Facing foreclosure can be scary. If you’ve received a Notice of Intent to foreclose or a foreclosure complaint and summons, you might not know how to save your home. You may have heard of the Foreclosure Mediation Program, which is available to New Jersey residents.
The NJ foreclosure mediation program offers a way for you to work with your lender on foreclosure-related disputes. If you’re behind on your mortgage, there are options available to help you avoid foreclosure.
Before you decide to pursue mediation, you need to understand the risks associated with mediation and other alternatives to stop foreclosure. Mediation rarely works in the homeowner’s favor. Our firm avoids mediation whenever possible so our clients can defend their rights in court.
Denbeaux Law can help you explore your options to avoid foreclosure and help you avoid the mediation process. Contact us today to learn more about how we may be able to help you.
How Does The New Jersey Foreclosure Mediation Program Work?
The New Jersey foreclosure mediation program allows homeowners facing foreclosure to meet with their lender and a neutral mediator to resolve disputes and explore solutions to avoid foreclosure. The goal of the program is for the Court to have a role in the mediation of foreclosure litigation.
The mediation program supplies a neutral mediator, but it’s recommended that you work with an attorney who can help advocate for your interests and make sure that you’re advocated for. Large corporations of all kinds often include mediation clauses in contracts to avoid costly court costs, knowing they can bury cases in mediation and prevent their wrongdoing from becoming public knowledge. In some states, mediation is the only pathway to stopping foreclosure or holding your lender accountable for violating your rights.
However, New Jersey has a special process that allows real estate proceedings to happen in court. Our state, unlike almost every other state, strives to protect consumers from large corporations that would take advantage of homeowners in mediation, providing a clear, legal pathway to defend homeowner rights.
How Mediation Helps & How It Hurts Homeowners
Mediation is supposed to help homeowners explore alternatives to foreclosure, such as a loan modification, forbearance, repayment plan, or short sale. But before you decide to go forward with mediation, think about who a mediation really serves.
If New Jersey has decided that every homeowner should be allowed to bring their foreclosure case to court and we have designed a special process for that unique to our state, why would mediation be a good idea? Who does it serve?
In mediation, lenders can easily pressure a mediator in a way they can’t in a court. Instead of spending money defending their foreclosure or wrongdoing, they can easily sweep your complaints under the rug. While the mediator is supposed to be neutral, they aren’t a judge, and mediation isn’t recorded in court documents the same way, so they don’t lose face because of their mistakes.
Meanwhile, instead of getting your day in court and being heard by a judge, your case is quickly “mediated” into a result you’re most likely unhappy with because mediation is all about finding the middle ground, not necessarily what’s right.
Mediation Requirements & Timeline
The foreclosure mediation program in NJ is available to all homeowners who meet certain requirements. This is not an income-based program.
In order to qualify for the foreclosure mediation program:
- Have been served with a foreclosure complaint and summons
- Be a 1-4 family residential property
- Be your primary residence
- Not be in bankruptcy
When you received your foreclosure notice, your lender may have pressured you to participate in mediation. You have other options and have the right to pursue your foreclosure case in court because you’re a New Jersey homeowner.
However, if you do want to complete the mediation program, you must complete and return the mediation request statement. You must apply for the mediation program within 60 days of receiving the summons and complaint.
If your house is already scheduled for a sheriff’s sale, you will need to file a motion asking the court to stay the sheriff’s sale so you can work through the mediation program.
Is Foreclosure Mediation A Good Idea?
Whether the foreclosure mediation program in NJ is a good idea is complicated. The reason it is difficult to answer is that, per federal law, the borrower is already entitled to submit applications for loss mitigation programs.
So, because you are already entitled to what the mediation process provides, when the mediation results in a modification, did it work? Or were you simply given what you were already entitled to in the first place?
There is also a massive flaw in the mediation program. Initially, people were using it to delay the sale of their property by submitting for the mediation right before the sale. Because of this, rules were changed to limit when, during the foreclosure process, the mediation program could begin.
I am not in favor of having my clients apply for modification (or other loss mitigation) unless it is most advantageous for them to exercise their right to review an application for loss mitigation. And since the mediation program is not permitted without judicial permission to enter the program after a certain date in the foreclosure process, that often does not meet my preferred schedule for when it is best for my clients to apply for modification.
Should I Apply For Foreclosure Mediation in NJ?
When you should apply for the residential mortgage foreclosure mediation program depends on several factors.
Let’s say you, like the majority of homeowners I speak to, fell on hard times temporarily but are now back to a monthly income that allows you to pay your bills again. For most cases in this scenario, I would not advise you to apply for a modification immediately. Instead, I would recommend that you answer the Foreclosure Complaint (which you can do on your own), put together a strategy to resolve the debts you have built up during your downturn, and save some money.
In my opinion, it’s incredibly important to use the foreclosure process to delay things so that you can get yourselves into a good financial place before modifying your loan, through mediation or otherwise. That could look like considering a Chapter 7 Bankruptcy, negotiating some of your debts, or using the mortgage payment you can now afford to put money towards other bills.
The last thing I want is for consumers to negotiate a modification, get into a payment plan that, with all their other debts they can only barely handle, hit one problem, and be back in the soup again.
Contact Denbeaux Law Today
The goal of the mortgage foreclosure mediation program is to help people stay in their homes and avoid foreclosure.
The goal of every good attorney representing people in foreclosure or other financial distress is to get them out of financial distress and into a financially healthy place. Occasionally, that involves the mediation program (because you can do that on your own with paying attorneys or other experts), and often, the mediation program is not the right way to go.
If you’re being pressured into mediation by your lender, Contact Joshua Denbeaux today for a free consultation to learn more about how we may be able to help you through the foreclosure process to protect your home, your rights, and your financial interests.
