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FORECLOSURE DEFENSE

     You have received mail -- what looks like and says - Summons and Complaint.  If you, the homeowner, do not answer the papers served, the lender's law firm will file a request for judicial intervention.  It is very important -- do not ignore the papers!  (Please scroll down to read about settlement conferences.)  You must answer.  [An Answer is a paper filed in court and sent to the plaintiff by the defendant, admitting or denying the statements in the plaintiff's complaint, and briefly stating why the plaintiff's claims are incorrect and why the defendant is not responsible for the plaintiff's injury or loss.]
     In NY you have 20 - 30 days to answer depending how you were served.  • 20 days - if the summons was given to you in your hand.  • 30 days - if the summons was given to you any other way (for example by mail, left on your door, or left for you with someone who lives in your home). 
     In NJ you have 30 days to respond; (this link is a fill-in-the-blank form provided by the NJ Judicary to assist you representing yourself in a foreclosure action.  This is known as "pro se" when you represent yourself.) 

     There are many legitimate reasons why borrowers may find themselves in default (loss of employment, sickness, death of a co-borrower, etc.). It is the borrower's best interest to contact the institution servicing their mortgage and explain what the issue is before they are more than thirty days in default on a payment. It is strongly recommended that you notify the institution by sending it a certified letter to the appropriate area and then following it up with a telephone call. Most companies have specific units usually called "loss mitigation" that handle these types of matters.

     Keep in mind that all the laws enacted are to protect primary home ownership.  If your property is an investment, many of the saving protections are not applicable.

     We recognize that many borrowers are either too embarrassed to take action or are unfamilar with the options available.  Here is some information to get you started:

VOCABULARY

• Lender - entity that made the original loan to the borrower.  They may not be continuing to service the loan.  Sometimes the loan has been sold to an Investor.
• Sometimes an Investor is the owner of the loan who is most likely not in the chain of title (the ownership line). Fanniemae, Freddiemac, and the FHA acting through HUD are the most common investors.
• Servicer - entity who administers the loan.  The servicer collects mortgage payments, pays taxes and insurance if there is an escrow acount, takes care of customer service and is responsible for referring the foreclosure action to counsel (the law firm representing the servicer).

A servicer may be the original lender, the assignee of a mortgage holder or just administering the loan on behalf of an investor.  The servicer is the entity from whom the borrower is receiving letters and notices.

• Mortgagee - entity that currently holds the mortgage of record, or is the assignee under an assignment that has been delivered but not yet recorded.

       As a borrower you can request that the institution consider modifying the mortgage loan terms. An example would be the company allowing the borrower to refinance at no or low cost to obtain a lower interest (2% for example) in order to be able to continue making their monthly payments. (More information is available on the makinghomeaffordable.gov website.)
If you can not make any payment and believe that this can be rectified within a reasonable amount of time, you can request that the institution provide you with a period of forbearance. This would give you the opportunity to address the financial hardship and then begin making your regularly scheduled payments. The institution would then apply the missed payments to either the end of the loan or to be due in full at a later date.

      If you and the institution can not agree on a specific type of loan modification or if your request for forbearance is denied you should immediately contact legal counsel for assistance (see above). When selecting an attorney, be sure to obtain the services of someone who has experience dealing with foreclosure cases and understands your rights pursuant to the Fair Foreclosure Act (NJSA 2A:50-53 et. Seq.) This act states that a creditor must give the debtor thirty (30) days notice before commencing a foreclosure and provide the possible availability of financial assistance by State, Federal or nonprofit organizations.

IMPORTANTLY --  In New York State you have the option of a settlement conference.  In New York State according to NY CLS Unif Rules, Trial Cts § 202.12-a (2010)
§ 202.12-a. Residential mortgage foreclosure actions; settlement conference

(a) Applicability. This section shall be applicable to residential mortgage foreclosure actions involving a home loan secured by a mortgage on a one- to four-family dwelling or condominium, in which the defendant is a resident of the property subject to foreclosure.

(b) Request for judicial intervention. (1) At the time that proof of service of the summons and complaint is filed with the county clerk, plaintiff shall file with the county clerk a specialized request for judicial intervention (RJI), on a form prescribed by the Chief Administrator of the Courts, applicable to residential mortgage foreclosure actions covered by this section. The RJI shall contain the name, address, telephone number and e-mail address, if available, of the defendant in the action and shall request that a settlement conference be scheduled.

►      (This is a link to the top 10 items you should note when preparing for your settlement conference.) 

     In New Jersey you have the option of foreclosure mediation (the link is to NJ's judicial website). This is a brochure link which details information about the process.

PRELIMINARY WORK --  When you meet with your lawyer: