Judicial Foreclosure

• A lender who is seeking relief for a defaulted loan secured by a mortgage can move to seize and sell the real property that is mortgaged. New Jersey law requires such lenders to take judicial foreclosure action through a formal legal action with the Superior Court of the county where the property is located. The lender can't force the borrower to vacate or to sell the property until it wins the foreclosure action. The foreclosure action is subject to rules of proper notification, legal procedures and legal rights.
  
  

Required Notices

• The lender must first send the borrower an official warning letter, notifying the borrower of a delinquency and the amount. If the borrower does not fix the delinquency within 30 days, the lender can start foreclosure action by filing a complaint with the court and serving an official notice of legal action on the borrower. The borrower then has 35 days to answer. The lender then can seek a ruling of default, but must wait another 45 days to secure a judgment, allowing the seizure and sale of the property.
  
  

Foreclosure Sale

• The lender can secure a writ of execution from the court after receiving the judgment. This writ is given to the local county sheriff who seizes the property and executes the foreclosure sale. The borrower must be served with at least 10 days notice prior to the scheduled sale. The foreclosure sale is done through a public auction and the sale must be confirmed by the court. The borrower has up to 10 days after the sale to redeem the property by paying the loan balance before title is passed to the auction winner.
  
  

Deficiency and Bankruptcy

• Per New Jersey law, a lender can also sue for a deficiency judgment against the borrower, if the foreclosure sale price is less than the defaulted mortgage balance. However, state law restricts any such judgment to the difference between the fair market price of the property and the mortgage balance. Furthermore, a deficiency judgment allows the borrower a six month right of redemption versus the normal 10 days. A borrower can stop all foreclosure action prior to the foreclosure sale by filing for Chapter 13 bankruptcy.