How Does Judicial Foreclosure Work?
In states like New Jersey where judicial foreclosure is used to foreclose on a mortgage the lender must file a lawsuit in order to foreclose (Is My State A Judicial or Non-Judicial Foreclosure State?). The defendants in the foreclosure are the delinquent borrower and all lien holders that have an interest in the property (other mortgage holders, municipal authorities [taxes], bail bondsmen, etc.). The mortgage lender filing the lawsuit will serve a copy of the lawsuit on all interested parties (lien holders) and a lis pendens is filed with the Court to alert the public that there is a lawsuit pending. After the defendants are served they usually have 20 days to formally submit their answer and present their case. If there is no reply or the judge does not agree with the defendant the judge will order that the mortgage will be foreclosed on and the property sold by the County Sheriff. The proceeds of the sale will be used to satisfy the amount owed by the homeowner to the lien holders. Here is a quick overview of the process.
- Lender files a lawsuit to foreclose mortgage with court
- Borrower responds to the lawsuit and a hearing date is set
- Foreclosure lawsuit is heard by the court and the judge either dismisses the suit or orders the property to be foreclosed on
- A sale date is set
- The foreclosure auction sale is advertised
- The property is sold to the highest bidder or taken back by the lender if there is no acceptable bid amount
Tags: Foreclosure : Judicial : law : mortgage: New Jersey
