Facing a foreclosure may be frightening and may make you feel helpless. But remember that in New Jersey, mortgage lenders must follow specific procedures to lawfully foreclose on a property – they cannot just take your property. This process allows property owners to fight back on the foreclosure by raising any applicable legal defense in their case.
First, don’t ignore the lawsuit papers or delay filing a response them. You or your lawyer could look for ways that the lender improperly followed legal or court procedures for foreclosure. Those defects that could delay foreclosure include improper service of the lawsuit papers, missing important deadlines or improperly filing the foreclosure complaint.
Another way to fight the foreclosure is to look for deficient paperwork. The company that currently owns your mortgage is the only company that can file for foreclosure. To show proof of ownership of the loan, the lender must provide the court with the original promissory note you signed. When mortgages are sold, which happens all the time, paperwork sometimes gets lost – or not completed at all – or is improperly signed. For example, a recent New Jersey Supreme Court cased said that a bank trying to foreclose on a home mortgage has to give the name of the lender before the bank can take the property, because without the proper identity of the lender, a homeowner could make an important mistake when trying to prevent the foreclosure.
By focusing on careless record-keeping or exposing deficiencies in the lenders’ poor handling of the legal process, homeowners have been able to retain their homes for months or even years without making mortgage payments. Even if your lender made no mistakes on the paperwork, your lawyer can still force it to prove its case, which could slow down the foreclosure process and give you more time to figure out a solution.
Also, New Jersey offers a Foreclosure Mediation Program to help avoid foreclosure by bringing the borrower and lender together to come up with an alternative solution that is mutually beneficial. To be eligible for the program, the property must be an owner-occupied one to three family residential property and it must be the borrower’s primary residence. Mediation must be requested within 60 days after the service of the lawsuit papers. If you ask for mediation after the 60 days, you must show exceptional circumstances and a judge will decide if you can participate in the program. Mediation can bring about alternative solutions to foreclosure such as a loan modification, a payment arrangement, a forbearance agreement, a short sale, or a deed in lieu of foreclosure. Although requesting mediation does not stop the foreclosure action, it can delay it – and it doesn’t hurt to participate in the program and it will more often than not make the lender with the homeowner and agree to an alternative solution.
Foreclosure is frightening, but remember that there are many ways to either slow down or stop the process. With some research – or an experienced lawyer on your side – you’ll learn that you have options – and which one is best for you. Kieu-Nhi Le, Rutgers School of Law Newark candidate for a JD degree in May 2016. She is the Managing Business Editor of the Rutgers Computer and Technology Law Journal collaborated with me on this blog.