The mortgage foreclosure process in New Jersey and Pennsylvania is the enforcement of the mortgagee's legal interest (security interest) in real property owned by the mortgagor (the entity providing the real estate property as collateral) at the time of the original transaction. Our goal is to make sure that our clients remain educated on the foreclosure process and understand what information we need to keep matters moving as smoothly and efficiently as possible. The steps in the foreclosure process are as follows:
- Pre-foreclosure Review. In the challenging environment of today's foreclosure world, it is important for the client and our office to understand who is the current holder of the mortgage and to have the basic mortgage documents organized. Understanding the current owner/legal holder of the mortgage is critical to being able to process and issue the pre-foreclosure demand. Review of the chain of title history to make sure the entity holding the mortgage truly has the ability to enforce its terms.
- Pre-foreclosure Demand. Regardless of the state, the mortgage documents typically have a provision regarding acceleration of obligation/mortgage. The terms of any such provision is the contractual obligation that must be followed. Notwithstanding, in the residential mortgage arena, both the Commonwealth of Pennsylvania (Act 6/Act 91) and State of New Jersey (Fair Foreclosure Notice Act) require specific pre-foreclosure demands prior to institution of foreclosures on mortgages meeting certain criteria under each statute. It is important that the notices
- Title Review and Clearance. Beyond the pre-foreclosure review done by the client (and our office) we review the real estate title to make sure the client's mortgage is duly recorded and holds the right priority against the property (i.e. 1st mortgage, 2nd mortgage, etc...). If there is an issue with the status of the mortgage, then our office will pursue title remedies in order to correct any defects. The client is always advised of any potential issues, as well as the potential remedies. The title review also serves other purposes in the foreclosure process. In New Jersey, we are required to make any subordinate lien holders defendants in our foreclosure action so they may protect any junior interests they have. We also file a lis pendens in New Jersey to cut-off the potential rights of any creditors that have claims arise or mature to liens after our action has started. In Pennsylvania, we will utilize the writ of execution as the cut-off date and notify junior lien holders existing at that time of the pendency of a sheriff sale so they can protect their interests. We also check to make sure there is not an active bankruptcy or other impediment beyond the chain of title.
Beyond mere titling concerns, we want to make sure we are not unduly burdening any of our service men and women by making sure our defendants are not in the active service of our country. We run this same check prior to entry of judgment/scheduling of a sale.
- Complaint. The complaint in both states is the document that officially begins the actual mortgage foreclosure proceeding. Service of the complaint on the various defendants is accomplished in accordance with each State's rules. The Commonwealth of Pennsylvania and State of New Jersey both have specific requirements for the content of the foreclosure complaints. The State of New Jersey has a centralized system for the handling and processing of complaints out of the Court Complex, in Trenton; while the Commonwealth of Pennsylvania has each county handle the foreclosures in each county. New Jersey's centralized system handles the Court's side of foreclosures through the entry of judgment and issuing of the writ of execution in uncontested foreclosure matters. Once/If a matter is contested in New Jersey, it will then be handled in the Equity Court for the county in which the foreclosure belongs.
- Conciliations/Mediations. New Jersey and, to a certain extent, Pennsylvania, have diversion programs to assist residential mortgagors in seeking loan resolution alternatives to completion of the foreclosure process. After the complaint has been served, New Jersey and some counties in Pennsylvania allow residential mortgagors to enter court sponsorred mediation/conciliation programs. Although we find that our clients are always willing to consider foreclosure alternatives outside of the Court process, the Courts sponsoring these programs wish to make sure every willing participant has a final opportunity to be heard. We strive to work quickly and efficiently through the process to reach a conclusion, whether it is a forbearance, loan modification, deed-in-lieu of foreclosure, or no solution and minimize the use of these programs by mortgagors as nothing more than a tool for delay.
- Pre-Judgment Notices. In both the Commonwealth of Pennsylvania and State of New Jersey, we cannot take judgment until after we have provided certain pre-judgment notices to the defendants, giving them a little additional time to act. Upon expiration of the notice, we then proceed to judgment, writ of execution and sheriff sale.
- Judgment and Execution. Once and pre-judgment notice requirements have expired we proceed to requesting judgment by default (as a result of the Defendants' failure to answer) and proceed to scheduling the sheriff sale with the local sheriff. In New Jersey, the uncontested judgment and writ of execution are obtained from the central office with the local/county sheriff taking the case from that point for the sheriff sale. In Pennsylvania, the local court will handle the uncontested judgment and writ of execution and the process continues with the local/county sheriff. Each state has its own requirements for entry of judgment with differing involvement from the clients.
- Sheriff Sale. Upon the entry of judgment, the writ of execution provides the county sheriff with the authority to sell the property at a regularly scheduled sheriff sale. We work to schedule the sale based on the regular sheriff schedules. In Pennsylvania, sales are typically scheduled on a monthly basis, while the New Jersey process offers more regularly scheduled dates. A few days before the sale, we ask the client for assistance in preparing the bid for sale. Prior to the sale, we will again check to make sure there is no bankruptcy and to confirm that the defendants are not in the service of our Country.
- Post Sale. Once the gavel has hit, whether our client or a third party, the successful bidder needs to settle with the Sheriff. In the event of a third party sale, we look for the proceeds belonging to the cleint up to the amount allowed under the judgment. If an REO, then we look to settle with the sheriff to the extent there are any additional amounts due. In New Jersey there is a 10-day right of redemption and the sheriff will not proceed during this redemption period. In Pennsylvania there is NO redemption period, however there is a process by which the sheriff will post the results of the sheriff sale and allow for settlement with the sheriff.
