ASA DIX LEGAL BRIEF
A PREVENTIVE LAW SERVICE OF THE JOINT READINESS CENTER LEGAL SECTION
UNITED STATES ARMY SUPPORT ACTIVITY DIX
KEEPING YOU INFORMED ON YOUR PERSONAL LEGAL NEEDS
HOME FORECLOSURE AND VEHICLE REPOSSESSION
Q: What is foreclosure? Foreclosure is a legal means that your lender can use to repossess (take over) your
home if you are in default on your mortgage payments.
Q: How far behind in mortgage payments can I be before my lender can initiate foreclosure
proceedings? When a mortgage payment is more than 30 days late, the mortgage lender has the right to start a
foreclosure. As a practical matter, most lenders will not start a foreclosure until the borrower is two to three
months overdue in payments.
Q: Are lenders required to give homeowners prior notice before starting foreclosure proceedings? Yes,
the lender must notify the borrower of its intent to foreclose. In New Jersey, mortgage lenders are subject to the
New Jersey Fair Foreclosure Act, which requires the lender to send a warning letter to the borrower at least 30
days prior to initiating foreclosure. During this pre-foreclosure period, the borrower can prevent the foreclosure
by paying off the amount in default. The warning letter must clearly state the availability of financial assistance
for curing the default through programs operated by the state or federal government. The lender may satisfy
this notice requirement by attaching a list of financial assistance programs to the warning letter.
Q: What happens during the foreclosure process? The foreclosure process takes approximately nine to ten
months. After sending the borrower a warning letter, the lender files a lis pendens (notice of pending lawsuit)
in court. The lender can sue for the amount in default or the entire unpaid principal balance. The borrower has
approximately 30-35 days to respond. If the court rules against the borrower, a sale date will be scheduled. In
New Jersey, notice of sale must be posted on the property, in the county office, and published in two local
newspapers. Notice must be given to the property owner at least ten days prior to the scheduled sale.
Foreclosure sales are conducted as public auctions and sold to the highest bidder. The sale is “confirmed”
automatically by the passage of ten days if there are no objections filed with the court or by court order if
objections to the sale were filed with the court. In New Jersey, the borrower has a right to redeem the property
until the sale is confirmed, which is usually ten days after the sale. In Pennsylvania, the borrower has no
redemption rights following the sale of the property.
Q: The foreclosure sale price was less than the amount remaining on my loan. Can the lender now sue
me for the deficiency? If the property was sold for less than the amount of the loan, the lender has the right to
sue you for the deficiency. There may be time limits on when the lender can sue for any deficiency. In New
Jersey, the lender must sue for a deficiency judgment within three months of the foreclosure sale.
Q: Is there anything a borrower can do to prevent foreclosure? If foreclosure action has not yet been
initiated by the lender, but you suspect that you may not be able to keep up with the mortgage payments, you
should contact the lender. Most lenders have a loss control department where you may be able to work out a
payment plan to catch up on missed payments. You also may be able to refinance the debt or extend the term of
your mortgage term, which will lower your monthly payments. Once the foreclosure process has been started, a
borrower can prevent foreclosure by paying off the entire amount in default, foreclosure costs, and interest. If
you cannot pay off the entire amount in default, you may consider filing a chapter 13 bankruptcy petition.
While bankruptcy should be your last resort, it will allow you to get caught up on the payments over a three to
