New Jersey had the second-highest rate of foreclosure activity in the country in 2022, with approximately 17,000 households receiving a foreclosure notice. Foreclosures are likely to continue increasing as a backlog of cases that built up during the pandemic moves through the courts. If you believe your home could be at risk of foreclosure, it is important to know your options.

Here are some of the strategies available to homeowners facing potential foreclosure:

• Mortgage modification — In some situations, you can work with your mortgage lender to change the terms of the loan and get your monthly payments lowered to a more affordable level. Modifications could include adjusting the interest rate, lengthening the term of the loan and/or switching from an adjustable-rate mortgage (ARM) to a fixed-rate one. Late fees can be added to your principal amount and be paid over time.
• Forbearance — Your mortgage lender or servicer might agree to let you pause your payments for a limited time, without added fees or penalties. Forbearance is not forgiveness. You still need to make all your payments eventually. You simply get a break, giving you time to muster financial resources.
• Chapter 13 bankruptcy — Filing a Chapter 13 allows you to pay off your unsecured debts, including mortgage arrears, over an extended period of time. This relief is often sufficient to allow you to get back on track with your mortgage payments and keep your home.
• Short sale — This means the mortgage lender allows you to sell the home for less than the amount due on the loan and accepts that amount as full satisfaction. Banks are sometimes open to a short sale because it lets them avoid going through the time and cost of foreclosing. You lose the home, but you avoid having to pay the deficiency between the sale price and the mortgage balance.
• Deed in lieu of foreclosure — You voluntarily turn over ownership of the home to your mortgage lender rather than go through the foreclosure process. In return, the bank cancels the loan.

You’ll want to discuss these options with a qualified foreclosure defense attorney to decide which of them is best in your situation. In some cases, it may become necessary to fight the foreclosure in court. A New Jersey foreclosure defense lawyer can evaluate the foreclosure filing and help you assert any available defenses. For example, you may be able to demonstrate that your lender violated rules about loan servicing, committed fraud or is trying to foreclose after having transferred your mortgage to a different servicer.

If you believe you may be in danger of a foreclosure on your New Jersey home, call the Law Offices of James C. Zimmermann to find out what we can do to help. You can reach us at 973-764-1633 or contact us online anytime to arrange a consultation. We have offices in Nutley, Vernon, Wayne, Hackensack and Pompton Lakes.