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We have a home in NJ that is in foreclosure...we have been

Customer Question

We have a home in NJ that is in foreclosure...we have been trying to short sell the house, but no offers...I think we should just let the house go, but our realtor is saying that the bank can still come after us, after the foreclosure. Is this true?
Submitted: 3 years ago.
Category: Real Estate Law
Expert:  Roger replied 3 years ago.

Hi - my name is XXXXX XXXXX I'm a Real Estate litigation attorney here to assist you.

 

Yes, this is true. Under New Jersey law, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures.

 

This means that you still owe the lender for the difference between what the property sold for at auction and the amount of the original loan. New Jersey however has a "Fair Market Credit" doctrine set forth under N.J.S.A 2A:50-3 which is a safeguard against low or minimal bids which may give rise to a windfall in the event of a deficiency proceeding. Under this doctrine the defaulting borrower is given credit for the fair market value of the property regardless of what the bid at the foreclosure sale was. This is however an affirmative defense which must be raised in a deficiency proceeding.

 

Deficiency actions must be brought within three (3) months of the foreclosure sale.

 

http://www.foreclosure.com/statelaw_NJ.html

 

The lender can even pursue a deficiency judgment even if you do a short sale - if the sale amount doesn't satisfy the loan.

Customer: replied 3 years ago.
So.....it doesn't matter if I do a short sale or the foreclosure....I may still have to pay...right? We are also going bankrupt....does that make any difference? We have moved to Ga. to live with my daughter because we could no longer afford our bills in NJ.
Expert:  Roger replied 3 years ago.

That's right. Either way, the deficiency will be due.

 

If you're filing bankruptcy, the deficiency can be included in the bankruptcy and discharged. However, you need to make sure that the foreclosure or short sale occurs before or during bankruptcy so you can include it.

Customer: replied 3 years ago.
Kirk...Thank you so much. Do I have to notify the bank that I want to go ahead with the foreclosure? We have not paid the mortgage for about 5 months...hoping we could get a buyer...but not one offers..... the bank will not respond to any calls from my realtor either.
Expert:  Roger replied 3 years ago.
You don't necessarily need to notify the bank, but you can. You just need to inform your bankruptcy attorney to include the debt in your bankruptcy so you can have it discharged.
Customer: replied 3 years ago.
Are we responsible if any damages occur in the meantime? My son goes to the house weekly to check on it.
Expert:  Roger replied 3 years ago.
You are required not to commit waste on the property - which is essentially causing damages in purpose. You can't prevent others from vandalizing the property, however.
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 27241
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
Roger and 3 other Real Estate Law Specialists are ready to help you
Customer: replied 3 years ago.
Thank you so much, again. These past 2 years have been a nightmare...but you have made this part a little easier.....We couldn't afford to go to another lawyer in NJ...so we are truly grateful for your help. I will recommend you to everyone...You are the best!!
Expert:  Roger replied 3 years ago.
Sure. Good luck.

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