New Jersey Foreclosure Information
Foreclosure is an event of last resort for New Jersey homeowners when they are unable to pay their debt and their lender repossesses the home. Foreclosures are rampant in the U.S. economy and increased 35 percent from first quarter 2009 to first quarter 2010, according to RealtyTrac via MSNBC News. New Jersey ranked 11th in the nation in number of foreclosures in May 2010, according to RealtyTrac. There are agencies in New Jersey that can help homeowners avoid foreclosure, or if it is unavoidable, help them through the process.
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Assistance
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Mortgage restructuring is a method to avoid foreclosure. A New Jersey homeowner should first attempt to avoid foreclosure by contacting the New Jersey Housing Resources Center, which endorses mortgage restructuring or affordable payments to save the home. The Neighborhood Assistance Corporation of America can also help to suspend auctions of New Jersey homes in foreclosure. The U.S. Department of Housing and Urban Development (HUD) offers homeowners solutions, and a no-cost visit to a HUD housing counselor in New Jersey is recommended.
Education and Legal Connections
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Legal advice is available in New Jersey to protect consumers from predatory loans. The New Jersey Housing Resources Center provides education about foreclosure and the legal rights available to homeowners. The agency provides a legal connection through the Legal Services of New Jersey (LSNJ) for consumers who are in foreclosure because of predatory loans. Predatory loans are loans that consist of skyrocketed interest rates, balloon payments, prepayment penalties, false advertising and high closing costs. Under the Anti-Predatory Lending Project, there is protection against these loans.
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Pre-Foreclosure and Options
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Should a New Jersey homeowner have no other option than foreclosure, the processes can include pre-foreclosure. Pre-foreclosure still entitles the homeowner to work with a buyer who will purchase the property. Typically, this is a beneficial option for both since the buyer typically pays 20 to 40 percent less than market value, and the homeowner's credit is not harmed by a foreclosure.
In lieu of foreclosure, homeowners can sell their home with a realtor to pay off the debt, do a short sale in which the debt owed is forgiven and the loan paid off, or the property title can be transferred to the loan provider to settle the debt.
Foreclosure Proceedings
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If the homeowner is unable to avoid foreclosure, the lender obtains a court judgment or judicial foreclosure, and the property is eligible for the auction block. In New Jersey, a lender can wait up to 250 days to go to court when their case is uncontested. When contested, this length of time can increase, with the homeowner being permitted 35 days to prepare an answer. The claim can be contested based on bankruptcy. For a default judgment, an additional 45 days can lapse before the foreclosure is officially executed.
Auctions and Bank-Owned Foreclosures
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Auction and bank-owned foreclosure are the final steps in New Jersey. An auction or trustee sale typically takes place 90 days after the loan is in default. An individual or the lending institution wins the property at auction. The bank-owned foreclosure happens if the bank purchases the property at pre-foreclosure or auction and chooses to resell it afterward to recoup its loss.
Right of Redemption
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In New Jersey, a right of redemption is written into state law. If a homeowner can come up with the balance owed on the loan and the costs associated with the foreclosure proceedings, she can reclaim the property. Redemption must be executed no more than 10 days following a foreclosure sale.
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