FORECLOSURE DEFENSE ATTORNEY
Foreclosure Defense vs. Bankruptcy
Attorney Jeffrey S. Walters, Esq. defends foreclosure actions. Do not confuse “foreclosure defense” with “bankruptcy.” Foreclosure defense is a true defense to a bank’s attempt to foreclose on your mortgage and take your home. A foreclosure is a legal proceeding where your mortgage lender files a Complaint in the Superior Court in order to force your house to be sold in a sheriff’s sale. If you are served with a Summons and Complaint for Foreclosure, we can help. Call our office right away to discuss your options.
Foreclosure Defense is Completely Different from Filing Bankruptcy
You may come across advertisements claiming to help you deal with a foreclosure problem, only to call and find out that they just try to convince you to file a bankruptcy. Ask yourself this: Can you afford your regular mortgage payment (including tax and insurance escrow)? If the answer is “no,” then a bankruptcy will not help you to afford a mortgage payment that you simply cannot afford. If you can afford the mortgage payment but just fell behind due to a temporary job loss or medical problem which is now under control, then yes, a bankruptcy filing will stop the foreclosure case and allow you to cure the arrears over 3-5 years while you continue to make your normal mortgage payment. But if you have lost income and cannot even afford your regular mortgage payment, a bankruptcy will not help you to save your home. What you really need is a loan modification, so that your mortgage payment is reduced to an affordable amount.
A Foreclosure is a Legal Proceeding Which Can be Defended
A lender cannot automatically take your house away from you, even if you have missed your mortgage payments. They must first file a Complaint in the New Jersey Superior Court in order to start foreclosure proceedings. They must then serve you with a Summons and Complaint. Usually, a process server will come to your door and serve you personally with these legal papers. Foreclosure defense attorney Jeffrey S. Walters defends these cases. This is what is known as “foreclosure defense litigation.” We defend these cases by actually filing an opposing Answer with the Court, which sets forth defenses to the foreclosure action. We then conduct what is known as “discovery,” whereby we force your mortgage lender to prove that they have the legal right to foreclose. While we pursue your legal defenses, the foreclosure process is dramatically slowed down from what would be the case if you did not defend it. While we are defending the foreclosure, you will have additional time to explore options such as mortgage modification. However, you must call us right away because when you receive a Summons you have 35 days to file a response with the Court. If you are served with a Summons and Complaint for Foreclosure, we can help. Call our office right away to discuss your options.
A Brief Overview of the Foreclosure Process
1. Default on Mortgage. You default on your loan by missing one or more payments.
2. Notice of Intention to Foreclose. Your mortgage lender sends you a Notice of Intention to Foreclose. A law called the “New Jersey Fair Foreclosure Act” requires the lender to send this special notice to you. The law also requires certain information to be included in the notice. The lender must send you this notice at least 30 days before the lender files a foreclosure Complaint with the Court. If you cure the default during that 30 day time period, the lender must accept your payment and cannot charge you attorney’s fees at this point.
3. Filing of Foreclosure Complaint with the Superior Court. If you do not make the cure
payment discussed above, then the lender may file a Foreclosure Complaint with the Superior Court, Chancery Division. Technically, the Complaint is filed with the Office of Foreclosure. The Office of Foreclosure is located in Trenton and is a part of the Superior Court of New Jersey. The foreclosure is not reviewed by a judge in your county unless you file an Answer with the Court. If you do not file an Answer with the Court, then the foreclosure will proceed as an uncontested case.
4. You are Served with a Summons and Complaint for Foreclosure. After the Complaint is filed with the court’s Office of Foreclosure, your mortgage lender must serve you with a Summons and Complaint. The lender must have a process server personally hand-deliver a copy of the Summons and Complaint to you. However, if the process server reports that you are avoiding service such as by looking out the window but not answering the door, the lender can attempt to send a copy of the Summons and Complaint to you by regular and certified mail, and file a special affidavit with the Court contending that you are avoiding personal service and excusing them from serving you in person. It is also important to know that if the Summons has your name on it, and if the process server hands the Summons and Complaint to your spouse or a household member over the age of 14, this counts as good service on you. This is because it is expected that a spouse or household member over the age of 14 is responsible enough to give the Summons to you.
5. Opportunity to Request Foreclosure Mediation. Along with the Summons and Complaint, the papers served on you must include information about the state’s Foreclosure Mediation Program. You must request mediation within 60 days of the date you receive the Complaint. If you fail to request mediation within 60 days, you will not be allowed to participate. If you miss the deadline, you may ask the court to allow you to participate, but you must be able to show “exceptional circumstances” for why you did not request mediation in a timely manner. If you cannot show a very special reason why you should be allowed a late chance for mediation, the court will deny your request. You can participate in mediation even if you do not file an Answer to the Complaint. However, this is risky, because if the mediation is not successful, then you will have missed your opportunity to defend the Complaint. If you wish to defend the Complaint, you must file an Answer with the court even if you have also requested Foreclosure Mediation. Requesting and participating in mediation will not stop the foreclosure process from continuing. Therefore, it is important to file an Answer to defend the Complaint even if you request mediation.
6. Filing an Answer to the Complaint. You have the right to defend against the foreclosure lawsuit in court. To do so, you must present your defenses to the Complaint in a written Answer filed with the court. An Answer is a written response from a defendant to a Complaint. In your Answer to a Foreclosure Complaint you must assert reasons why the lender does not have the legal right to foreclose. As noted above, you have 35 days from the date you receive the Summons and Complaint to file a written Answer. If you file an Answer yourself, most likely you will not know what to say and you will not know what to do next. Many homeowners who attempt to handle things themselves end up filing Answers that are considered by the Office of Foreclosure to be Non-Contesting Answers as opposed to Contesting Answers. A Non-Contesting Answer will not be sent to a judge. If you file an Answer that is deemed to be a Non-Contesting Answer, it will essentially be pointless and you will not be given an opportunity to defend the foreclosure. This is why it is important for you to seek the representation of an attorney who is experienced in foreclosure defense.
7. Transfer to County Judge for Defense Litigation. If you successfully file a contesting
Answer, the Office of Foreclosure will transfer the case to the Superior Court in the county where the property is located, and the matter will be assigned to a judge.
8. The Parties Conduct “Discovery." Discovery is the process by which the parties (plaintiff and defendant) use several types of tools to ask for facts, documents, and other information before the trial takes place. In a foreclosure case, each may ask the other to provide information that may help prove or disprove the right to foreclose. This may consists of Demand for Production of Documents and Interrogatories. Depending on the circumstances, this can also included depositions. Again, an experienced foreclosure defense attorney knows how to conduct discovery appropriately. In addition, when the demanded discovery is received, an experienced foreclosure defense attorney knows how to review and analyze the discovery to explore defenses that may be asserted to the foreclosure action. It is likely that if you try to undertake this yourself, you will not know how to request discovery appropriately, you will not know what to ask for, and you will not know how to interpret any response that you receive.
9. Filing Motions With the Court. The parties may file motions. Attorneys for lenders usually file motions seeking to prove their right to foreclose without having a trial (called a “Motion for Summary Judgment.” An experienced foreclosure defense attorney knows how to respond to these motions.
10. Trial. If the judge has not granted the lender’s motion to proceed with foreclosure without having a trial (Motion for Summary Judgment), then the matter will go to trial. At a trial, the lender must prove it has the right to foreclose. Then you must prove that the lender should not be permitted to foreclose because of the defenses you have raised.
11. Entry of Default if You Do Not File and Answer. If you miss the deadline to file an Answer, or choose not to file an Answer, or file an Answer that is deemed to be Non-Contesting, the lender will probably file papers with the court asking the court to Enter Default against you. By doing so, they are asking the court to officially recognize that you did not file an Answer contesting the foreclosure.
12. Service of Pre-Judgment Notice. After entry of default, your mortgage lender may seek entry of Final Judgment of Foreclosure. But before they can do so, your lender must mail you a special notice giving you the opportunity to file a Good Faith Statement of Reasonable Likelihood. This is a statement whereby you assert in good faith that there is a reasonable likelihood that you can pay what you owe to cure the arrears within 45 days. If you feel that there is a reasonable likelihood that you may be able to cure, you must respond with a Good Faith Statement within 10 days of receiving the Lender’s Notice. You must send your response to the exact address stated in the notice, by certified or registered mail, return receipt requested. If you properly respond, you will have 45 days from the date of receipt of the letter notice to cure the default before the lender may proceed with requesting Final Judgment of Foreclosure. If you do not respond within 10 days, then your lender may proceed with requesting Final Judgment of Foreclosure after the 10 days elapses.
14. Motion for Entry of Final Judgment of Foreclosure. Once the 10 days elapses (or the 45 days if you served the Good Faith Statement), the lender may now request entry of Final Judgment of Foreclosure. The lender does this by filing a Motion for Entry of Final Judgment with the court. This is the court’s judgment that the lender is entitled to foreclose on the property, and the judgment will set forth the amount of money that the lender is entitled to receive when the property is sold at a Sheriff’s Sale. The lender must serve you with a copy of their motion, which will be served by mail. Their motion will state the amount that you owe on the mortgage. Up until the actual entry of Final Judgment, you have the right to cure the arrears and get the foreclosure dismissed. If you disagree with the amount the lender says is owed on the mortgage, you may file an opposition disputing the amount the lender claims is owed on the mortgage. A judge would then have to decide the proper amount that you owe. Once the judge resolves the dispute over the amount that you owe, you will have the right to cure the arrears and get the foreclosure dismissed up until the time the court enters Final Judgment of Foreclosure. However, your opposition to the amount owed will not stop the foreclosure itself, and will not allow the judge to hear any legal defenses that you might have. The judge will only decide the amount that you owe, if you are disputing this amount. This is because default has already been entered against you for not filing a valid Answer when you were first served with the Foreclosure Complaint. In order to have an opportunity to have a judge hear your defenses at this point in the case, you must file a motion to ask the court to reopen the default and allow you to file a late Answer.
15. Writ of Execution for Sheriff’s Sale. If the court grants Final Judgment of Foreclosure to the lender, the court will also issue a Writ of Execution directing the County Sheriff to sell your house to the highest bidder at an auction. You will receive a notice telling you when your house is scheduled to be auctioned. A notice also will be posted in the local newspaper. You must be given at least 10 days notice of the sheriff’s sale date, but typically lenders provide you with at least one month’s notice.
16. Opportunity to Adjourn the Sheriff’s Sale (i.e. Delay the Sheriff’s Sale). If your home is scheduled for a Sheriff’s Sale, you may apply to the County Sheriff for two delays of 14 days each. These delays are called adjournments. Depending upon the county, you may need to pay a fee to the Sheriff’s office for this adjournment. Camden County has a fee of approximately $30. Burlington County does not charge a fee. Once you use your 2 adjournments, the Sheriff’s Sale can only be further adjourned by applying to a Judge in the Superior Court, Chancery Division, in the county where the property is located. Courts may grant a stay if you have already applied for a loan modification and are waiting for an answer. Courts rarely grant stays for any other reason, except in very compelling circumstances, such as to allow a homeowner to complete a sale or refinance of the property that is already in progress. These stays are temporary, and will not give you an opportunity to have any of your defenses heard by a judge. They only give you the opportunity to try to complete some other plan to avoid the sheriff’s sale.
17. Sheriff’s Sale. A sheriff’s sale is an auction where the property is sold to the highest bidder. Unless there is equity in the property, usually there is no competitive bidding and your lender gets ownership of the property. After the sheriff’s sale takes place, you have 10 days to get back the property. You no longer have the legal right to get it back simply by paying the past due amount. Rather, during this period of time you can only save the property by paying the entire mortgage balance (such as by completing a refinance or sale of the property). This 10 day period is called the “redemption period.” After the expiration of the 10 day period, if you have not redeemed or obtained a court order extending the redemption period, the Sheriff will issue a Sheriff’s Deed to the high bidder, usually the lender. Once the Sheriff’s Deed is issued, you will no longer own your home, and the lender will now be the new legal owner of the property. Once your lender gets the property, they can sell it privately on the open market just as any owner may sell their property.
18. A bankruptcy filing will stop a sheriff’s sale. If you have not yet tried to obtain a loan
modification, and the sheriff’s sale date is approaching or imminent, a bankruptcy filing can be a useful tool to stop the sheriff’s sale and provide you with bankruptcy protection while you attempt to pursue a loan modification. If you are going to file bankruptcy, is must be filed BEFORE the sheriff’s sale takes place and not a minute later. A bankruptcy filed after the sheriff’s sale takes place, even one second after, is too late, and will no longer allow you to save your home by curing the arrears or getting a loan modification. Again, if you are going to file a bankruptcy to try to save your home, you must file it with the Bankruptcy Court Clerk’s Office BEFORE the sheriff’s sale takes place, and not a second later.
19. A bankruptcy filing after a sheriff’s sale is too late. The final nuance to keep in mind is that if you file a bankruptcy after the sheriff’s sale takes place (even one second later), but during the 10 day redemption period before the Sheriff’s Deed is actually issued, you still cannot save your home by curing the arrears or getting a loan modification. However, a bankruptcy filing during the narrow window of time will expand the redemption period to 60 days from the date of the sheriff’s sale. What this means is that you can still save your home by paying off the ENTIRE BALANCE of the mortgage (not just the arrears) before the 60 days expires. For most people, this opportunity is of no value or very limited value, since they do not have the funds to do so and their poor credit would prevent them from obtaining a refinance loan to do so. But certainly, if a relative or other person will lend the money to pay off the entire mortgage balance, the expansion of the 10 day redemption period to 60 days could be beneficial. The bottom line is, if you are thinking about filing a bankruptcy to try to save your home, you must file it before the sheriff’s sale takes place and not a moment later.
20. Sheriff’s Deed. After the new owner (usually the lender) gets the Sheriff’s Deed, you will no longer own your home. However, this does not automatically remove you from the home. The new owner will usually attempt to work with you to encourage you to move out peacefully. The new owner may offer you “cash for keys” whereby they will pay you money if you leave by an agreed upon date and leave the property in good condition. If you still do not leave after the new owner gives you opportunities to leave peacefully, then the new owner may ask the court clerk to issue a Writ of Possession. The new owner is entitled to a Writ of Possession simply by asking for it. Ultimately, if you do not leave then the new owner can ask the Sheriff to execute the Writ of Possession to forcibly remove you from the property, after which the locks will be changed. Your belongings will be removed as well.