may file a written motion asking the court to order the lender to respond to the Document Demand or asking the court to dismiss the lender’s complaint for not responding. (See What happens if a party does not provide discovery that is requested?)

  • Interrogatories and depositions. If you do have an attorney, the attorney will make the Document Demand, and may also send the lender’s attorney a list of written questions (called interrogatories). Another way to get answers to questions is to ask the lender’s witnesses to answer questions (called a deposition) while under oath in the presence of a court reporter. The lender also has the right to ask you for information. Whether or not you are represented, the lender may also ask you to provide documents, answer written questions, or appear before a court reporter and give a deposition.

  • What happens if a party does not provide discovery that is requested? Each party is responsible for making sure that it completes its own discovery. The court will not instruct the parties on this process or give a party forms to fill out in order to get the information that is needed. If either the lender or the homeowner fails to respond to the discovery requests of the other party, the lender or homeowner may make a motion to the court to force the other party to respond or face a penalty. For instance, if you are the homeowner and you fail to respond to the lender’s discovery request, the lender may make a motion to the court to ask the court to strike (disregard) your Answer. If the court strikes your Answer, the Complaint will be sent back to the Office of Foreclosure, and the foreclosure will proceed as if no Answer had been filed. Therefore, it is very important that you respond to any discovery requests that the lender makes of you.

  • Motion to Enforce Discovery. Sample forms and instructions for filing a Motion to Enforce Discovery may be found on the New Jersey Judiciary’s website.

(c) Case management conference

The judge assigned to the case may write a letter to the parties setting up a case management conference (CMC). A CMC is a meeting that will include you (or your attorney), the judge, and the lender’s attorney. The main purpose of the CMC is to set up a time schedule with deadlines for discovery. Remember to make sure that you ask for enough time to get the information that you need. The court may also schedule a trial date at the case management conference. The CMC is not an official hearing in the courtroom. No one will be sworn in, and the judge will not make any decisions about whether the lender may foreclose. At the meeting, the judge may ask some questions to get an idea of the issues involved in your case. The judge may explore whether settlement (reaching an agreement without a trial) is possible.

Trial

At a trial, the lender must prove it has the right to foreclose. Then you must prove that the lender should not be permitted to foreclose because of the defenses you have raised. Review the defenses described in the Laws that Can Protect You from Foreclosure section.

The Process After You File a Non-Contesting Answer or If You Do Not File an Answer at All

Lender’s request for entry of Default

If you miss the deadline to file an Answer, or file a Non-Contesting Answer, the lender will probably file papers with the court asking the court to Enter Default (officially recognize that the you did not file an Answer).

Your response: Motion to Set Aside (Undo) Default. New Jersey Court Rule 4:43-3 allows you to file a written request with the court asking the court to cancel/undo the default and to give you another chance to file an Answer. You must show good cause in order for the Court to give you a second chance to file an Answer. The case of O’Conner v. Abraham Altus, 67 N.J. 106, 129 (1975) is an example of a case where a court set aside a default for good cause. Good cause usually means that you have a defense to the mortgage foreclosure.

For a more detailed description of defenses and counterclaims to foreclosure and an explanation of the laws that the lender may have violated, see the section, Laws that Can Protect You from Foreclosure.

Lender’s request for entry of Final Judgment

If you do not respond to the lender’s request for entry of default, the lender may go forward and ask the court to enter Final Judgment in the lender’s favor. The lender does this by making a Motion for Entry of Final Judgment. However, before the lender may file this motion, the lender must give you notice and one final chance to cure the default.

  • Lender’s Notice of Motion for Entry of Final Judgment. Fourteen days before the lender asks for the court to enter Final Judgment, the lender must send you a notice in the form of a letter telling you this.

  • Your response: Good Faith Statement. If you feel that there is a reasonable likelihood that you may be able to cure (pay what you owe and stop the foreclosure), you must respond with a Good Faith Statement within 10 days of receiving the Lender’s Notice. You will have 45 days from the date of receipt of the letter notice to cure the default. Send your response by certified or registered mail, return receipt requested.

  • Your response: Bankruptcy. If you intend to file for bankruptcy, it is a good idea to file before judgment enters against you in the foreclosure. Otherwise, you may have to ask the Superior Court to reopen the foreclosure case so that you can raise your defenses in either the Superior Court or in the Bankruptcy Court.

Lender’s Motion for entry of Final Judgment

If you are unable to cure, the lender will file a Motion (request) to the court to enter Final Judgment in the lender’s favor. This is the court’s judgment that the lender is entitled to foreclose on the property. It sets forth the amount of money that the lender is entitled to receive when the property is sold at a Sheriff’s Sale.

  • Your response: Objection to Lender’s Motion. At this point, if you disagree with the amount of the judgment, you have 10 days to file an objection to the lender’s motion. This objection may alter the amount of the foreclosure judgment, but it will not prevent the foreclosure.
  • Your response: Motion to Vacate (Undo) the Final Judgment. After the court has entered Final Judgment in favor of the lender, you still have one last chance to undo the judgment, reopen the case, file an Answer, and perhaps prevent foreclosure. New Jersey Court Rule 4:50-1 permits you to file a Motion (request) with the court to Vacate (undo) the Judgment. You must include a copy of your Answer with the Motion to Vacate Judgment. You must also include a filing fee of $30.00 or an application for a fee waiver.

For a sample Motion to Vacate Default or Default Judgment and or Request for Waiver of Filing Fees, see the section, Foreclosure Forms.

The Sheriff’s Sale Process

If the court grants final judgment to the lender, the court will also issue a Writ of Execution directing the County Sheriff to sell your house to the highest bidder at an auction. You will receive a notice telling you when your house is scheduled to be auctioned. A notice also will be posted in a newspaper.

Your response: Request to stay (delay) the Sheriff’s Sale—Sheriff’s office

If your home is scheduled for a Sheriff’s Sale, you may apply to the County Sheriff in person for two two-week delays of this sale. These delays are called adjournments or stays. You must pay a fee to the Sheriff’s office for this stay. You should be prepared to pay a fee of under $50 by cash or money order. You do not have to prove good cause or appear before a judge to get these stays.

Your response: Request to stay (delay) the Sheriff’s Sale—in court

You may also apply for a stay at the Superior Court, Chancery Division, in the county where the property is located. Courts often will grant a stay to allow you to participate in the Court’s mortgage mediation program. However, courts rarely grant stays for any other reason, except in very compelling circumstances, such as to allow a homeowner to complete a sale or refinance of the property that is already in process.

Forms to request a stay so that you can participate in Mediation are available on the New Jersey Judiciary website.

Note: These stays are temporary, and will not give you an opportunity to have any of your defenses heard by a judge. They only give you the opportunity to try to complete some other plan.

Getting the property back after the Sheriff’s Sale

After the auction, you have 10 days to redeem (get back) the property. During this period of time, you can save the property by completing a refinance or sale of the property. A bankruptcy filed after Sheriff’s Sale extends the period of time in which you can redeem the property, but you will not be able to raise your defenses in bankruptcy court at this time.

If the lender wins the court case, then the Sheriff sells the property. The money from the Sheriff’s Sale is paid to the lender to make up for the homeowner’s failure to pay. If the house sells for more than the amount of the mortgage, then the homeowner is entitled to the difference. If the house sells for less than the amount of the mortgage, then the lender has the right to sue the homeowner for the rest of the money that the homeowner owes, called the deficiency.

After the Sheriff’s Sale, you will receive a Notice from the Sheriff telling you when you must vacate (move out) of the house. If you do not move out of the house by that date, then the Sheriff may come in to the property and remove you and your belongings.

Remember that it can take a year or more for an uncontested foreclosure to be final, from the date of the Notice of Intention to Foreclose through the date the Sheriff takes possession of the property.

Because it may be easier for you to understand the process if you see it in a different format, the chart below describes the same process explained above when a homeowner files a Non-contesting Answer or No Answer to a Foreclosure Complaint.

Foreclosure process when a homeowner files a Non-Contesting Answer or no Answer to a Foreclosure Complaint

EVENT

TIME PERIOD

COMMENTS

Default on loan

Usually three months of missed mortgage payments

Lender may send a letter to the homeowner after the first missed payment to remind the homeowner that a payment is due.

Notice of Intention to Foreclose

Must be sent at least 30 days before the lender can file a complaint

If the homeowner offers the lender the full amount owed, the lender must accept it and reinstate the loan. No attorney’s fees or court costs can be charged at this time.

Notice must contain the following:

  • A description of lender’s interest in the property (home). This means that the notice must tell the homeowner that the lender has a mortgage on the home.

  • A statement about the nature of the default. In other words, the notice must tell you why the lender will try to foreclose (for example, that you missed payments).

  • A statement telling the homeowner that he/she has the right to cure, which means that you have the right to pay what you owe and stop the foreclosure.

  • Information about how to cure.

  • A statement of how much the homeowner needs to pay to cure.

  • The date to pay to avoid foreclosure with name and phone number (must be at least 30 days).

  • What will happen if the homeowner does not cure.

  • A statement that homeowner may stop the foreclosure process, even after the filing of the foreclosure complaint.

  • A statement telling the homeowner that he/she may still transfer title to the property to someone else at this time.

  • A statement advising the homeowner to get an attorney along with contact information for county lawyers referral and Legal Services.

  • A list of available resources to help with cure along with contact information for the State Dept. of Banking and Insurance.

  • The name and address of the lender.

  • The name and address of a representative of the lender to contact in the event of a dispute.

Foreclosure Complaint filed in Trenton Foreclosure Office (received with fee)

Must be served on the homeowner (delivered to him or her by mail or in person) within 30 to 60 days of filing.

Homeowners usually unaware of the filing.

As soon as a complaint is filed, the homeowner may also be responsible for additional expenses, such as the lender’s attorney’s fees and costs added to cure amount.

Complaint served (delivered to defendant homeowner by mail or in person)

35 days to answer. Answer to be filed in Trenton Foreclosure Office. 60 days to request mediation.

Service must comply with Court Rules and due process standards (due process refers to fair procedures—homeowner must actually receive a copy of the Complaint and a Summons, which informs the homeowner of rights and responsibilities and deadlines). However, if the lender is unable to serve the homeowner personally, the court will grant the lender permission to serve the homeowner by publishing notices in a local newspaper.

The homeowner will be able to ask the court to take actions against the lender if the court finds that the lender did not make certain that the homeowner received actual notice (actually knew) that the lender had filed a Complaint against him or her.

Along with the Summons and Complaint, the homeowner will receive a notice with information on the state’s mediation program. A homeowner can request mediation at this point, or at any point after filing of the foreclosure complaint.

Answer: non-contesting

30 to 75 days

Foreclosure Unit sends no notice if it decides that the Answer is non-contesting (does not say that the mortgage is not valid or that the lender doesn’t have a right to foreclose).

If no Answer is filed, or if an answer is non-contesting, the lender can file a paper with the court clerk asking for entry of default. The lender can request entry of default as soon as 35 days have passed since the homeowner received the Summons and Complaint.

Notice of Entry of Final Judgment

14 days prior to filing Motion for entry of final judgment with the court

 

 

The lender must send the homeowner a letter offering the homeowner a final chance to cure the default. If there is a reasonable likelihood that homeowner can cure, he/she must respond with good faith statement within 10 days of receipt of Notice to gain 45 days from the date of the letter to cure the default. Response must be sent by certified or registered mail, return receipt requested.

Motion for Entry of Final Judgment

Any time after entry of default. However, the homeowner has 10 days to respond before final judgment is entered.

The lender must file with the court and serve on the homeowner a motion (written request) to the court asking the court to enter a final judgment of foreclosure. The request must include the lender’s proofs and must give the homeowner 10 days to object to the entry of the order.

At this time, if the homeowner thinks that the amount the lender claims due is wrong, the homeowner can file a written objection. Objecting may alter the amount of the foreclosure judgment, but will not prevent foreclosure.

The homeowner’s right to pay the arrears only ends.

The homeowner still has the right to redeem the property. (To redeem means to pay off the whole mortgage. This is usually done by refinancing the mortgage with a new loan.)

Judgment in favor of the lender may be entered by the court in 10 days if there are no other encumbrancers (other parties holding mortgages, liens, leases, or restrictions related to the property in question) or in 30 days if there are other encumbrancers. Judgment is not entered automatically; lender must file a motion with the court (make an application to the court for this relief).

Writ of Execution

45 to 120 days

Sheriff’s Sale must be scheduled within 120 days of Sheriff’s receipt of writ.

Sheriff’s Sale Scheduled

28 days

Notice must be published (in a newspaper) pursuant to Statute (according to the law).

If homeowner is considering Bankruptcy, he/she must file for bankruptcy prior to Sheriff Sale to preserve right of redemption.

Homeowner entitled to ask the Sheriff to adjourn (reschedule) date of sale twice

14 days for each adjournment

An application for an adjournment (delay) must be made in person at the Sheriff’s office. Sheriffs will almost always allow two two-week delays The Sheriff will charge a fee for this service.

Additional adjournments

 

Homeowner may make a motion (formal written request) to the court. A court order with a new date for the sale is required, even if the lender consents (agrees) to the new date.

Sheriff Sale

10 days left to redeem (pay everything, usually by refinancing with a new loan)

After the Sheriff sells the property, the homeowner has 10 days to try to get the property back by paying off the entire mortgage.

Deed Transfer

Two weeks from date of sale

The right to redeem ends.

3/18/2013