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It is a lengthy process with strict rules for mortgage lenders and multiple opportunities for you to save your home (or arrange the most favorable alternative). According to Nolo.com, New Jersey has the third-longest foreclosure timeline. The average is 1,161 days (38 months) from that first foreclosure notice.
Mortgage lenders are now prohibited by federal law from conducting a foreclosure while a mortgage modification application is under consideration. Before a foreclosure is begun, the lender or their servicer must take steps to let the borrower know what options exist to keep the house.
Although lenders in New Jersey will usually initiate foreclosure proceeding after three missed payments, legally, a lender may consider a mortgage delinquent as soon as one payment is missed.
It is still entirely possible for a foreclosure suit from the lender to be moving forward on a parallel track with your loan modification. One department for the lender may be trying to negotiate better terms with you while another is aggressively working to take your home.
Some states have complete consumer protections against deficiency suits, (known as non-recourse states). New Jersey doesn't. The lender must file their deficiency suit within 3 months of the Sheriff's sale in New Jersey. Invoking the fair market value of the property is a common defense against deficiency.