New Jersey Foreclosure Law & Procedures
New Jersey is a judicial foreclosure state, meaning that mortgage lenders seek foreclosure on a property by filing a court action against the property owner (debtor). The court is authorized to enter a judgment of foreclosure which awards the property to the lender or orders a foreclosure sale by the sheriff. The time period from initiation of a foreclosure action to entry of a judgment is typically 4 to 6 months.
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Pre-Foreclosure Notice
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The New Jersey statutes (Section 2A:50-56) require written notice before a mortgage lender files a complaint seeking foreclosure on a residential property. The lender must notify the borrower of the lender's intention to file a foreclosure action at least 30 days before initiating the action. The notice must advise the property owner (debtor) to seek legal counsel regarding the mortgage default. The notice provided by the lender must also advise the debtor that financial assistance to address the mortgage default may be available from federal or state agencies, or from nonprofit organizations.
Foreclosure Complaint
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Foreclosure complaints in New Jersey are filed with the clerk of the Superior Court in Trenton. The Office of Foreclosure in Trenton processes the complaints, answers and other pleadings filed in foreclosure proceedings. The debtor has 35 days after receiving the summons and complaint to file an answer. If the debtor does not file an answer, the lender may seek entry of a default judgment of foreclosure.
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Foreclosure Judgment
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The court in a New Jersey foreclosure action has authority to enter a judgment awarding title of the property to the plaintiff, or ordering sale of the property by the county sheriff. If the court orders a foreclosure sale, the sheriff then advertises the sale in a local newspaper once a week for four consecutive weeks. If the court awards title of the property to the lender or to the purchaser at a foreclosure sale, the Office of Foreclosure may issue a writ of possession, advising the sheriff of remove any occupants of the property.
Deficiency Judgment
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If the amount received through sale of the property is less than the amount owed on the mortgage, the lender may initiation a separate court action for a deficiency judgment against the debtor. In actions involving residential property, the amount that can be recovered is limited to the difference between the debt on the mortgage and the fair market value of the residential property.
Mediation
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New Jersey has instituted a foreclosure mediation program, which is administered by the state court system. The program offers court mediators and foreclosure counselors to homeowners, in an effort to resolve foreclosure proceedings. The mediation program aims to devise an affordable mortgage payment schedule for the homeowner.
Residential Tenants
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The New Jersey statutes (Sections 2A:18-61.1 to 61.12) provide protections to the tenants of a residential property that is involved in a foreclosure action. The tenants have the right to continue to occupy the property in the event of a foreclosure.
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