Facing foreclosure in New Jersey is a tough choice for today’s homeowners. If you are about to face such a situation, you need to clearly understand what is foreclosure and what is short sales. Foreclosure is a situation when a homeowner fails to make complete payment that includes principal and interest on his/her mortgage and the lender holds the right to sell the property to recover the balance of the loan. Short sale is the situation when the lender agrees to provide the homeowner a discount on the loan balance. In a short sale, the homeowner sells the property for a lower amount than the outstanding balance of his/her loan and hands over the proceeds received from the sale to the lender. Here’re brief outlines of NJ laws on foreclosure and short sales.
- The foreclosing party must send a notice of intention to foreclose to the borrower before starting the foreclosing process. This notice must provide a minimum period of 30 days to settle the default.
- The foreclosure process gets started by serving the borrower with complaint and summons. The borrower receives 35 days to answer.
- An entry of final foreclosure judgment may be applied by the foreclosing party if the borrower does not respond to the foreclosure suit. Here, the foreclosing party has to provide a final notice of 14 days via mail. In case the borrower replies to the notice within 10 days stating his/her intention to settle the default, the foreclosing party has to provide another 45 days notice to the borrower.
- A notice of sale must be send to each party concerned in the process a minimum of 10 days prior to the sale. A notice of sale is also posted in the sheriff’s office and at the property.
- The state offers special foreclosure protections to military service members (who are in the state military service in accordance with the governor’s orders, or on federal active duty), which state that such individuals can potentially postpone court proceedings and that the redemption period won’t include the duration of military service.
- You can catch up on the missed payments on your defaulted mortgage to reinstate your mortgage until the entry of a final judgment.
- After a foreclosure sale, homeowners get the right to redeem within a 10-day period after the sale or until the court issues an order that confirms the sale.
- Within 3 months after the foreclosure sale, or in case confirmation of the sale is needed, from the date of such confirmation, a separate lawsuit may be filed by the foreclosing party for a deficiency judgment. A deficiency judgment is a personal judgment that the lender seeks to recover from the borrower an amount equal to the difference between the foreclosure price and the total mortgage debt (in case the latter exceeds the former).
- Due to deficiency judgments, homeowners’ liability for the complete amount of their mortgage may not necessarily end after the short sale. When the lender gives consent for a short sale of the mortgaged property but receives an amount from the sale that’s less than what’s still owed on the mortgage, s/he can make the original homeowner pay the difference.
- A short sale is documented as “foreclosure proceedings started” and won’t affect an individual’s credit report any further. However, the individual’s credit rating would suffer to some degree as it would remain on the report for 7 to 10 years and in most cases may prevent the issuance of any mortgage for several years to come.
Cash Buyer NJ negotiates short sales for New Jersey home-owners. Unlike attorneys and many agents, we do not charge fees upfront. To find out if you qualify for our short sale services, give us a call at (201)472-3554.