Foreclosure Law in New Jersey

Foreclosure in Franklin Lakes, New Jersey is a process that authorizes a lender to take possession of the property that was used to secure their loan, in the event that the borrower fails to repay it.

Foreclosure most commonly is a forced sale of a house at auction, since those are the most common types of property bought through a mortgage. Banks will normally try to get rid of the property as quickly as they can, selling it for as much money as they can get in a short period of time.

In every U.S. state, including New Jersey, a borrower has a right to a judicial sale of their foreclosed property. A judicial sale is just an auction supervised by a court. The purpose of this is to make sure that the lender takes reasonable steps to sell the home for the highest possible price, and to ensure that the homeowner has an opportunity to bid on the house, if he or she is able. It is in everybody's interest for the bank to get the highest price possible for the house, even the borrower's. If the house fetches a higher price than what's left on the mortgage, the buyer can keep what's leftover. On the other hand, if it fetches less, the buyer might have to pay the deficiency.

In some states, original mortgages are regarded "non-recourse" loans. This means that once the house or other property that secured the mortgage is sold, and if it sells for less than the balance of the mortgage, the lender has to absorb the loss, and cannot sue the borrower for the remainder. This normally does not apply to second mortgages or refinanced loans.

How to Possibly Avoid Foreclosure in Franklin Lakes, New Jersey

It's extremely important that you engage in continued communication with your bank. Lenders are surprisingly willing to make accommodations if it means they still get paid something, but in order to accommodate your case, they have to know about it.

You should be mindful of the fact that your bank wants you to make your monthly mortgage payments - they likely aren't scheming to trick you into giving up your home. This isn't out of altruism, it's due to the fact that foreclosure is almost never as lucrative for the bank in the long run than a mortgage that is paid in full over a period of years or decades, with interest accruing the whole time. For a bank, a foreclosure is just a last resort to cut their losses.

It's possible that your lender is willing to negotiate a plan that results in temporarily-lower payments on your mortgage, particularly if this means that they will be able to get some payments, instead of none at all.

Lastly, there is the "short sale." Normally considered a last resort, a short sale results in the borrower losing their home, but discharges almost all of their remaining mortgage debt. If the house is worth far less than the balance of the mortgage, this might be a good choice. In New Jersey, when a house is sold in a short sale, the proceeds go to the lender. If it sells for less than the mortgage balance, whatever's leftover is forgiven. If it sells for more, the surplus goes to the homeowner.

Can a Franklin Lakes, New Jersey real estate attorney help?

If you are worried that your Franklin Lakes, New Jersey house is going to be foreclosed, and want to try and stop this, a seasoned real estate lawyer can help.