Foreclosure is a legal process allowing mortgage lenders to take ownership and/or possession of the debtor's real estate (which was used to secure the loan) in the event of nonpayment in Somerville, New Jersey. Foreclosure normally results in the property being sold in an auction. Banks normally want to get rid of the property as soon as possible, even if it means taking a financial hit, and an auction is the easiest way to do this.
In every state, including New Jersey, there is an option to go through foreclosure by a judicial sale, which is a procedure in which a court supervises the sale of the property, and makes sure that the proceeds first go the to the holder of the mortgage, then to anyone else who may have a lien on the property, and finally to the debtor if anything is left. In many states, mortgages which have not been refinanced are "non-recourse loans." This means that, in the event of default, the bank can take ownership of the house and sell it; but if the sale price happens to be less than the balance of the mortgage, the lender cannot go after the borrower for the remainder. Because of this, some people have found that their best option is to simply walk away from the home if the mortgage is more than the house is worth. You should talk with a Somerville, New Jersey attorney to see if this state is one of them.
How Can I Avoid Foreclosure in New Jersey?
First and foremost, you should not ignore the possibility of foreclosure. Failing to respond to collection calls from your lender will not make the problem go away. As unpleasant as this might seem, you should stay in contact with your creditor, and be straightforward with them. One should remember that banks typically don't want to take your house in Somerville. They issued your mortgage expecting to earn a profit on the interest. Taking possession of, and selling, your house is a last resort for them. Therefore, if you are straightforward with them about your financial situation, they are likely to make reasonable accommodations to prevent you from defaulting.
If no deal can be worked out, or the mortgage payments have become prohibitive, you might consider a "short sale". While the lender has to consent to it, many will take a moderate loss if it means avoiding foreclosure (which lenders typically treat as a last resort). This allows you to sell the house for whatever price it can fetch on the current market, and hand the proceeds over to the bank. If the sale nets less than the balance, some or all of the deficiency might be forgiven. You might also consider a "short refinance" which allows a portion of the debt to be forgiven, while refinancing the rest, hopefully under better terms.
How Can A Somerville, New Jersey Attorney Help?
If you are worried about foreclosure, a good Somerville, New Jersey real estate lawyer might be able to help. A lawyer can increase your chances of keeping your home, and help minimize the financial impact if keeping it proves impossible.