The New Jersey Fair Foreclosure Act (N.J.S.A. 2A:50-53 et seq.) requires lenders to provide homeowners with a 30-day Notice of Intention to Foreclose before filing a foreclosure complaint, grants borrowers the right to cure the default during this period, and mandates referral to HUD-approved housing counseling agencies. Failure to comply with any of these requirements can result in dismissal of the foreclosure action.
Who Is Protected by the Fair Foreclosure Act?
The Fair Foreclosure Act applies to residential mortgage loans secured by residential real property consisting of four or fewer dwelling units, one of which is occupied by the debtor as their principal residence. It covers first mortgages, second mortgages, and home equity lines of credit that meet this definition. The Act does not apply to commercial properties or residential properties with more than four dwelling units.
The Notice of Intention to Foreclose (NOI)
Under N.J.S.A. 2A:50-56, before filing a foreclosure complaint, the lender must send the borrower a Notice of Intention to Foreclose at least 30 days before the complaint is filed. This notice must be sent by registered or certified mail and by regular mail to the borrower’s last known address. The NOI must contain specific information required by the statute, including the nature of the default and the borrower’s right to cure it, the date by which the borrower must cure the default to avoid acceleration of the full balance, the right of the borrower to dispute the debt or any portion of the debt, the name, address, and telephone number of the lender and the servicer of the mortgage, the name and address of the party to whom payment should be sent, and information about HUD-approved housing counseling agencies.
The 30-Day Cure Period
The Fair Foreclosure Act provides borrowers with a 30-day period to cure the default after receiving the NOI. “Curing” the default means paying all past-due mortgage payments, late fees, and any other amounts specified in the NOI. If the borrower cures the default within the 30-day period, the lender cannot proceed with the foreclosure and the loan is reinstated to current status. The right to cure is a critical protection that gives homeowners an opportunity to resolve the default without the expense and consequences of a foreclosure lawsuit.
Right to Reinstate the Loan
Under the Fair Foreclosure Act, borrowers have the right to reinstate their mortgage at any time before the entry of a final judgment of foreclosure. Reinstatement requires paying all past-due amounts, late charges, and the lender’s reasonable attorney fees and costs incurred up to that point. This right exists independently of any loss mitigation or loan modification process and can be exercised at any point during the foreclosure case prior to final judgment.
HUD Counseling Requirement
The NOI must include information about HUD-approved housing counseling agencies available to the borrower. These counselors can provide free or low-cost assistance with budgeting, understanding your mortgage documents, negotiating with your servicer, and exploring loss mitigation options. While the borrower is not required to use these services, the lender is required to provide the information, and failure to do so is a violation of the Act.
Consequences of Lender Violations
If the lender fails to comply with the Fair Foreclosure Act’s requirements — whether by not sending the NOI, sending a defective NOI, or failing to include all required information — the borrower can raise this as a defense in the foreclosure action. NJ courts have consistently held that compliance with the Fair Foreclosure Act is a prerequisite to maintaining a foreclosure action, and have dismissed foreclosure complaints where the NOI was defective or missing. The defense is available at any stage of the foreclosure proceeding and should be raised as an affirmative defense in the borrower’s Answer.
Call Friscia & Associates Today
The NJ Fair Foreclosure Act provides powerful protections, but only if they are properly asserted. Call Friscia & Associates at (973) 500-8024 to speak with a NJ foreclosure defense attorney who can review whether your lender complied with the Fair Foreclosure Act and use any violations to defend your home.
Legal Disclaimer: The information on this page is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this content. Every foreclosure case is different, and outcomes depend on the specific facts and circumstances involved. If you need legal advice, please contact our office to schedule a consultation.