Are you facing foreclosure/home repossession?
Foreclosure is one of the worst things any homeowner would wish to experience in their lifetime. Not only does it bring emotional stress, disappointment, frustration and other psychological worries to the family but it will also mean an end to their happy days inside their beloved homes. Fortunately, there are laws which govern these types of disputes and these are grounded on the rules of justice approved upon by all of the states in the US. All it needs is a little understanding and assistance from an experienced real estate lawyer for your legal problems to be resolved.
Legal Definition of Foreclosure
Foreclosure is the legal process a lender can use to repossess a home. When this happens, the homeowner will be left with no other choice but to move out of their house and in some instances, not only will the homeowner be left with no home but with additional loans to repay as well.
General Types of Foreclosure
There are general four types of foreclosure approved by the majority of states. These are known as judicial, non-judicial foreclosure, trust deed foreclosure and mortgage foreclosure.
Although New Jersey legislation does NOT support this type of foreclosure, for information only this type of foreclosure is given if the mortgage agreement indicates that a power of sale is to be given to the mortgagee, commonly a bank or lender. This is preferred by many mortgagees because it gives them the freedom to sell the property even without any court order. It does not proceed to a lawsuit involving legal fees and sales expense. It involves a speedier process which only takes a month or two to be completed. It also gives a statutory right of redemption which restricts the owner to reclaim the property even after paying the mortgage amount.
The only disadvantage a mortgagee will experience from this type of foreclosure is the possibility of not recovering any deficiency from the debtor. This entails that the lender cannot force the court to issue any order that will require the borrower to pay any difference between the foreclosure sale price and the amount he or she owed on the mortgage.
This type makes use of the security interest or collateral loan, a pledge you have given to the bank as assurance, when you signed the mortgage agreement. However this requires strict rules of compliance which includes the following processes:
- the bank needs to send the borrower a notice of default
- if the notice of default is not addressed by the borrower then the bank will file a lawsuit
- it will then undergo a lis pendens that is recorded in the recorder's office so anyone interested in the property will be informed that a foreclosure proceedings is going on
- a settlement trial will then be conducted
- a write of sale will be issued by the court
- the property will be sold through a public auction
- any difference in the sale price will be considered debt of the borrower and will be used as deficiency judgment against the borrower
- a specific rule for the State of New Jersey indicates a right to redeem the property within ten (10) days prior to the foreclosure sale (right of redemption)
Trust Deed Foreclosures
This type of foreclosure involves three types of principal parties which includes the lender, who is a private, public or institutional entity which provides funds to a borrower; the borrower; and the trustee, who is the legal person who was given the power or control by law to hold a piece of property for another person.
It occurs when the borrower fails to pay the required payments on his or her loan, so the trustee records a Notice of Default. It undergoes a similar procedure as per judicial foreclosures until a Notice of Trustee Sale is released by the court. This will be advertised to the public for a specific period and if the borrower fails to bring the current loan, the property will then be auctioned to the public.
This is given by the court after the lender has sent multiple notices to the borrower informing him or her of late submission of missed payments. A similar lawsuit with that of Judicial and Trustee foreclosure will be filed in court and a notice of legal action pending on the property will be published in local newspapers so the public will know about it. If amidst these legal actions the borrower is still unable to respond to the demands of the lender, the judge will issue a Judgment of Foreclosure and Sale in favor of the lender. An auction sale will be advertised and opportunities for the public to purchase the foreclosure property will begin.
Seven Specific Types of Foreclosure Honored in NJ
Based on the NJ Office of Foreclosure the following are handled by the State of New Jersey:
- residential mortgage foreclosure
- multi-family/commercial mortgage foreclosure
- in personam tax certificate foreclosure
- municipal in rem tax certificate foreclosure
- condominium lien foreclosure
- strict foreclosure
- Fair Foreclosure Act optional foreclosure procedures
Different Foreclosure Resolution Options
Receiving notices of possible foreclosure is not a very easy task to handle but it doesn't mean the end of your home. There are certain resolutions which your lawyer can assist you with.
1. Answer the Lawsuit
The best thing any borrower can do is to respond to the Summon given unto you by the legal counsel of your lender. It is better if these will be written by your chosen legal counsel so that the other party will receive the impression that you are well prepared for any possible legal battle in case they will not agree on a settlement.
2. Pay the Mortgage Arrears or best the entire loan when possible
If you have money to pay the mortgage then there is no reason why you will hold on to this payment. Pay the reinstatement figure to immediately stop the move for foreclosure but if you have saved enough to pay the entire loan then that will be the best action to do.
3. Forbearance Agreement
You may wish to enter a forbearance agreement through the mediation of your real estate lawyer. This will give sufficient time to settle the mortgage amount, normally within a six month period. However, your legal counsel must be well skilled in convincing the lender that you are doing this in good faith.
Fill out any necessary forms required by the lender and submit the required substantial information and documentation which includes list of assets and expenses and your proof of income. You may also be required to send in a "Hardship Letter" which explains the reasons for your previous late payments.
4. Consider Mortgage Refinancing
If you sincerely believe that you do not have enough resources to pay the mortgage arrears even after being given a six month grace period by the lender, then your next option is mortgage refinancing. You can request the assistance of real estate attorneys to help you with loan restructuring. However, this is not always a very viable option because you may still find yourself in bigger financial trouble in the future.
5. File Bankruptcy Protections in Court
One of the best legal options you may have is to file for Chapter 13 Bankruptcy so you can still reinstate the mortgage while saving your house for the longest time possible however the State of New Jersey requires that this be done prior to the execution of a sheriff's sale or Chapter 7 Bankruptcy Protection so you can surrender your house and eliminate any deficiency debt after deducting funds received from the sale of your house from the sheriff's sale.
The worst action you can do is to ignore summons for late payments and not communicate with lenders in the hope your situation will improve before legal action is sought against you. This will always make the situation worse in the long run so take action early and protect yourself and your home.
If you find yourself facing foreclosure/home repossession and need to seek legal counsel do not hesitate to Contact Us Online or call our office at 1-973-478-1026 for a free initial consultation and case evaluation. Sammarro & Zalarick have over 40 years combined experience as real estate attorneys and have dealt with many cases featuring all aspects of real estate law and foreclose, so if in doubt, contact us.
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