New Jersey is a state that only uses judicial or through the court foreclosures. This process begins with the bank filing a lawsuit or complaint against the homeowner who has fallen behind in their payments. In response to this, the court decrees the amount the homeowner must pay and gives them a short period of time to pay that money. If they cannot pay that amount in that time frame, the clerk of the court must then advertise the sale of the home.
At this point, a notice of foreclosure is issued. This notice must be posted in the county office of the county in which the home is located. It must also be posted on the home. An ad must be run in two papers in the county where the home is located. The bank must also notify the homeowner a minimum of ten days before the scheduled sale date.
Because all foreclosures must go through the court system in New Jersey, it creates a new docket of cases. This creates a very long process. The average length of time for the full process to run its course from the beginning lawsuit, to the sale of the property, is a full two hundred and fifty days. That’s and average, so some may take even longer. With the number of foreclosures being the highest in history, that only indicates that the time line for this process, in this state will be running longer rather than shorter. Foreclosure can even be delayed longer if the process is contested, by the homeowner. It can be slowed down, or extended by adjournments of hearings or filings of bankruptcy.
The homeowner has thirty five days to file an answer to the foreclosure complaint. If they do not file that answer, the official status of default is issued. Once this default is entered with the court, the bank must wait another forty five days before entering a final judgment. After this, a writ of execution is issued. This writ must be delivered to the sheriff to keep moving the process to the sale. The home owner must also be given a minimum of ten days notice prior to the commencement of the foreclosure sale.
New Jersey has a very short right of redemption period. This right of redemption allows the person who lost their home at the foreclosure auction to regain ownership of the home by paying the total amount of the loan plus costs and attorney’s fees. The home owner only has ten days following the sale, to come up with the money. So, this almost never happens.
Deficiency judgments are allowed in New Jersey. When a property sells for less than is owed on the mortgage, the bank can seek more money from the former home owner. The former home owner does have protections here. New Jersey provides a fair market credit to the former home owner. In other words, if the amount of the winning bid is lower than what is owed on the loan, but was still within the courts assertion of fair market value, then the bank will have a whole lot more difficulty seeking additional money. It is a good defense for the home owner in a deficiency proceeding, but does not preclude the bank from moving forward. Deficiency judgments must be sought in the first three months of the sale.
In most situations where people have lost their home to foreclosure, these people have no other assets worth going after by the bank. Banks realize this and rarely seek deficiency judgments. The exception to this rule would be if the bank has good reason to believe that the former owner does have asset worth taking.
