Reasons Why a NJ Foreclosure Property is a Great Investment

NJ foreclosure

Buying a home is often the biggest investment an individual can make. Depending on where you live and the status of the market at the time, you may face heavy competition for homes in your price range. Including NJ foreclosure properties could widen your pool of potential homes while simultaneously saving you some money. It can seem to some potential buyers that foreclosed homes may be a bad investment. If you get what you pay for, the low prices of foreclosed homes may make it seem like you’re paying for a house with a lot of problems. But foreclosed homes can be a great investment for the right homebuyer.

Foreclosure status on a potential home can mean a lot of different things. In most cases, you will not be able to gather as much information on homes in foreclosure as compared to properties that are simply listed for sale. It is also a good bet that the home is in need of some upkeep, especially if it has been empty for an extended period of time. If the previous owners fell behind on payments, it stands to reason that they may have fallen behind on regular home maintenance as well. This is not always the case though – and every foreclosed home will come with different needs. A foreclosed home could be in perfectly good shape or in need of a substantial amount of hard work.

Pre-Foreclosure

Sometimes, buying a home in pre-foreclosure can be a “best of both worlds” situation. Pre-foreclosure means the home is being sold by the owners to avoid losing the home at Sheriff’s Sale. The owners have likely already received legal notice from their lender, but the foreclosure process hasn’t officially started yet. Sellers who know foreclosure is imminent are facing serious legal and financial consequences; therefore, they are often very motivated.

If you’re lucky enough to find a house just before it goes into the NJ foreclosure system, you’ll have the opportunity to tour the property before making an offer, which doesn’t always happen if you’re buying a foreclosed home at auction. It can be difficult, however, to find these homes or confirm that they are actually on the market. Often, your local newspaper will list foreclosure notices and some real estate websites have filters for “potential listings.” If you’re up for some detective work, or have a NJ real estate attorney with a vast network of real estate agents, you could get a great deal on an awesome property.

Buying a Home at Sheriff’s Sale

Once a home has officially entered the foreclosure process, there are two main ways for you to purchase it. The first is through auction. Banks and lenders prefer auctions because they are an easy, straightforward way for them to recuperate at least some of their losses and get the home off the market. For a potential homebuyer, though, auctions can be a little scary. Buying a home via NJ Sheriff’s Sale means you likely will not be able to see the inside of the home before the day of the sale. Properties are sold as-is in auctions, so you could be taking a huge risk buying a home without seeing it first. Hiring a professional home inspector to accompany you to the Sheriff’s Sale to indicate any potential repairs or major issues is one way to avoid making a huge mistake.

Additionally, you can do some research on your own to help you make an informed decision. Ownership records, building permits, and previous inspections will all be part of public record. Drive to the property yourself and see what you can from the outside. Ask neighbors what they know about the home. You will want all the information you can possibly get to make sure you are making a worthwhile investment.

Direct Purchase from the Lender

The second way to buy a foreclosed home is directly through the bank. Like with an auction, the property will be sold as-is and the seller may not have all the information you would want on important records about house maintenance or potential repairs. Unlike an auction, however, you will have more time to get the property professionally inspected and determine if the repairs are worth the investment. If you choose to go through with the purchase, be prepared for a long wait. Because you are dealing with a corporation instead of an individual, it can take a long time for these kinds of foreclosure sales to go through.

While foreclosed homes are certainly a bargain, you still may need help financing your investment. When buying a foreclosed home at auction, you will probably need cash up front for the quick transaction. However, you will have financing options if you buy a home in pre-foreclosure or directly through the lender. Your purchase will likely be similar to a traditional home buying process in that you will still have regular mortgage payments over 15 or 30 years. The only difference might come from the level of repairs needed on the home. If your inspection reveals major repairs will be necessary, you should consider getting an FHA 203(k) renovation loan. This type of mortgage loan will cover the purchase price in addition to any renovations needed.

Sometimes buying a foreclosed home comes down to luck and timing, but if you’re willing to put in some time and research it could be worth your while. Making the decision to purchase a foreclosed home doesn’t have to be intimidating. Veitengruber Law can help ensure you are getting the most out of your investment. It is possible to become the owner of a great home at a low cost – you just have to know where to look.

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Aging in Place: Avoiding NJ Foreclosure in Retirement

NJ foreclosure

Entering retirement can be a time of celebration and relaxation, but it can also lead to financial stress. You’ve spent your whole life working towards this moment, but managing your finances on a fixed income can be hard to get used to. While ideally you would be living debt-free in retirement, many homeowners are taking their mortgages and other debts with them into their senior years. If you are worried about how to continue to pay for your home after retirement, there are some steps you can take to avoid facing a NJ foreclosure.

No matter how much you plan for retirement, one unexpected event can throw everything off balance. Unforeseen expenses are some of the biggest reasons retirees struggle to make their mortgage payments. Medical bills can quickly amount to a small fortune. Divorce can leave one person struggling to make mortgage payments alone. Loss of income can affect homeowners even after retirement, due to loss of a part-time job or loss of invested funds. If you find yourself facing even one of these hardships, it may be difficult or impossible to make a mortgage payment.

If you believe a lower monthly payment would allow you to stay in your home, you should consider a loan modification. With a loan modification, your interest rate can be lowered, the loan term can be extended, and/or the principal can be reduced to make monthly payments more affordable. In order to be eligible for a loan modification, you need to prove to your lender that you can’t afford your current mortgage payment, but could if the payment was lowered.

When applying for a loan modification, it is really helpful to have an experienced attorney advocating for your interests. When applying alone, homeowners inexperienced with the process can make mistakes or neglect to provide sufficient evidence of their income. Lenders will reject applications if they believe the requester doesn’t have enough income to meet the lower payments. However, it may just be that you have not listed all of your income, or have have failed to describe your income appropriately. Any money you are receiving has the potential to help your chances of getting approved for a loan modification. At Veitengruber Law, we know what lenders are looking for and how to create an application will be approved.

While you are working to avoid foreclosure, it might be worth looking into increasing your income. If you have the space, renting a room to a relative or friend or renting out an unused space for storage can help supplement your retirement plan. Many retirees hold part-time jobs like dog walking, babysitting, elderly care, and freelancing. Even if you only take a job long enough to get your loan modification approved and pay off some debts, you can resume a carefree retirement once the threat of foreclosure is no longer looming.

The State of New Jersey has made efforts to give retirees a better chance of maintaining their standard of living while continuing to live in the garden state. Law makers have stepped in to help struggling seniors with the Property Tax Reimbursement Plan, also known as the “Senior Freeze.” For seniors who meet a list of requirements, this program freezes property taxes at the amount paid at the time of retirement. Under this program, any increases in NJ property taxes paid since retirement will be reimbursed. This program helps struggling seniors achieve a more consistent, lower cost of living.

Your retirement years should be stress-free and happy. Veitengruber Law is experienced in offering expert legal and financial advice to carry you through retirement with financial security. Enjoy your golden years the way you should—in the comfort of your own home.

STOP a NJ Sheriff’s Sale and KEEP YOUR HOME

NJ sheriff's sale

In New Jersey, it can take a long time to foreclose on a home. There are a lot of options to explore before you get to the point of foreclosure. If, however, you find yourself unable to work with your lender to get a loan modification and a foreclosure commences, you may be facing a sheriff sale of your home. The good news is, even at the point that a sheriff sale has been scheduled, there are still ways to stop the auction and save your home. Veitengruber Law is here to offer valuable legal advice to get you through this time sensitive situation.

After it has been decided the home will go to sheriff’s sale, the lender or the homeowner can ask the court to adjourn, or postpone, the sale temporarily. Under NJ law, the adjournment can be requested for any or no reason at all, but the homeowner can only ask for adjournment twice whereas the lender can ask as many times as they want. These adjournments last for two weeks and give the homeowner time to consider their options.

In New Jersey, each county has its own adjournment procedures and sets its own costs for requests. Generally, the fee is small – around $28 – in most counties. All requests for adjournment must be made in person and the fee must be paid up front. The request can be made in a letter listing the docket number and sheriff sale number along with the property address and date of the sale. Some counties offer a standard form to request the adjournment. We can help you submit this request to make sure you are approved for your two week adjournment.

In limited situations, the homeowner can ask for additional adjournments. This formal request to the Court would only be granted for good cause, like if a sale of the home is pending or the homeowner is likely to be approved for a loan modification. Additional requests for adjournment can be costly and are at the full discretion of the judge, so it is important to try to work toward a solution within the time limits provided by your two allotted adjournments.

Once the sale of the home has been stalled or stopped, you have a few options to consider. Because you have missed more than three payments, the loan is declared to be in default and the lender will not just let you start paying again to catch-up on missed payments. These missed payments and late fees are combined with any real estate taxes or insurance that has been paid by the lender along with any legal fees to make up the “arrears.” The arrears must be paid before the lender will allow you to start making monthly payments again.

There are a few ways to pay off the arrears. The first is to pay them off in one lump sum, which can be difficult if not impossible for most people. The second is to negotiate a loan modification with your lender and have the arrears added to the principal balance of the loan. Even if you have tried and failed to get a loan modification in the past, with Veitengruber Law’s help it may still be possible to work out a loan modification. This could permanently close your foreclosure case and save your home. A loan modification is often the most ideal way to resolve a foreclosure case and we will do everything they can to work toward this goal.

The final option to repay arrears and end your foreclosure case while keeping your home is to file for Chapter 13 bankruptcy. Once bankruptcy is declared, a sheriff sale of your home will be immediately stopped. While the idea of filing for bankruptcy can seem intimidating, bankruptcy is actually a very useful legal tool to get back on top of your finances. A Chapter 13 bankruptcy will likely save your home from foreclosure and also give you options to mitigate your debts. If you also have excessive credit card debt or other debt from medical or other unplanned expenses, these debts can be managed within the same bankruptcy case. Working with an experienced  bankruptcy law attorney who also provides foreclosure defense services will help you determine the best way to save your home and get you on the path to a better financial future.

There are a lot of considerations to take into account when facing a sheriff sale of your home in New Jersey. We understand that this is a deeply personal decision and we will be there to support you every step of the way. Don’t assume you are out of options because a sheriff’s sale is scheduled. Contact us today for an expert assessment of your situation and save your home!

After Foreclosure: What is the Legal NJ Eviction Process?

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What is a Sheriff’s Sale in NJ?

At Veitengruber Law, we understand the intricacies surrounding losing a property or navigating the options one may have when their property is in jeopardy. Part of understanding New Jersey law and the legal NJ eviction process may also involve understanding what a Sherriff’s Sale is, and we can help.

 

A Sheriff’s Sale in NJ is a sale handled by a Sheriff that is ordered by a court when the owner has unsuccessfully paid the judgment. According to New Jersey law, a Sheriff’s Sale is navigated within the local rules of each County Sheriff’s Department, and takes place at each said office. Anyone interested in purchasing a Sheriff’s Sale property can easily find the list of real estate properties available online at the county court website or at the actual Sheriff’s Department during normal business hours.

 

A Sheriff’s Sale (when referring to real estate) generally involves a property that is in danger of/or in foreclosure. The property is sold “as is” and any money generated from the Sheriff’s Sale is applied toward the outstanding lien owed on the judgment. If someone were to become the highest bidder at the sale, they would be required to place a deposit on the property, while understanding the risk of losing the property and part of the deposit in accordance with New Jersey law. The risk of the buyer losing the property has to do with the New Jersey law that states the debtor has a 10 day redemption period in which they may try to pay the lien and recover their property or object to the sale formally through court. If the 10 day redemption period expires and the new buyer pays the the sale price in full, the transaction is deemed complete and the title will then be given to the buyer.


What Happens Next?

The process following a Sherriff’s Sale can be confusing and frustrating, but we can expertly help you navigate this next phase. Once the new owner is in possession of the deed to the home, they cannot simply “kick you out” – this is illegal and would be considered an Unlawful Detainer. New Jersey law has specific rules about the eviction process and the steps that must occur for official eviction to take place.

 

The first step the new buyer must take is to file for a Writ of Possession which allows the County Sherriff to evict any occupants of the home. The County Sherriff then has to deliver notice to the occupants, at which point you have several choices. You could wait out the 30-90 day time-frame and attempt to save money to be prepared to move out of the property. Another option for you may be to ask for “cash for keys” where the new buyer may be inclined to cover moving out expenses for you to leave the home sooner. Veitengruber Law could also help you navigate other options such as a hearing to stay the eviction in front of a judge where you would appear before the judge with valid concrete reasons to postpone the eviction. The final resort could be filing a bankruptcy petition, in which case an automatic stay would occur and the eviction process would be halted indefinitely.

 

How Do I Determine What is the Best Option?

 

Veitengruber Law can help you understand all of your options, and we strongly urge you to take advantage of our expertise! Call today for your FREE one-hour comprehensive consultation to start understanding what the right answer is for YOU.

 

 

 

 

 

 

Navigating the NJ Foreclosure Process

NJ foreclosure

New Jersey has the highest rate of foreclosure in the United States.  More than 74,000 homes went through the foreclosure process in 2016 and while some improvement was seen in 2017, this remains a huge issue for New Jersey residents. Navigating the NJ foreclosure process can be overwhelming to say the least. At Veitengruber Law, it is our goal to give our clients peace of mind during this complicated process.

It is important to note that NJ is a judicial foreclosure state. This means all foreclosures must go through the court system. The lender must sue the occupant in an attempt to get his/her investment back. The process is cumbersome and time consuming, with the state taking on average 1,300 days to foreclose a housing unit.

A foreclosure starts with the occupants of a home missing a mortgage payment. The foreclosure proceedings can begin after one missed payment, but this is rare. Generally, most lenders allow 120 days after a missed payment before starting the foreclosure process.

Before the lender can initiate foreclosure proceedings, the lender is required by law to send a ‘Notice of Intention to Foreclose.’ This is a formal letter indicating the rights of the occupant to cure the debt and the amount required to do so. The letter must also indicate the occupant’s right to contact an attorney during the foreclosure process.

After the Notice of Intention is sent, the lender will file a lawsuit in court. The lawsuit will indicate that the lender is trying to sell the house to satisfy the money owed. Once the lender serves the occupant with the lawsuit, the occupant will have 35 days to respond. In order to dispute the lawsuit, the occupant must respond to the suit in front of the judge in order to explain why they legally should not lose their home. If this time passes with no response, the lender can ask the judge for a default judgment and potentially win the suit.

If the lender wins the suit, they can sell the house. NJ has a ‘right to redeem’ law which allows the occupant a short period of time to get the house back, typically lasting up to ten days. After this, the court will order the sheriff to initiate a sheriff sale, or public auction. The occupant will receive notice of the date of the sale and will have the chance to request a two-week postponement in order to gain more time to either refinance or sell the property. The deed to the home will be transferred to the lender two weeks from the date of sale.

While NJ certainly does have laws to protect home owners, it is important to act fast and with a full understanding of the law. The attorneys at Veitengruber Law are experienced in foreclosure law. Every foreclosure has its own complications and one mistake can mean the loss of your home. Having an experienced NJ foreclosure attorney during this process can help in several ways. Foreclosure defenses are complex and foreclosure law is always evolving. When your home is on the line, it is important to have an expert on your side to ensure you are complying with detailed court filing procedures and rules.

Image: “House Keys” by Steven Depolo – licensed under CC 2.0

Reverse Mortgage Foreclosures: Can They Be Stopped?

nj reverse mortgage

What are reverse mortgages?

Reverse mortgages allow homeowners ages 62 and up to borrow against the equity of their primary residence to receive a loan in the form of either a revenue stream or a lump sum of money from their lender. In order to be eligible for a reverse mortgage, homeowners must first meet a few basic requirements.

The homeowner(s) have to be at least 62 years old and either own their home outright or have a very strong equity built up and owe very little on their mortgage. They must also occupy their home as their primary residence and hold the title to their home. While they typically get a bad rap, reverse mortgages oftentimes provide senior citizens with a valuable and much-needed source of funding to assist with a wide variety of needs that can occur with aging.

Some common reasons seniors seek reverse mortgages are to:

  • Finance a child’s college education
  • Pay for necessary medical expenses and bills
  • Fund home repairs and remodels
  • Supplement social security income to maintain an adequate standard of living throughout retirement.

It is worth noting that while the homeowner gets to remain living in their home and keep the title to the home as collateral, they are still required to pay all necessary taxes, property maintenance and repair costs, homeowner’s insurance payments, and interest and fees on their loan.

What happens if circumstances change?

While reverse mortgages can be a feasible and even financially sound option for certain people, there are some potential pitfalls to take into consideration before ever opting for a reverse mortgage in the first place. It is important to understand the specifics of what you are undertaking as a homeowner. For instance, a reverse mortgage is immediately owed back to the lender upon the occurrence of any of the following circumstances:

  • The borrower(s) decide to transfer the title or sell the home and succeed in doing so.
  • The borrower(s) reside elsewhere for over a year, thereby relinquishing the primary residence status of the home in the eyes of the lender.
  • The borrower(s) fail to meet the terms and conditions of the mortgage; for instance falling delinquent in homeowner’s dues or property taxes, or allowing the condition of the property to substantially deteriorate.
  • The borrower(s) pass away.

If in the near future you are considering moving, living away from your home for more than a year, or if you currently have a terminal illness, you may want to look into alternatives to a reverse mortgage so that you do not leave your loved ones in a bad financial situation upon your departure.

IMPORTANT NOTE: Once the reverse mortgage becomes due for any of the aforementioned reasons, the homeowner(s) (or their heirs) are legally liable to pay back the lender in full, including any applicable taxes and fees.

Can a reverse mortgage foreclosure really be stopped?

If you find yourself or your loved ones on the verge of a reverse mortgage foreclosure, you are not entirely without viable options. Contact a NJ real estate lawyer or foreclosure defense attorney who can help determine if you are eligible for a reputable loan modification on the reverse mortgage. There is also the option of selling the property yourself or allowing a relative or friend to pay off the remaining balance owed on your reverse mortgage.

A real estate attorney with experience in NJ reverse mortgage foreclosures will be best equipped to help answer any questions you may have and help you weigh the pros and cons of all your options. They will walk you through every step of the decision-making process with the end goal of ultimately helping you avoid a reverse mortgage foreclosure.

Bidding on a NJ Foreclosure Property: The Lowdown

NJ foreclosure

Buying a home at a NJ foreclosure sale (or sheriff’s sale, as they are commonly called) can be a fantastic way to score a property at below-market price. While there are some risks and pitfalls to be aware of when bidding at a foreclosure auction, if you’re well-informed, you’ll likely come out of the process happy and (hopefully) successful!

Naturally, the most obvious advantage of purchasing a home via sheriff’s sale is the low price you’re likely to pay. Foreclosure sales are a great way to gain ownership of a rental property or a home you intend to “flip.” Homes that are being auctioned at a New Jersey foreclosure sale have been through the judicial foreclosure process that our state requires, and the lender has been permitted by the court to move forward with selling via auction.

How can I find out about upcoming NJ foreclosure sales?

This is one of the best parts about buying a foreclosed property in New Jersey. Sheriff’s sales are required to be advertised for a minimum of 30 days. You can find listings of upcoming sheriff’s sales in local newspapers for each county. Many jurisdictions also have sheriff’s sale listings online on their county court website.

How does a sheriff’s sale work?

In New Jersey, foreclosure auctions are controlled or led by the sheriff’s department of the property’s county. All local county rules must be followed, however, there are several general rules that are consistent across all counties, according to NJ law.

  1. NJ foreclosure properties up for sale must be sold subject to the first mortgage held on the property. This information can usually be found within the property’s first lien.
  2. Any NJ foreclosure sale will also be subject to any/all local state or federal liens on the property.

Because of the above information, all bidders at NJ sheriff’s sales would be remiss to fail to run a complete title search on the property in question before even considering bidding. Failure to do so could land you with a property that is deeply encumbered by multiple liens, for which you will be 100% responsible.

In New Jersey, foreclosure sales usually start with the lender being given an opportunity to open the bidding. Most lenders will start with a $100 bid. Bidding on the property continues via voice auction between all of the interested parties present at the auction.

The usual course of a NJ sheriff’s sale/auction continues with bidding the price of the property higher and higher until a highest bidder remains. If you are the lucky bidder, you will be required to pay a 20% deposit of your bid price.

Upon conclusion of the bidding, the sale is considered to have ended. However, the end of the sale triggers what is known as the Redemption Period. This is a ten day period during which the original owner (who was foreclosed upon) is allowed to “redeem” the property. This can only be done if the original owner can completely pay off the foreclosure judgement amount, including any additional fees and costs (and potential liens).

At the end of the Redemption Period, if the original homeowner does not choose to redeem the home, you will be given a sheriff’s sale deed. When you receive this deed, it is expected that you will make full payment of the balance of your successful auction bid. You’ll also have to handle any fines that accrued relating to the property, after which you will be able to officially transfer the title from the former owner to yourself!

NJ Foreclosure Sale: What is an Arm’s Length Transaction?

When a piece of real property is scheduled for NJ foreclosure sale (also known as and commonly referred to as the Sheriff’s Sale), an interested buyer, investor or “house hunter” may reach out directly to the homeowner. Even when a homeowner’s property is in foreclosure with the Sheriff’s Sale scheduled, they (the owner) have the legal right to attempt to sell the home.

A home that is in NJ foreclosure is likely to sell at Sheriff’s Sale for substantially less than its real value. This can end with the original homeowner owing the lender the difference between how much they still owed on their mortgage loan and the foreclosure sale price. This is called a deficiency, and although lenders do not always pursue a deficiency judgement from the court, sellers should know that it is always a possibility.

Armed with information about a potential deficiency judgement, a homeowner going through the foreclosure process is smart to attempt to find a buyer before the Sheriff’s Sale date. In fact, should the homeowner find an “arm’s length” buyer prior to the foreclosure sale, it’s good news all around. The lender doesn’t have to move forward with their sale, which saves them time and money, and of course, the original homeowner may very well receive a better offer outside of a Sheriff’s Sale. Lastly, the new buyer can feel good about purchasing a foreclosure property before it is up for public sale, eliminating the competition.

What is an Arm’s Length Transaction?

When a homeowner’s lender moves forward with foreclosure, the homeowner still retains ownership and the ability to sell the property before the Sheriff’s Sale, but there are several stipulations in order to guarantee that a seller in this situation can only sell to a party who is considered an Arm’s Length buyer.

For a transaction like this to be considered fair, New Jersey real estate laws state that both the buyer and the seller must not be in any kind of relationship that is closer than “arm’s length.” The following are examples of relationships that are not arm’s length, and therefore would not be ideal buyers before the Sheriff’s Sale:

  • Family members
  • Close friends
  • Employer/employee
  • Parent company/subsidiary
  • Trust/beneficiary

As long as the homeowner is negotiating with someone who is not acting in the homeowner’s best interest (for example, a parent buying the home below market value only to allow their child, the seller, to keep living there), the end result of a transaction prior to foreclosure sale is typically a good idea.

An Arm’s Length Transaction must involve two parties who are independently acting for their own self-interest. Also, the best and fairest deal that is close to the home’s market value should ultimately be the goal of this type of transaction.

Is it Illegal to Participate in a Non-Arm’s Length Transaction?

While it is not necessarily illegal to sell to a non-arm’s length buyer, when a homeowner is already immersed in the foreclosure process, it is advisable to follow the recommendations of an experienced NJ foreclosure/real estate attorney. Ask your attorney to hook you up with a reputable tax professional as well, because transferring property to a non-arm’s length buyer comes with additional tax implications.

Learn more about your rights during foreclosure!

 

New Jersey Foreclosure: Frequently Asked Questions

In a New Jersey foreclosure sale, your home will be sold in an auction-type setting. The sale will be publicly announced and will be open for anyone to attend. Since New Jersey is a judicial foreclosure state, the local sheriff will typically lead the auction. If the sheriff cannot conduct your sale, another public official will do so.

Everyone who attends the foreclosure sale is able to place bids in order to buy your former home. As in all auctions, “to the highest bidder go the spoils.” The spoils in this case refers to your mortgaged home.

So: you stopped paying your mortgage payment. For a variety of reasons, people sometimes do this. Maybe you ran into temporary (or permanent) financial trouble because you: lost a job, got divorced, fell ill, made some poor money choices – the potential reasons are endless. Regardless of how you ended up in foreclosure, it’s probably not something you hoped would happen to you one day.

No one goes around saying, “I hope I get foreclosed on at least once in my lifetime!” Because foreclosure something you didn’t wish for – you probably don’t know what to expect. As a general rule, we don’t sit around thinking about things that we don’t plan to experience. Therefore, now that you have found yourself smack dab in the middle of a foreclosure, chances are that you have some questions.

We’ve covered a lot of foreclosure sub-topics here on our blog. Today’s foreclosure question we’d like to answer for you is:

“Who gets the money from the foreclosure sale?”

The normal course of a foreclosure auction is that the bidding remains rather low and the final, winning bid is often less than the house is actually worth. In fact, many times foreclosed homes are sold for less than the original mortgagor still owes the bank. There are, of course, exceptions.

Here is a breakdown of what will happen to the proceeds from your foreclosure sale, who receives payment, and in what order:

  • The first person/entity to be paid from the foreclosure sale proceeds is the New Jersey lender who granted you the loan for the mortgage in the first place. The bank or mortgage company needs to recover as much money as possible because you didn’t repay them like you originally agreed. A small portion of the proceeds will also go toward settling the cost of having the foreclosure auction.
  • If there is still money left after the sale is paid for and the lender has fully recovered the amount they are owed, any secondary lenders (2nd or 3rd mortgage granters) will receive the full amount you borrowed (perhaps for a home equity loan) or as much as possible.
  • After the above parties have received payment in full is the only time you, as the mortagor, will be entitled to receive any money from your foreclosure sale. Keep in mind: you are not likely to receive much, if any, money from a foreclosure sale because foreclosed homes don’t typically sell for as much as they would in a traditional real estate transaction.

In fact, you may even owe money when all is said and done. If the winning foreclosure bidder pays less than you still owe on the property, your lender will suffer a loss. This discrepancy is known as a deficiency balance. As the mortgagor, you can legally be held accountable for this amount.

You can learn more about NJ foreclosure procedures, get the answers to common foreclosure FAQs, and find out how a foreclosure will affect your life on our NJ law blog. We can also help you save your home via foreclosure defense, if that is your ultimate goal.

Can the Bank Repossess My NJ Foreclosed Home Before Evicting Me?

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If your home has been through the NJ foreclosure process and the new owner has tried to take possession of the property before you have received formal eviction notice, it is important for you to know your rights.

Naturally, if you’ve made it all the way to the end of the foreclosure process in New Jersey, the fact that you’ll have to move soon should come as no surprise. With that being said, as the former owner of the home, it is within your rights to stay in the home until you have received proper notice of eviction.

After the Sheriff’s Sale of your home has occurred, the NJ County Sheriff must provide the bank/lender with the property deed within ten days. If the bank or lender was not the winning bidder at Sheriff’s Sale, the successful party who purchased the home will be the deed recipient. It is most often the mortgage company who ends up with the home since they are the ones who initiated the foreclosure process in the first place. Their reason for filing for foreclosure is so they can re-sell the home to recover part or all of mortgage loan that you (as the borrower) have failed to pay. Missed mortgage payments are what lead to foreclosure.

Upon receipt of the deed to the property, the mortgage company’s next step is to file a formal eviction motion in New Jersey State court. Without this official eviction (called a Writ of Possession in legal terms), you cannot be forced to leave the home even after it has been sold at foreclosure sale.

Is your mortgage company attempting to force you out of the home without a formal eviction? If you have yet to see an actual eviction notice affixed to your front door, you have almost certainly not been served with notice to vacate the premises. Any efforts on the part of the lender to forcibly kick you out without eviction paperwork is against the law in New Jersey.

We typically advise our foreclosure clients to be prepared with an alternate place to live as of the date of the Sheriff’s Sale. Forcing your mortgage company to evict you can look bad to your future landlords or lenders – potentially marking you as a “difficult” borrower or renter. However, it is within your rights to remain in the home until you have formally been evicted, and staying there can give you several months to save money because you won’t be paying a mortgage or rent payment. Weigh your options carefully before you decide whether to vacate willingly or stay put until the Sheriff removes you.

The bottom line is that, legally, your mortgage company (or new owners after Sheriff’s Sale) cannot take possession of the home until you have been formally served with an eviction notice. If your foreclosed home’s new owners are attempting to prematurely take possession of the property by locking you out, removing your personal items, or moving new tenants in while you aren’t home – you need to contact your New Jersey foreclosure attorney right away in order to preserve your rights.

Image credit: Andy Wright