Facing a foreclosure can be a frightening and traumatic experience for those behind on their mortgages. To make matters worse, many homeowners don’t understand their mortgages and the terms, which means people often don’t know what to do.
The first step in managing a foreclosure is to understand where you are in the process. Often there are steps that banks can take to help you get through a difficult financial situation so you can get caught up on your mortgage. You also have legal rights when it comes to timeframes and opportunities to rectify the situation.
If you’re facing a Sheriff’s Sale, you’ve reached the end of the foreclosure process in the state of New Jersey, but that doesn’t mean you’re out of options. The Sheriff’s Sale itself is a process and understanding what’s involved can mean the difference between letting go of your home, or taking steps to keep it. That decision is up to you, but knowledge of the process can help you mitigate the outcome.
Here are some common questions related to a Sheriff’s Sale and the actions you can take at each step.
What Is A Sheriff’s Sale?
A Sheriff’s Sale is a public auction of a property that has been repossessed through court-ordered means. The property is typically repossessed by a mortgage lender at the end of a foreclosure, but it can also be seized to satisfy judgements or tax liens.
The local sheriff presides over the sale, giving it its name. A Sheriff’s Sale does not occur until after a lender files a foreclosure lawsuit. If you choose to fight the foreclosure complaint, your case will proceed through a trial. A trial is not required or necessary, however. Most people do not fight or answer the foreclosure complaint, in which case it defaults in the lender’s favor.
The proceeds of the sale go to the lender to repay the debt. If there is any money left over after repayment of all liens, the surplus is refunded to the borrower. After the sale you have no right or title to the home and you will be notified of the date by which you must leave the property.
As the owner of the property, you can take steps at any time prior to the sale to halt it and keep your home. You also have options for a brief period after the sale. Here are some key things to know about a Sheriff’s Sale in New Jersey and what you can do.
How Much Notice Will You Be Given?
Once the lender has obtained a final judgement, the sheriff must serve you, the homeowner, with written notice of the sale at least 10 says prior to the sale. The notification must be in the form of registered or certified mail, return receipt requested.
If you’ve reached the end of the foreclosure process and you’re worried about the sale schedule, you can check other sources. For example, in the state of New Jersey, the sheriff is required to advertise the sale in the newspaper for four consecutive weeks. Since each county is different, you should check the website of your local sheriff’s office to determine which newspaper the sale will appear in.
Often, the sheriff will also post a notice at the property itself 30 days prior to the sale. This is not a requirement so checking the website and newspaper is your best option to see the schedule. The sale will also be listed on the website though it may be somewhat delayed. If you want to be sure, you can visit the sheriff’s office for a schedule as well.
Can You Apply For A Loan Modification To Stop The Sale?
There are requirements you must fulfill, but if you meet them, then you have the right to apply for a loan modification before the sale.
If you want to apply for a loan modification in anticipation of getting caught up with your mortgage payments, you must submit a complete application at least 38 days prior to the sale. At a minimum, the sale will be adjourned while the application is reviewed. If the application is denied, you will also be given the opportunity to appeal the denial.
You are also entitled to apply for a loan modification any time the loan servicer changes.
Can You File Bankruptcy To Stop The Sale?
The short answer is: maybe. There are two types of bankruptcy that individuals file; Chapter 13 and Chapter 7. Each has its own requirements and complexities so speak to a bankruptcy attorney about your options.
If you have not been able to get a loan modification, then Chapter 13 bankruptcy can help you obtain one and stop a Sheriff’s Sale. In Chapter 13 bankruptcy your debt is typically restructured so that you can repay your debt over a period of time and get caught up on outstanding payments. You must be able to make your current mortgage payment, plus your arrears payment to the trustee.
If you qualify for Chapter 13 bankruptcy and have enough income to make the appropriate payments, then there is no approval required from the lender. The bankruptcy court will confirm your repayment plan and as long as you abide by the terms, you will be able to keep your home.
Chapter 13 also has a provision for lien stripping, which can help to discharge a second or third mortgage on an underwater loan. Discuss the details of your situation with a bankruptcy attorney so you can understand options and limitations.
What Are Your Options After The Sale?
If you’ve taken steps to stop the sale, whether through loan modification, bankruptcy or simply repaying the debt, but your efforts have failed, then the Sheriff’s Sale will take place. The price is set by the lender, and if nobody agrees to pay it, then the lender will buy the property back.
You are, however, entitled to a 10-day right of redemption period after the sale. If you can pay the full amount due plus the costs of the foreclosure during that period, then you can reclaim the property.
If you file bankruptcy during the 10-day redemption period, you will be granted an additional 60 days to repay the debt.
The court may also cancel the sale if a motion can be brought to show that there was any fraud, mistake or irregularity in the conduct of the sale. You’ll need to file a written objection during this same redemption period and show explicitly that an irregularity renders the sale invalid. For example, if the lender did not send appropriate notice, or if the sale was not advertised in the newspaper as required, these can be grounds for an objection to the sale.
Courts are more likely to cancel, or more specifically “set aside” a sale if there was an irregularity combined with an artificially low sale price.
As with any legal situation, there are nuances and complexities that change from state to state. If you reside in New Jersey and are facing foreclosure or a Sheriff’s Sale, contact us for a free consultation. Whether you need a real estate attorney, a bankruptcy attorney, or an advocate for you in court, we will help you through the process and look out for your best interests. With us you’re never just a number. Let us help you deal with these difficult times and fight for your rights.