In New Jersey it is compulsory for any lender to go to court in order to obtain a foreclosure. This means that only the judicial foreclosure process is allowed and the primary instrument of security is the Mortgage Lien. The state of New Jersey is therefore a lien theory state. No power of sale clauses, deeds of trust or non-judicial foreclosures are allowed.
The foreclosure can take anything from 250 days upwards, depending if the case is contested or uncontested. The laws do state 90 days but as the process is required to be processed through the courts and the wheels of justice turn slowly. There are so many foreclosures taking place at the moment in the US, that the courts are becoming overwhelmed. In actual fact New Jersey has one of the longest foreclosure wait times. If the foreclosure filing is contested it takes even longer for the process to be finalized, and we are talking about years! Once the courts have ordered the decree the borrower also still has 45 days to rectify the debt.
Borrowers have rights of redemption but this is only for 10 days after the date of the sale, if the borrower exercises their rights of redemption they are required to pay the delinquent amount plus all other related costs.
Deficiency judgments are allowed if the sale of the property does not cover the amount of the loan in default. “Fair Market Credit” is used to determine how much the deficiency judgment can be, and these safeguards against low bids at the auction sale. This doctrine determines that the borrower has to be given fair credit in terms of the “Market Value” of the property when it is sold. Deficiency claims have to be made within 90 days of the sale of the property.