Behind on the mortgage, with a foreclosure notice on the table
In both New York and New Jersey a lender cannot take a house without going through a judge, and that court process usually leaves an owner more room to act than the first scary letter suggests. This page walks through the steps in each state, what selling to us looks like in the middle of it, and the protections the law gives you when you do.
Judicial foreclosure, in plain terms
In some parts of the country a lender can auction a home after mailing a few notices. New York and New Jersey are not among them. Here, the lender has to file a lawsuit, serve you, prove what is owed, and get a judgment before anyone can schedule an auction. Each of those steps eats up weeks or months, and you keep owning the house the whole time. Owning it means you can still sell it.
That matters because a voluntary sale and a foreclosure auction end very differently. At an auction, the price is whatever the highest bidder offers on the courthouse steps, and the lender’s fees, interest and legal costs keep piling onto the debt until that day. In a sale you arrange, the lender’s payoff comes out of the purchase price at closing, and the equity left over is wired to you rather than being sorted out afterward through the court.
How the New York case usually unfolds
For a home loan, New York requires the lender or servicer to mail a warning at least 90 days before it files, under section 1304 of the Real Property Actions and Proceedings Law. If payments are not brought current, the lender sues in state Supreme Court, in whichever county the property is in, and a process server delivers the summons and complaint.
If the borrower lives in the home, CPLR 3408 obliges the court to hold a settlement conference within 60 days after proof of service is filed. That conference is meant to explore a loan modification, a lender-approved short sale, handing over the deed in lieu of foreclosure, or some other workout, and the court also passes your name to a housing counseling agency. Many homeowners use those conferences well. If nothing is resolved, the lender eventually asks for a judgment of foreclosure and sale, and a referee appointed by the court runs the auction.
There is no single timetable. Contested cases, adjournments and court calendars all stretch things out, so we never quote you a number of months. Your attorney or a housing counselor can look at your docket and tell you where you actually stand.
How it works on the New Jersey side
New Jersey’s Fair Foreclosure Act starts with a Notice of Intent to Foreclose. According to the state courts, that notice has to explain the default, the amount needed to cure it, the mediation program, your right to hire a lawyer, and the fact that you may sell or transfer the property. You then have 30 days to cure or make arrangements before the lender can file.
Once the complaint is served, a homeowner has 35 days to answer. Uncontested cases stay with the Office of Foreclosure in Trenton; contested ones go to a General Equity judge in your county. Free foreclosure mediation is available, and the courts recommend asking for it early. After final judgment, a writ sends the case to the county sheriff, who has 150 days to hold the sale and must advertise it for at least four weeks. The owner and the lender can each request two adjournments of the sale date. After the auction there is a 10-day window to redeem, and if the sale brings in more than the debt, the surplus belongs to the former owner.
The cancellation right that protects you when you sell to an investor
Both states have laws written specifically to stop people from talking homeowners in foreclosure out of their equity. If you live in the house, they apply to a sale to a buyer like us, and they are worth knowing before you sign anything with anyone.
New York: Real Property Law section 265-a covers an owner-occupied home of one to four units that is in foreclosure, or whose owner is two or more months behind on the mortgage. The contract has to contain the entire agreement and a printed notice, and you may cancel it until midnight of the fourteenth business day after signing. Sundays and legal holidays do not count, so the window runs a bit over two weeks on the calendar. No one may have you sign a deed before that period runs out. The statute also tells sellers to consult their own attorney rather than one the buyer suggests, which is advice we agree with.
New Jersey: the Foreclosure Rescue Fraud Prevention Act, passed in 2011, covers an owner-occupied home of one to four units that is in foreclosure or a tax sale proceeding, or whose loan is more than 90 days delinquent. Under that law you can cancel a sale contract until midnight of the tenth business day after signing, or until the sheriff’s sale is completed, whichever comes first. The contract must spell that out in a notice the statute words for you.
What that means in practice: the fast closings we can do on a clean title don’t apply here. The cancellation window comes first, then the closing. If an auction date is close, that is one more reason to call early instead of waiting for the last week.
Selling isn’t the only option, and we will say so
If keeping the house is the goal and your income can carry the payment, a loan modification, a repayment plan or mediation may be the better path, and a HUD-approved housing counselor costs nothing. Bankruptcy can pause a foreclosure too, though that choice belongs with a bankruptcy lawyer. We are a good fit for owners who have already decided they would rather move on, or whose numbers simply don’t work anymore. If you tell us what you owe and the house is worth less, we will say so plainly rather than make an offer that can’t close.
What a sale to us looks like mid-foreclosure
- Greg or Brett walks the house with you and asks for the latest statement or payoff figure.
- A written offer follows, normally within a day, showing the price and who pays which closing costs.
- Your attorney reviews the contract, and the required cancellation notice is part of it.
- The title company requests a payoff letter from the lender’s attorney, including fees added during the case.
- At closing the loan and any other liens get satisfied, after which the lender has the case discontinued.
You don’t clean out the house or fix the roof first. Take what you want; what stays behind is ours to deal with. Our process page covers the closing day itself in more detail.
A word about the letters you are getting
Once a foreclosure is filed it becomes public record, and the mail starts: loan-modification “specialists” charging up-front fees, offers to “save” the house if you sign it over and rent it back. The New Jersey courts specifically warn homeowners about rescue scams. Anyone legitimate will put everything in writing, will not rush you past your cancellation right, and will be fine with your lawyer reading every page.
Related reading: if property taxes are also unpaid, see behind on property taxes; if you have already moved out, selling a vacant house covers the risks of an empty property; and if a separation is part of the picture, selling during a divorce explains how both owners sign off.
Ready to see a number? Call or text (845) 367-4898, or give us the address via the contact page. Have the date on your most recent court notice handy so we can tell you honestly whether there is time.
Foreclosure questions we hear on first calls
Can I still sell my house after the foreclosure has been filed?
Yes. Filing a case does not transfer ownership. In New York you own the house until the referee’s auction, and in New Jersey until the sheriff’s sale, followed by a short redemption window. The sooner a sale starts, the less pressure the timeline puts on it.
Will selling stop the foreclosure?
Once the closing pays the mortgage in full, the lender no longer has a claim and its attorney asks the court to end the case. Until that payoff actually happens, the case keeps moving, so the closing date has to land before the sale date.
How much time does a foreclosure case usually take in these two states?
Neither state has a fixed clock. Both are judicial, so the pace depends on whether the case is contested, settlement conferences or mediation, adjournments and the court’s calendar. Ask your attorney to check the docket for your specific case.
Why does your contract have a cancellation notice in it?
State law requires it when the seller lives in the house and is behind or in foreclosure. In New York you can cancel until midnight of the fourteenth business day after signing; under New Jersey’s 2011 law, the tenth business day or the end of the sheriff’s sale, whichever is first.
What if my mortgage balance is higher than the house’s value?
Then a straight cash sale may not cover the payoff, and we will say that during the first call. A short sale approved by the lender, a modification or another workout may fit better, and a housing counselor or attorney can help you compare them.