IN NEW JERSEY IT TAKES A LONG TIME FOR THE MORTGAGE COMPANY TO FORECLOSE ON YOUR HOME
It could take the mortgage company well over a year to complete a foreclosure. They can't just surprise you and come to your home one day, board up the windows and kick you out. Foreclosure is a strict process, and the mortgage company must follow all the rules before they can have a sheriff sale.
IF YOU KNOW YOUR LEGAL RIGHTS, YOU WON'T BE AFRAID OF FORECLOSURE.I want people to be aware that they are not in jeopardy of immediately losing their home just because they fall two or three payments behind on their mortgage. In fact, the way things are right now in New Jersey, they probably aren't in jeopardy of losing their home to an immediate Sheriff Sale even if they are 11 or 12 months behind in their payments.
The most important thing for you to understand so that you don't worry needlessly, is that foreclosure is a process. In fact, foreclosure can be a very slow and long process. If the mortgage company doesn't follow the exact step by step legal procedures, the foreclosure will not be permitted to go forward.
Foreclosure is a step-by-step process, and the mortgage company must follow each and every step precisely as required by law. If the mortgage company doesn't do it exactly the way it is supposed to be done, the foreclosure will not be valid or legal.
Let's compare foreclosure to a nine-inning baseball game. Many people come to us thinking that they are about to be locked out of their homes, when really they are only in the first or second inning of the foreclosure process.
So if you have gotten some nasty letters from the mortgage company, or even if you have been served with a foreclosure complaint, you don't have to needlessly worry, because the game has just begun.
We want to let you know that if you regularly communicate with your, and give your attorney copies of all documents, court papers, and everything else that you get from the mortgage company and/or their attorneys, your attorney knows how the process works, and knows what to do to protect you.
So don't live in fear of foreclosure. You have many rights you can assert to object to the foreclosure process, and even if you can't afford to make any mortgage payments, a knowledgeable attorney could probably delay the foreclosure process for a long time.
DON'T GIVE UP. YOU CAN USUALLY STAY IN YOUR HOME EVEN AFTER A SHERIFF'S SALE.We have actually had clients who have lived in their homes for three years or more without paying a single penny to the mortgage company.
So even if you can't foresee how you could pay your mortgage in the future, you should not give up. A lawyer who knows how to help you understand your legal rights, should be able to help you stay in your home as long as legally possible.
And in New Jersey that means even staying in your home after a sheriff's sale has taken place. That's right, if you understand the law and utilize your legal rights, you can often stay in your home for at least a month or so after the sheriff's sale has taken place.
Here is another potential bonus. Some mortgage companies actually offer incentive programs to homeowners to help them effectuate an orderly move out of the property. Every mortgage company is different, but just to give you some examples, we have had clients that have been offered between $1000 and $10,000 to voluntarily leave there home so that the mortgage company doesn't have to spend the money for lawyer fees, sheriff's fees, moving companies, and storage companies.
Once your lawyer knows exactly where you stand in the foreclosure process (are you in the first inning, or are you in the 9th inning?), your lawyer can help you do what is necessary to legally keep you in your home for as long as possible.
MAYBE YOU DON'T HAVE TO LEAVE YOUR HOME, MAYBE YOU CAN GET A MORTGAGE LOAN MODIFICATIONHere is another interesting fact. Mortgage companies often lose $35,000 or more when they foreclose on a home. Many mortgage companies have changed their attitudes, and they realize that they are better off working out a deal with the homeowner, rather than taking over ownership of a home that has dropped in value and getting stuck with a home that they are going to have difficulty selling to someone else.
Many lawyers help their clients get loan modifications. This means that the foreclosure is stopped, and the mortgage company agrees to modify the terms of your mortgage. Let's give you an easy example of this.
Let's assume your mortgage payments are $2000 a month, your mortgage interest rate is 6%, and you are 10 months behind on the mortgage payments. If the mortgage company were to give you a modification, here is what they might do.
1) They will say that you don't have to pay back the $20,000 arrears anytime soon. In fact, they might say that they will put that $20,000 arrears all the way to the back of the mortgage. So instead of being pressured to pay back that $20,000 in a short period of time, you might not be obligated to pay back that $20,000 for another 20 to 30 years.
2) So if the mortgage company puts the arrears at the back end of the mortgage, instead of being $20,000 behind on your mortgage, you are now magically up to date.
3) The next thing the mortgage company can do is reduce your interest rate. They could say to you that instead of charging you this high rate of 6%, they are willing to reduce you to a much more reasonable interest rate like 4%. This could save you a ton of money over the term of a 20 or 30 year mortgage.
4) When the mortgage company gives you an interest rate reduction, this will automatically result in your monthly payment being lowered. In our example, the monthly payment might go from $2000 a month to maybe $1400 per month. That kind of reduction will save you a lot of money over the remaining years of the mortgage.
5) There are two more things the mortgage company could do, but these things only happen in very limited situations. The mortgage company could take the arrears you owe and say that instead of putting them at the back end of the mortgage, they are going to totally forgive you of all of those arrears. This is rare, but it does happen once in a while.
6) The other thing the mortgage company can do is to reduce the principal balance that you owe. For example let's say you owe $250,000 to pay off the balance on your mortgage in full. Let's also assume that your property value has gone down, and it is now only worth $200,000. The mortgage company can forgive some of your principal, and they could agree that you will now owe them $200,000 instead of $250,000 to pay off your mortgage. This actually does happen once in a while, but realistically it does not happen that often, so you really shouldn't expect that the mortgage company is going to do you a huge favor and forgive a substantial amount of your principal balance.
DON'T BE AFRAID TO USE THE LAW FOR YOUR BENEFIT.Hopefully you have now learned some legal principles that can help you a lot when you are going through the foreclosure process. Don't fear the mortgage companies. Sure they have legal rights, but so do you. And don't be afraid to assert your legal rights as needed. The law is there to protect you and to benefit you.
If all of your efforts don't succeed, and you are facing a sheriff's sale, there are still things that you can do. First of all, in New Jersey you can postpone the sheriff's sale two times for two weeks each time. Just contact the county sheriff's office, and they will tell you what you need to do to obtain your two postponements. It is very routine. All you usually have to do is write a letter to the sheriff's office and request your postponements. Some county sheriffs will postpone the sale for free, and some county sheriffs charge $28 per postponement.
If you have done everything else, and you have also used up your two sheriff sale postponements, you can still hire an attorney to file a bankruptcy case for you. You can even file a bankruptcy without a lawyer. Filing a bankruptcy will almost always stop a sheriff's sale from taking place. The filing must be done in good faith.
Talk to a knowledgeable bankruptcy lawyer when needed so that you can more fully understand and assert all of your legal rights. Don't be intimidated or afraid of the mortgage company lawyers. They have to follow the law just like everyone else, and they know better than to bully you.
Donald Trump has used the bankruptcy process on multiple occasions to protect his businesses from the creditors that were threatening his companies. The bankruptcy laws are based on the United States Constitution. Some people will tell you that bankruptcy is based on the Bible in the Old Testament Book of Deuteronomy which talks about forgiveness of debts and the year of Jubilee.
The bankruptcy laws are the same for Presidents of the United States as they are for everyone else. So don't be afraid to file for bankruptcy. It is your legal and Constitutional right. There is no shame or stigma in bankruptcy, and probably close to 2 million people will file for bankruptcy this year. Many people and many businesses use bankruptcy as a legal bailout and as a tool of financial planning.
So don't be afraid to use the laws of this country for your benefit. That's exactly the reason that we have these laws.