The Process Before Going to Court
Step 1: You default on your loan
You are considered to be in default as soon as you miss one loan payment (or if you break your loan agreement in some other way). The lender might contact you by letter or telephone after the first missed payment to remind you that a payment is due.
Step 2: The lender sends you a Notice of Intention to Foreclose
The lender usually waits until you have missed at least three mortgage payments before sending this notice. The New Jersey Fair Foreclosure Act requires the lender to send this notice to you. The law also requires certain information to be included in the notice. Use the checklist in the section Laws that Can Protect You From Foreclosure to make sure that the lender gave you all of the information that you are entitled to. If not, then you may include the lender’s failure to do so in your Answer or in a Motion (written request) to the court asking the court to dismiss the foreclosure action. The lender must send you this notice at least 30 days before the lender files a complaint.
If you can cure the default (make the payments you missed), the lender must accept your payment and cannot charge you attorney’s fees at this point.
The Process in the Office of Foreclosure
Step 1: The plaintiff (lender) files a foreclosure complaint
The court process of foreclosing on property begins no sooner than 30 days after you receive the Notice of Intention to Foreclose, when the plaintiff (the lender or company filing the complaint) files a complaint against you, the defendant (homeowner), with the Office of Foreclosure. The Office of Foreclosure is a part of the Superior Court of New Jersey, and it is located in Trenton. The Office of Foreclosure handles the foreclosure, and the foreclosure is never reviewed by a judge in your county unless you file an Answer.
The Complaint for foreclosure must set out all the facts that would give the plaintiff the legal right to foreclose.
Step 2: The plaintiff serves you with a Summons and Complaint
The lender must have a copy of the Summons and Complaint hand-delivered to you. The lender also may send a copy of the Summons and Complaint to you by regular and certified mail. If the lender cannot reach you, the lender will ask the court for permission to serve you by publication. This means that important notices won’t be delivered to your house. Instead, they will only be published in the newspaper.
Notice of information about the state’s mediation program. Along with the Summons and Complaint, you should receive information about the state’s mediation program. You must request mediation within 60 days of the date you receive the complaint. You must request mediation and file an answer to the complaint if you want to fight the foreclosure. If you fail to request mediation within 60 days, you will not be allowed to participate. If you miss the deadline, you may ask the court to allow you to participate, but you must be able to show “exceptional circumstances.” If you cannot show a very special reason why you should be allowed a late chance for mediation, the court will deny your request. However, mediation will not stop the foreclosure process from continuing. It is important to file an Answer even if you request mediation.
Step 3: You file an Answer to the Complaint
You, the homeowner, have the right to defend against the foreclosure lawsuit in court. To do so, you must present your defenses to the Complaint in a written Answer filed with the court. (An Answer is a written response from a defendant to a complaint). In your Answer to a foreclosure complaint you must explain to the court why the lender does not have the legal right to foreclose.
Sample forms and instructions for filing an Answer are available on the New Jersey Judiciary’s website
Deadline for filing Answer. You have 35 days from the date you received the Summons and Complaint to file a written Answer. An Answer that is filed on time is the homeowner’s best opportunity to fight the mortgage foreclosure.
Step 4: The Office of Foreclosure reviews your Answer to determine if it is a Contesting or Non-Contesting Answer
The Office of Foreclosure reviews every Answer to determine if it is a Contesting Answer or a Non-Contesting Answer. This is because the kind of Answer that you file determines how the case will proceed.
Contesting Answer. A Contesting Answer is one that questions whether the mortgage is legal or correct or questions whether the lender has a legal right to foreclose on your property.
What must be included in a Contesting Answer? In a Contesting Answer, you must include a response to each of the lender’s claims (admitting the lender’s claims are true, denying they are true, or stating that you do not have enough information to know whether the lender’s claims are true). Your Answer should also include Defenses (explanations about why you should not lose your home to foreclosure) and Counterclaims (your complaints against the lender claiming that the lender’s actions may have violated other laws). If other people were involved in making your loan a predatory loan, you may need to file a Third-Party Complaint and add those parties to the lawsuit.
An Answer that admits all of the lender’s accusations or states that you do not have enough information to know whether the accusations are true for every paragraph may be deemed a Non-Contesting Answer. A Non-Contesting Answer will not be sent to a judge.
For a more detailed description defenses and counterclaims to foreclosure and an explanation of the laws that the lender may of have violated, see the section, Laws that Can Protect You from Foreclosure.
Sample forms and instructions for filing an Answer are available on the New Jersey Judiciary’s website.
Step 5: The Office of Foreclosure transfers the court case to the county where the property is located
If the Office of Foreclosure decides that you have filed a Contesting Answer, the Office of Foreclosure will transfer the case to the Superior Court in the county where the property is located, and the matter will be assigned to a judge.
The Process in the Superior Court in the County Where the Property is Located
After the case is transferred to a Superior Court judge in the county where the property is located, you must get ready to have a trial. The lender will try to convince the court either by a motion (written request) or at a trial that it has the right to foreclose on the property. You must convince the court that the lender does not have the right to foreclose on the property for the reasons you described in your Answer.
(a) Motion for Summary Judgment
Sample forms for responding to a Summary Judgment Motion are available on the New Jersey Judiciary’s website.
Discovery is another activity that takes place before the trial. Discovery is the process by which the parties (plaintiff and defendant) use several types of tools to ask for facts, documents, and other information before the trial takes place. In a foreclosure case, each may ask the other to provide information that may help prove or disprove the right to foreclose.
(c) Case management conference
The judge assigned to the case may write a letter to the parties setting up a case management conference (CMC). A CMC is a meeting that will include you (or your attorney), the judge, and the lender’s attorney. The main purpose of the CMC is to set up a time schedule with deadlines for discovery. Remember to make sure that you ask for enough time to get the information that you need. The court may also schedule a trial date at the case management conference. The CMC is not an official hearing in the courtroom. No one will be sworn in, and the judge will not make any decisions about whether the lender may foreclose. At the meeting, the judge may ask some questions to get an idea of the issues involved in your case. The judge may explore whether settlement (reaching an agreement without a trial) is possible.
At a trial, the lender must prove it has the right to foreclose. Then you must prove that the lender should not be permitted to foreclose because of the defenses you have raised. Review the defenses described in the Laws that Can Protect You from Foreclosure section.
The Process After You File a Non-Contesting Answer or If You Do Not File an Answer at All
Lender’s request for entry of Default
If you miss the deadline to file an Answer, or file a Non-Contesting Answer, the lender will probably file papers with the court asking the court to Enter Default (officially recognize that the you did not file an Answer).
Your response: Motion to Set Aside (Undo) Default. New Jersey Court Rule 4:43-3 allows you to file a written request with the court asking the court to cancel/undo the default and to give you another chance to file an Answer. You must show good cause in order for the Court to give you a second chance to file an Answer. The case of O’Conner v. Abraham Altus, 67 N.J. 106, 129 (1975) is an example of a case where a court set aside a default for good cause. Good cause usually means that you have a defense to the mortgage foreclosure.
For a more detailed description of defenses and counterclaims to foreclosure and an explanation of the laws that the lender may have violated, see the section, Laws that Can Protect You from Foreclosure.
Lender’s request for entry of Final Judgment
If you do not respond to the lender’s request for entry of default, the lender may go forward and ask the court to enter Final Judgment in the lender’s favor. The lender does this by making a Motion for Entry of Final Judgment. However, before the lender may file this motion, the lender must give you notice and one final chance to cure the default.
Lender’s Motion for entry of Final Judgment
If you are unable to cure, the lender will file a Motion (request) to the court to enter Final Judgment in the lender’s favor. This is the court’s judgment that the lender is entitled to foreclose on the property. It sets forth the amount of money that the lender is entitled to receive when the property is sold at a Sheriff’s Sale.
For a sample Motion to Vacate Default or Default Judgment and or Request for Waiver of Filing Fees, see the section, Foreclosure Forms.
The Sheriff’s Sale Process
If the court grants final judgment to the lender, the court will also issue a Writ of Execution directing the County Sheriff to sell your house to the highest bidder at an auction. You will receive a notice telling you when your house is scheduled to be auctioned. A notice also will be posted in a newspaper.
Your response: Request to stay (delay) the Sheriff’s Sale—Sheriff’s office
If your home is scheduled for a Sheriff’s Sale, you may apply to the County Sheriff in person for two two-week delays of this sale. These delays are called adjournments or stays. You must pay a fee to the Sheriff’s office for this stay. You should be prepared to pay a fee of under $50 by cash or money order. You do not have to prove good cause or appear before a judge to get these stays.
Your response: Request to stay (delay) the Sheriff’s Sale—in court
You may also apply for a stay at the Superior Court, Chancery Division, in the county where the property is located. Courts often will grant a stay to allow you to participate in the Court’s mortgage mediation program. However, courts rarely grant stays for any other reason, except in very compelling circumstances, such as to allow a homeowner to complete a sale or refinance of the property that is already in process.
Forms to request a stay so that you can participate in Mediation are available on the New Jersey Judiciary website.
Note: These stays are temporary, and will not give you an opportunity to have any of your defenses heard by a judge. They only give you the opportunity to try to complete some other plan.
Getting the property back after the Sheriff’s Sale
After the auction, you have 10 days to redeem (get back) the property. During this period of time, you can save the property by completing a refinance or sale of the property. A bankruptcy filed after Sheriff’s Sale extends the period of time in which you can redeem the property, but you will not be able to raise your defenses in bankruptcy court at this time.
If the lender wins the court case, then the Sheriff sells the property. The money from the Sheriff’s Sale is paid to the lender to make up for the homeowner’s failure to pay. If the house sells for more than the amount of the mortgage, then the homeowner is entitled to the difference. If the house sells for less than the amount of the mortgage, then the lender has the right to sue the homeowner for the rest of the money that the homeowner owes, called the deficiency.
After the Sheriff’s Sale, you will receive a Notice from the Sheriff telling you when you must vacate (move out) of the house. If you do not move out of the house by that date, then the Sheriff may come in to the property and remove you and your belongings.
Remember that it can take a year or more for an uncontested foreclosure to be final, from the date of the Notice of Intention to Foreclose through the date the Sheriff takes possession of the property.
Because it may be easier for you to understand the process if you see it in a different format, the chart below describes the same process explained above when a homeowner files a Non-contesting Answer or No Answer to a Foreclosure Complaint.
Foreclosure process when a homeowner files a Non-Contesting Answer or no Answer to a Foreclosure Complaint