Legal fact: Mortgage lenders are not legally obligated to work with you if you fall behind on your mortgage. NJ homeowners do not legally have an automatic right to mortgage modification, refinance, forbearance, or any other solution to avoid the loss of their home. That being said, it is typically in the lender's best interest to work with a borrower who may be facing foreclosure. Lenders' loss mitigation departments can offer you several options to repay your debt and get current on your mortgage. Here are several of the most common and effective talking points that may help you avoid foreclosure in New Jersey.
Option #1: Mortgage Modification
A mortgage modification is a popular method of getting right with your lender to avoid foreclosure. Your lender may agree to change the terms of your loan to make monthly payments more realistic for your budget. They can change the loan length, reduce your interest rate, change your terms to a fixed rate loan, or even agree to move missed payments and fees to the back end of your loan. A loan modification is a great way to change the terms of your mortgage to work for you.
Option #2: Repayment Plan
This option would allow you to resume your regular monthly payments in addition to an agreed-upon plan to pay back the past due amount and any fees that have accrued. Your lender will reinstate your loan once you pay off the owed arrears through the repayment plan.
Option #3: Forbearance Plan
Unlike a repayment plan, a forbearance plan puts a stop to your monthly payments. Instead of making monthly payments, you would pay towards the delinquency until you pay it in full. A forbearance plan could also reduce your monthly payment or put the payment on hold. If you are temporarily out of work, this could be an excellent option to get you through until you find employment.
Option #4: Short Sale
If you do not want to keep your home or do not think you will be able to do so financially, consider a short sale. A short sale is when you sell your home for less than what you currently owe your lender for the property. A lender may accept a short sale if it is preferable to the costs of foreclosure proceedings. In fact, some lenders may even agree to waive your liability for the deficiency in the sale price.
Option #5: Voluntary Surrender
If all other options fail and you are heading towards foreclosure, this option may be your last move. Voluntary surrender is often only an option if the house is already heading to a Sheriff's Sale and the property is in excellent condition. Occasionally, a lender will offer you money to leave the property.
As an experienced NJ real estate law firm, we have had success helping clients with all of the above solutions. Not every lender will offer the above options, but no matter your situation, we can help you navigate the best path forward.