7 Reasons to Avoid NJ Real Estate Foreclosure

What NJ Real Estate foreclosure is and why you should save your home

Foreclosure is the legal and professional process in which a lien holder, known as the mortgagee, obtains a court ordered termination of a mortgagor's equitable right of redemption. The lender, usually a bank, obtains a security interest from the NJ Real Estate borrower who mortgages an asset such as a home to secure the loan. In the event of borrower default, the lender will attempt to repossess the property. Equity courts have the authority to grant the borrower the equitable right of redemption if the borrower repays the debt. In addition, other lien holders can also foreclose the owner's right of redemption for other debts such as assessments, overdue taxes or homeowners’ association dues and delinquent contractors' bills.

The number of NJ Real Estate foreclosures is increasing every day in the United States. An estimated 4%, or 4.8 million of 120+ million homes, are facing foreclosure. Although a number of homeowners have the ability to avoid foreclosure, about 500,000 homes went through the process last year. Foreclosure proceedings typically start with a formal demand for payment, usually a letter issued from the lender, referred to as a Notice of Default. The lender will issue this notice when the homeowner has been delinquent on the mortgage payments for an extended period of time. It is important to remember that this notice is an attempt to terminate all rights to the property, sell the property and in turn evict the homeowner from the premises. Delinquency may be due to several reasons such as job loss or mandatory job relocation, property damage, death of spouse or family member, business failure, divorce or separation, severe illness or medical bill expenses, incarceration, military service, mortgage adjustment and NJ Real Estate tax or insurance increase.

The following is a list of reasons why a homeowner should want to avoid foreclosure on their home:

  1. The homeowner will always have to disclose foreclosure(s) on any mortgage application in addition to some job applications in the future. This can also inhibit mortgage rates offered to the applicant in the future.
  2. The NJ Real Estate homeowner may be responsible for any deficiencies post-foreclosure for an indefinite period of time depending on their state of residence. An effect of this is always being in collections.
  3. The lender can seek a deficiency judgment against the homeowner and collect for the amount not recuperated at a bank sale.
  4. Credit scores will be impacted by 300+ points with a foreclosure being the most detrimental issue the homeowner could have in reference to credit availability in the future.
  5. A foreclosure is the only item on a credit report that is nearly impossible to have repaired.
  6. A number of employers run credit checks on prospective employees and foreclosure is one of the top threats to job applicants.
  7. Many current employers run periodic credit checks and foreclosure can jeopardize a current position.