New Jersey Fair Foreclosure Act was adopted to provide homeowners with the ability to cure a defaulted mortgage.
Good Public Policy To Cure Defaults.
The Legislature, when enacting the Fair Foreclosure Act, found that it was good for New Jersey for homeowners to be given every opportunity to pay their home mortgages, and thus keep their homes; and that lenders will be benefited when residential mortgage borrowers cure their defaults and return defaulted residential mortgage loans to performing status.
The Act Applies to Residential Mortgages Only.
The Fair Foreclosure Act applies only to residential mortgage loans in which the property is owner-occupied and does not contain more than four units. “Owner” can extend to the owner’s immediate family.
Notice of Intention To Foreclosure.
The first protection arises in the form of a Notice of Intent To Foreclosure which must be a written notice sent to the borrower 30 days prior to filing a Complaint and initiating a foreclosure action notifying the borrower that it has the right to cure and of the amount of the default and how to cure the default.
Statute of Limitations.
This provision has had much attention lately in a Bankruptcy Court case where Judge Kaplan found in In Re Washington that the date from which the statute of limitations is calculated in addition to what is stated in the Act can also be the date the entire loan was accelerated. This typically occurs in the Complaint when it is filed which means the Complaint would have had to have been dismissed for some reason and then re-filed within six years from the date of the first Complaint (the acceleration date). This may be a rare occurrence but may apply if your case was dismissed for lack of prosecution or due to the large settlement in 2012.
Otherwise, the statute of limitations runs six years from the date for the making of the last payment or the maturity date of the note. 36 years from the date of recording the mortgage and 20 years from the date which the borrower defaulted.
This is the cornerstone of the Act and provides that at any time during the foreclosure action, up until the date of entry if final judgment, the borrower can cure the default.
Notice Prior to Entry of Final Judgment.
An additional notice notifying the borrower that it has the right to cure must be sent to the borrower 14 days prior to asking the court to enter final judgment. The notice notifies the borrower that it has the right to cure and that if the borrower believes he or she can cure with 45 days, to notify the lender within 10 days of the notice. If such a notice is sent to the lender, the lender cannot ask for final judgment until 46 days has past.
Reinstatement of Mortgage Relationship.
In the event the default is cured, the lender is required to restore the borrower to the same position it held proper to the default. In other words, the borrower can continue to pay the mortgage payments under the terms that were in place on the day of default.
If Your Hone Is Abandoned.
The Act does provide some relief to lenders if the home is abandoned. The time frames and additional notices can be avoided if the lender can show to the Court that the home is abandoned.
Foreclosure Time Frame.
The Fair Foreclosure Act, with the addition of the additional notices and protections creates and extended time-frame for residential foreclosure actions which at minimum are 169 days and at maximum 200 days. This of course assumes the borrower is not represented by counsel and is allowing the case to proceed uncontested (either did not file an answer or filed an non-contesting answer). It also assumes the lender does not delay in processing the case and that the Court is not backlogged. Click this link for more detailed information on time frames for a residential foreclosure action in New Jersey.