If you’re facing a foreclosure of your New Jersey home, you should educate yourself about the foreclosure 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 reinstate the mortgage prior to the sale, and whether you could be liable for a deficiency judgment after the foreclosure.
The citations to New Jersey’s foreclosure statutes are:
The important parts of New Jersey’s foreclosure laws are summarized below. You can find more detailed articles on various aspects of New Jersey’s foreclosure law in Nolo’s New Jersey Foreclosure Law Center.
Foreclosures in New Jersey are judicial, which means the foreclosing party must sue the borrower in court in order to foreclose.
New Jersey law requires the following notices.
Notice of intention to foreclose. Before starting the foreclosure, the foreclosing party must send the borrower a notice of intention to foreclose that provides at least 30 days to cure the default. N.J. Stat. Ann. § 2A:50-56.
Complaint and summons. The foreclosing party starts the foreclosure by filing a lawsuit in court and giving notice of the suit by serving the borrower with a summons and complaint. The borrower gets 35 days to answer. New Jersey Court Rule 4:6-1. (Learn more about the difference between a foreclosure summons and complaint.)
Along with the complaint and summons, the borrower will also get notice about foreclosure mediation. (Learn more in Nolo’s article New Jersey's Foreclosure Mediation Program.)
Notice of entry of final judgment. If a defaulting borrower fails to respond to a foreclosure suit, the foreclosing party may apply for an entry of foreclosure judgment. The foreclosing party must mail the borrower a notice 14 days before applying for the final judgment that gives the borrower one final chance to cure the default. N.J. Stat. Ann. § 2A:50-58.
If the borrower responds to the notice within 10 days, saying he or she intends to cure the default, the foreclosing party must provide an additional 45 days for the borrower to cure the default before entry of final judgment. N.J. Stat. Ann. § 2A:50-58.
Notice of sale. The foreclosing party must mail 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.
Notice of order of redemption (only in certain foreclosures). New Jersey allows the foreclosure of certain homes without a public sale through an “optional foreclosure procedure.” This procedure is allowed only if
In this type of foreclosure, the foreclosing party gets an "order of redemption" from the court which gives the borrower between 45 and 60 days to redeem (payoff) the total amount owed on the mortgage. Within 20 days of the order, it serves the borrower notice of the order, which includes information about the optional foreclosure procedure, the conditions under which the borrower may request a public sale instead, and that the borrower must request a public sale within 30 days of service. N.J. Stat. Ann. § 2A:50-63.
New Jersey law provides protections similar to the federal Servicemembers Civil Relief Act to military service members. Among other things, it states that a service member can potentially stay (postpone) court proceedings and that the period of military service is not included in the redemption period. The law applies to service members 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 defaulted mortgage's missed payments (plus fees and costs) in order to stop a foreclosure (also called curing the default). (Learn more about reinstatement to avoid foreclosure.)
In New Jersey, you can cure a default at any time up until the entry of a final judgment. However, there are advantages 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. However, 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 (repurchase) 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.
The borrower can redeem up until the court confirms the sale. After the foreclosure sale, there is a 10-day period during which the homeowner can file a motion objecting to the sale. New Jersey Court Rule 4:65-5. After the 10-day period, the court must confirm the sale to finalize it. The New Jersey Supreme Court has determined that foreclosed homeowners get the right to redeem:
The borrower can redeem if the foreclosing party gets a deficiency judgment. A foreclosed borrower can bring a separate action for redemption within six months of the entry of a deficiency judgment. N.J. Stat. Ann. § 2A:50-4. (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, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
In New Jersey, the foreclosing party may bring a separate lawsuit for a deficiency judgment within three months after the foreclosure sale or, if confirmation of the sale is required, from the date of the confirmation of the sale. N.J. Stat. Ann. § § 2A:50-2, 2A:50-2.1. However, if the foreclosing party obtains title to the property through an optional foreclosure procedure, it cannot seek a deficiency judgment. N.J. Stat. Ann. § 2A:50-63.
The homeowner 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. However, keep in mind that if you challenge the amount of the deficiency, you'll lose your right to redeem. 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.)
If the foreclosed homeowners do not leave after the foreclosure, the new owner (usually the foreclosing party) applies for writ of possession from the court. The sheriff then executes the writ.