What Can Be Expected in a New Jersey House Foreclosure Mediation?

The New Jersey Superior Court's Foreclosure Mediation Program was instituted by the state government to try to reduce the number of homeowners losing their homes from foreclosure. The goal of the program is to help the homeowner and the mortgage lender to reach a workout agreement that will allow the homeowner to stay in their home.

Purpose and Eligibility

Foreclosures not only hurt the homeowner who is forced out of their home, but also the local community and even the mortgage lender. Foreclosures cause social and community disruptions and cost the mortgage lender time and money. The program seeks to promote an agreement, called a mortgage workout, between the homeowner and lender, which will allow the homeowner to stay in their home. New Jersey homeowners who have a foreclosure action against them are eligible to participate in the program if they meet the following criteria: the property is a one-to-three family residential building, the property is the homeowner's primary residence and the homeowner is the mortgage borrower.

Application Process

A homeowner can apply to use the program at any point during the foreclosure process before the forced sale of the home by the sheriff. Either the homeowner or a certified housing counselor can make application. The homeowner applies by completing and returning the Foreclosure Mediation Financial Worksheet and the Mediation Request Statement. A housing counselor needs to complete and submit the Mediation Recommendation Statement along with supporting documents. Forms can be obtained from and must be submitted to the Administrative Office of the Courts---Office of Foreclosure. There are no fees to participate in the program.

Mediation Process

The homeowner is expected to use the assistance of a government certified housing counselor to complete the financial worksheets required in preparing for the mediation. The homeowner needs to demonstrate the ability to make some sort of payments required in a workout. The mediator should have received special training and should be able to be impartial. The homeowner, lender and the mediator conduct the mediation session at the county courthouse. The homeowner can bring along the housing counselor and an attorney. The lender is usually represented by their attorney, but an official from the lender needs to be available by phone. The mediator will try to negotiate a mutually acceptable workout agreement between the parties.

Possible Outcomes

Participating in the program does not stop the foreclosure process, but will put on hold an ordered sheriff's sale. The court can order that the parties to participate in mediation, but cannot force an agreement. The desired outcome of the mediation is a mortgage workout agreement is reached. Such a workout can include a refinancing of the mortgage, reductions in principal or interest on the mortgage, payment forbearance or some other type of modification agreement. If the homeowner has no financial ability to make satisfactory payments, the mediator might arrange for the lender to pay a cash payment to the homeowner to voluntarily surrender the home and quickly move out.

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