Today, for many people, the threat of foreclosure looms large. This is the case in New Jersey as well as many other states. The response to this crisis has been the implementation of foreclosure mediation programs. Foreclosure mediation is simply a process where borrowers and lenders are given the opportunity to work out an alternative to foreclosure.
How does foreclosure mediation work in New Jersey?
First of all, foreclosure is not a desirable outcome to either party. For that reason alone, mediation is in the best interest of both borrower and lender. It begins with completing the foreclosure mediation package and submitting the necessary supporting documents within 60 days of being served with the Complaint. Next, a meeting is scheduled between the parties and the mediator. Mediation is merely a process that allows all parties to work together for a resolution. Examples of resolutions are:
- Modification of the loan
- Short sale
- Deed in lieu of foreclosure
A modification of the loan is not guaranteed and depends on factors such as income and overall debt. A short sale is where the bank allows you to sell the property short of what you owe on the loan. A Deed in lieu of foreclosure is where you voluntarily transfer the title to the property to the bank. If you want to stay in your house, then you want to try and obtain a modification. If a modification is permitted, the bank will have you make trial payments for generally 3 months, and, assuming you have made the trial payments, then the modification will be converted to a permanent modification.
If you cannot qualify for a modification, then you should consider doing a Deed in lieu of foreclosure or short sale. A short sale is a better option than a Deed in lieu of foreclosure because you are able to try and minimize the impact of the forgiven debt, which can be construed as income if it is forgiven by the bank. If you are faced with making this decision, it is advisable to consult an accountant.
What is the cost of foreclosure mediation?
The program is free. If you are wondering whether or not it is even worth it to go through with mediation, its lack of cost might influence that decision. Plus, you have nothing to lose by participating in the mediation program.
What is the bottom line?
The bottom line on mediation is that while it offers no guaranteed result, it offers an objective, controlled environment for trying to work out a loan resolution. It also buys you additional time in your house because by participating in the mediation program, you are slowing down the foreclosure process.
If you have questions about foreclosure mediation or foreclosure in general, contact the Law Office of H. Benjamin Sharlin LLC for a free consultation.
The Law Office of H. Benjamin Sharlin LLC is owned and operated by H. Benjamin Sharlin and serves all of Mercer County, New Jersey and the surrounding areas. Mr. Sharlin is a bilingual Spanish-speaking attorney who vigorously represents the interests of all his clients.
Please be advised that this blog is for informational purposes only, is not legal advice and does not create an attorney-client relationship.
The Law Office of H. Benjamin Sharlin LLC
is owned and operated by H. Benjamin Sharlin and serves all of Mercer County, New Jersey and the surrounding areas. Mr. Sharlin is a bilingual Spanish-speaking attorney who vigorously represents the interests of all his clients.
Call (609) 585-0606 or click the button below to schedule an appointment
