Loss mitigation in foreclosure (state court)

In January 2009, the New Jersey courts began a foreclosure mediation program. On November 1, 2019, lawmakers passed the New Jersey Foreclosure Mediation Act. Lawmakers put the court program into law to continue the program and help homeowners find a foreclosure alternative. Now, lenders must send homeowners written notice about the Foreclosure Mediation Program with a notice of intention to foreclose. The lender must send the notice again when the lender files a foreclosure complaint. The purpose of the mediation program is to determine if a foreclosure alternative, like loan modification, is possible.

To initiate mediation, the homeowner must seek free counseling from a HUD housing counselor. Always seek out a HUD-Certified Housing Counseling Agency because there are many “mortgage rescue” scams out there. The counselor signs a certification form which is sent to the court. There is no fee. Mediation begins when the court office sends a letter to the homeowner and schedules a conference. The conference will be held by phone within 45 days, and the lender will send documents to the homeowner before the conference. The purpose of the first conference is to help the quick exchange of documents. If the homeowner and lender are not ready to continue, a second conference can be held. Then, the court office will schedule mediation within 30 days.

Mediation will be at the courthouse, and a court employee will be the mediator. Lenders must have a representative attend the mediation who has authority to modify, refinance, or otherwise offer a foreclosure alternative.  The homeowner and lender must participate in good faith. This means they both most follow the rules, act quickly, and appear at mediation.  If someone does not show up, then courts have authority to issue a $1,000 fine and other penalties. A second mediation can be held if it would be helpful. If mediation is unsuccessful, a judge will review. Importantly, the mediation program will not pause foreclosure proceedings.

An attorney can represent you at foreclosure mediation and during foreclosure lawsuits. Attorneys are familiar with the rules and can help you navigate the process for the best result.