THE FORECLOSURE PROCESS

ARE YOU AT RISK FOR FORECLOSURE?

HELP! I HAVE MISSED MORTGAGE PAYMENTS. When it has become difficult or impossible to make one or more mortgage payments, many people think they have time before they need to worry about foreclosure. However, typically there is only a three month window before the lender will transfer your file to their attorneys to begin foreclosure proceedings.

Warning Signs. Are you finding it more and more difficult to pay your monthly bills on time? Has your financial situation changed due to a mortgage payment increase, loss of a job, divorce, medical expenses, increase in taxes, or other reasons? If your answer to any of these questions is yes, you may be at risk for foreclosure.

Three Month Window. If you miss one payment, your lender will contact you. If you miss a second payment, they will contact you again. It is possible that if you make a payment at this time you will prevent yourself from falling three months behind. It is also possible that your lender may work with you by agreeing to a payment plan to bring your mortgage current. Most lenders wait until the third missed payment to begin the process toward foreclosure.

Notice of Intention to Foreclose. After the third missed payment, the lender typically sends a Notice of Intention to Foreclose. The lender is obligated by the New Jersey Fair Foreclosure Act, N.J.S.A. 2A:50-53, et. seq. to send this Notice thirty days before it files a foreclosure Complaint.

The Notice must contain specific statements, as follows:

• The particular obligation or security interest.
• The nature of the default: does the lender identify why it claims a right to foreclose (e.g., that you failed to make certain monthly payments)?
• That you have a right to cure the default.
• The amount that you have to pay in order to cure the default.
• The date by which you have to pay the arrears in order to avoid foreclosure proceedings.
• The name, address, and phone number where you should send your payment.
• A statement that, if you do not pay the amount that you owe, the lender can begin foreclosure proceedings against you in court.
• A statement that, if the lender does begin foreclosure proceedings, you will still have the right to cure, but you will also owe court costs and the lender's attorney's fees.
• Whether you have the right to transfer the property to someone else and have that person cure the default.
• That you are advised to seek an attorney.
• A statement that, if you are not able to find an attorney, you can call the New Jersey Bar Association or the Lawyer Referral Service in your county.
• A statement that, if you can't afford an attorney, you can call your local Legal Services office.
• A statement that financial assistance might be available to help you cure the default
• The name and address of the lender.
• The telephone number of a representative of the lender that you can contact if you don't think you are in default or if you think you owe less than the amount the lender claims is due.

The Notice of Intention to Foreclose should give you the name and address of the holder of your Note and Mortgage. It should also tell you the name and address of a representative of the holder to contact in the event of a dispute. Often, the holder and the representative are two different entities.

INITIAL FORECLOSURE PROCEEDINGS

LITIGATION (COURT PROCEEDINGS) BEGINS WHEN THE LENDER FILES A COMPLAINT AGAINST YOU. Thirty or more days after you have received the Notice of Intention to Foreclose, the lender files a Complaint with the Superior Court Office of Foreclosure in Trenton, New Jersey. The Complaint explains all the facts that give the lender the right to foreclose.

The Lender Must Serve You With The Complaint. The lender must serve you with a copy of a Summons and the Complaint. This means they are required to make sure you are aware that you are being sued for foreclosure. The Summons/Complaint must be personally delivered to you, or it may be mailed via regular and certified mail. If the lender cannot serve you in either of these ways, the lender will ask the Court to allow it to publish notice of the foreclosure in the newspaper.

About Mediation. The lender is required to send you information about the New Jersey Foreclosure Mediation Program when it serves you with the Complaint. However, even if you request mediation the foreclosure litigation will still go forward toward eventual loss of your home. It is very important that an Answer to the Complaint be filed - even if you request mediation.

FILE AN ANSWER TO THE FORECLOSURE COMPLAINT. It is important to know that the best chance to avoid losing your home is to answer the foreclosure Complaint. If you do not file a contesting Answer, your case will never be reviewed by a judge. It will be handled in the Office of Foreclosure through the time a Final Judgment is entered against you. You have 35 days from the date you received the Complaint to file an Answer, or you may wind up in default (the lender notifies the Court that you did not answer the Complaint. If you do not answer, the lender may proceed toward final judgment against you).

What is a Noncontesting Answer? A non-contesting Answer does not challenge the Lender's statements. The Office of Foreclosure will almost certainly determine your Answer is noncontesting if your Answer admits the lender's statements are true, or states that you do not have enough information to know whether the statements are true. Your case will not be reviewed by a judge but will instead be handled in the Office of Foreclosure through the time a Final Judgment is entered against you.

*For further discussion of what happens if you do not file an Answer, or file a noncontesting Answer, see *Uncontested Foreclosures at the end of this article.

What is a Contesting Answer? A contesting Answer is a response to each of the lender's claims. It may admit some of the claims are true or deny they are true. The Answer should include defenses - explaining to the Court the reasons you should not lose your home. The Answer should also include Counterclaims - explaining to the Court that the lender may have violated certain laws. Sometimes, if other people were involved in offering you a loan and/or closing your loan, you may need to file a Third Party Complaint - explaining to the Court how people other than the lender violated laws when the loan was made.

FORECLOSURE PROCEEDINGS IN COUNTY

CONTESTED CASES ARE TRANSFERRED. If the Office of Foreclosure determines your Answer is Contesting, the case will be transferred to the county where the property is located.  A Superior Court judge will now review your case. Usually, a conference will be scheduled.

Case management conference. The judge assigned to the case may schedule a case management conference. This is a meeting with the judge, the lender's attorney and your attorney (or you, if you do not have an attorney). The judge may ask questions to get an idea of the important issues. He may also look into whether a settlement between you and the lender is possible, whereby you and the lender may come to an agreement without the need for a trial. However, at this meeting the judge will not make decisions about your case. The most important purpose of the conference is the scheduling of important dates in your case. The judge may decide the deadline for sending and responding to discovery (see below) and set a trial date.

PRE-TRIAL. While your case is in litigation, the county judge makes decisions about the arguments between the lender and you. The lender will try to convince the judge that it has a right to proceed to a foreclosure judgment. You must argue why the lender does not have that right according to what you claimed in your Answer.

The lender may file a Motion for Summary Judgment asking the Court to rule in the lender's favor without a trial. In this motion, the lender argues that you are in agreement with all the important facts, and the law is completely on the lender's side. You must file a written response or the lender will win automatically. Your written response will argue that you have legal defenses to the foreclosure. If the judge rules that you do not have legal defenses, he will usually decide the motion in favor of the lender and allow the lender to proceed toward foreclosing your property. If the judge rules that you do have legal defenses, you and the lender will now proceed toward a trial.

Discovery. Discovery is the name for the ways each side asks for facts, information and documents before the trial. This information allows each side to discover facts and information that may help prove or disprove the right to foreclose. The lender has a right to demand this information from you, and you have the right to demand it from them. The two most common tools of discovery in a foreclosure case are interrogatories and document demands. Interrogatories are written questions the other side must answer. A Demand for Production of Documents lists the documents you have a right to obtain. Interrogatories and document demands are sent to the lender's attorney. The lender must also send them to your attorney.

TRIAL. At a trial, the lender will argue to prove it has the right to foreclose. You must prove that the lender should not be allowed to foreclose because of the defenses and claims you raised in your Answer.

*UNCONTESTED FORECLOSURES

The Lender Proceeds Toward Final Judgment By Sending A "14-Day Notice". Before the lender may file a Request for Entry of Final Judgment, it must send you a notice fourteen days beforehand that it is going to do so. This Notice provides a final chance to "cure" the default (pay what you owe and stop the foreclosure).

Good Faith Statement. You must respond within 10 days or receipt of the 14-day Notice if there is a reasonable likelihood that you may be able to cure the default.  You then have 45 days to cure the default.

Request for Entry of Final Judgment. If you are unable to cure the default, the lender will ask the court by motion in writing to enter final judgment against you. The judgment will state that the lender is entitled to foreclosure and the amount of money the lender is entitled to receive when the property is sold at Sheriff's Sale.

Sheriff's Sale.

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