If you’re facing a foreclosure of your New Jersey home, it’s a good idea to get as much information as possible about the process. Below you can learn about the most common type of foreclosure process in New Jersey, how much and what type of notice you’ll receive before the sale, whether you get the right to catch up on the payments (reinstate) to stop the sale, and whether you could be liable for a deficiency judgment after the foreclosure.
You’ll also learn about important protections for homeowners in foreclosure, like the opportunity to get free housing counseling and work out a way to avoid foreclosure through mediation.
Foreclosures in New Jersey are judicial, which means the foreclosing party must sue the borrower in court to foreclose.
Before starting the foreclosure, the foreclosing party must send you (the borrower) a notice of intention to foreclose that provides at least 30 days to cure the default. The bank must mail you the notice a minimum of 30 days—but not more than 180—before foreclosure starts. (N.J. Stat. Ann. § 2A:50-56).
The foreclosing bank starts the foreclosure by filing a lawsuit in court and serving you a summons and complaint. You get 35 days to answer. (New Jersey Court Rule 4:6-1).
Along with the complaint and summons, you’ll also get notice about foreclosure mediation. A law passed in 2019, effective as of November 1, 2019, made New Jersey's foreclosure mediation program permanent. (Learn more in Nolo’s article New Jersey's Foreclosure Mediation Program.)
If you don’t respond to the foreclosure suit, the bank may apply for an entry of foreclosure judgment. The bank must mail you a notice 14 days before applying for the final judgment giving you one final chance to cure the default. (N.J. Stat. Ann. § 2A:50-58). If you respond to the notice within 10 days, saying you intend to cure the default, the bank has to provide you with an additional 45 days to cure the default before it seeks an entry of final judgment. (N.J. Stat. Ann. § 2A:50-58).
The bank must mail a notice of the sale to every party who has appeared in the action and the property owner at least ten days before the sale. The sheriff (the party that conducts the sale) posts a notice of sale at the property and in the sheriff’s office. The notice is also published in two newspapers. (New Jersey Court Rule 4:65-2, N.J. Stat. Ann. § 2A:50-64).
New Jersey law provides protections similar to the federal Servicemembers Civil Relief Act to military servicemembers. Among other things, it states that a servicemember can potentially stay (postpone) court proceedings and that the period of military service is not included in the redemption period (see below). The law applies to servicemembers on federal active duty or in state military service pursuant to the governor’s orders. (N.J. Stat. Ann. §§ 38:23C-1 to 38:23C-26).
"Reinstating" is when you catch up on the missed payments, plus fees and costs, to stop a foreclosure.
In New Jersey, you can cure a default (reinstate) at any time up until the entry of a final judgment. But there’s an advantage to acting quickly: If you cure the default before the deadline given in the notice of intention to foreclose, and then down the line you default again, you'll get a chance to cure the default again. If you cure the default after the deadline in the notice has expired, you'll stave off foreclosure, but if you fall behind again during the next 18 months, you don't get the right to cure the default in the second foreclosure proceeding. (N.J. Stat. Ann. § 2A:50-57).
Some states permit the borrower to redeem the home within a certain period of time after the foreclosure. In New Jersey, the defaulting borrower can redeem the home in the following circumstances:
Right to redeem during the 10-day period following the sale. The homeowner gets a 10-day period after the sale to file a motion objecting to the sale. (New Jersey Court Rule 4:65-5). After ten days, assuming no objection is filed, the court then confirms the sale to finalize it. The New Jersey Supreme Court has determined that foreclosed homeowners get the right to redeem within the 10 days after the sale, and up until the court issues an order confirming the sale if objections are filed under the rule. (See Hardyston Nat. Bank v. Tartamella, 56 N.J. 508 (1970)).
Right to redeem if the foreclosing bank gets a deficiency judgment. Also, the foreclosed borrower gets a separate right to redeem if the foreclosing party gets a deficiency judgment. To redeem, you’ll have to file an action for redemption within six months of the entry of a deficiency judgment. (N.J. Stat. Ann. § 2A:50-4). But if you file an answer to the deficiency judgment lawsuit to dispute the amount of the deficiency (see below), you lose this right to redeem. (N.J. Stat. Ann. § 2A:50-5.) (To get details on redemption rights in New Jersey, see Nolo’s article If I lose my home to foreclosure in New Jersey, can I get it back?)
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment, called a “deficiency judgment,” against the borrower for this amount. Other states prohibit deficiency judgments with what are called anti-deficiency laws.
Under New Jersey law, the bank has to file a separate lawsuit within three months after the foreclosure sale or, if confirmation of the sale is required, from the date of the confirmation of the sale, to get a deficiency judgment. (N.J. Stat. Ann. §§ 2A:50-2, 2A:50-2.1). (Find out how a bank collects on its deficiency judgment.)
You may contest the amount of deficiency owed by answering the deficiency suit and introducing evidence regarding the property’s fair market value. The court will then determine the amount of the deficiency by subtracting the fair market value of the home from the outstanding debt. (N.J. Stat. Ann. § 2A:50-3). Although, if you challenge the deficiency amount, you'll lose your right to redeem as discussed above. (N.J. Stat. Ann. § 2A:50-5). (For a summary of the deficiency law in New Jersey, see New Jersey Laws on Post-Foreclosure Deficiency Judgments.)
This article contains details on foreclosure laws in New Jersey, with citations to statutes so you can learn more. (If you need help locating the statutes, see Finding Your State’s Foreclosure Laws.) Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you’re facing a foreclosure.
Also, if you have questions about the foreclosure process in New Jersey or want to learn about potential defenses to a foreclosure, you should consider talking to a foreclosure lawyer. Again, it’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation options or get assistance in the mediation process.