Behind on your mortgage? Few events are more stressful than a potential foreclosure, but here in New Jersey, you do have options.
Here are all of the steps you could take to save your home.
Option #1: Seek Counseling
On January 24, 2022, the legislature permanently expanded the New Jersey Housing and Mortgage Finance Agency’s Foreclosure Mediation Assistance Program (FMAP). FMAP now offers pre-foreclosure counseling assistance to any homeowner struggling to meet their monthly mortgage payments.
Counselors help you create or modify your budgets, create action plans, and negotiate with lenders to save your home. Homeowners participating in counseling are nearly three times as likely to receive a loan modification, are 70% more likely to remain current on their mortgage after receiving the modification and achieve an average reduction of $5,000 annually on mortgage payments.
Counseling can be an incredible option if you are only struggling a little bit and aren’t too far behind yet.
Option #2: Modify the Loan
You can always try to modify the home lown yourself.
You must apply for a loan modification at least 37 days before any property sale date. The lender may not foreclose while reviewing your application, thanks to federal dual-tracking laws.
If the lender determines you are not eligible, you may appeal. In addition, the lender is free to continue pursuing foreclosure if you reject the workaround plan it offers or fail to make payments under the terms of the new plan.
Option #3: Seek Temporary Forbearance
If you have a federally-backed mortgage, you may have a right to a mortgage forbearance for up to 180 days.
You can temporarily reduce or pause your mortgage payments when you receive a forbearance. Your arrearage will generally be placed on the back end of the loan and paid off later.
If you choose this option, you may end up upside down on your home, but it can buy you the time you need to get back on your feet.
Option #4: Cure the Default
All New Jersey foreclosures must go through the court system. You can stop the process by curing the default on your payments at any point until a judge enters a final judgment against you.
You can also delay a sheriff sale for 28 days by paying a fee and can exercise that right twice, giving you a little more time to stop the foreclosure and cure the default.
Option #5: Sell the Home
You can stop the foreclosure by either selling or short-selling the home to pay all or most of the mortgage debt. While this means finding a new place to live, it can also save your credit and preserve your ability to buy a house later.
Be careful when exercising this option. Many scam artists will come out of the woodwork when a homeowner sells in distress. You should also consult with your bank, as they may not allow a short sale, and discuss with your realtor whether you have a realistic chance of selling the home before the foreclosure proceeds.
Option #6: File for Bankruptcy
Many do not realize Chapter 13 bankruptcy can save their home and allow them to dodge foreclosure altogether.
The automatic stay stops the bankruptcy. The trustee will roll your mortgage payments into your bankruptcy plan. Payoff plans take current income into account.
While this solution isn’t right for everyone, it’s helped millions of Americans save their homes. Once you pay off your bankruptcy plan, you can reaffirm the debt and resume your regular mortgage payments. You will have paid off your arrears and freed up much room in your budget.
Get Help Today
Our law office can help you save your home.
If you’re underwater, don’t keep drowning. Call Michelle Labayen to schedule a free consultation today.