New Jersey homeowners facing foreclosure have numerous legal defenses available, including lack of standing, Fair Foreclosure Act violations, RESPA and TILA violations, predatory lending claims, statute of limitations, and equitable defenses. This guide provides a comprehensive overview of every major defense that can be raised in a NJ foreclosure case. Each defense targets a different potential weakness in the lender’s case.
Lack of Standing
The plaintiff must prove it is the holder or owner of the promissory note and mortgage at the time the foreclosure complaint was filed. Defects in the assignment chain, MERS issues, and missing or robo-signed documents can defeat standing. This is the most frequently successful defense in NJ foreclosure cases. Read our detailed guide on lack of standing defenses.
NJ Fair Foreclosure Act Violations (N.J.S.A. 2A:50-53 et seq.)
The NJ Fair Foreclosure Act requires lenders to provide a Notice of Intention to Foreclose at least 30 days before filing the complaint. This notice must include specific information: the nature of the default, the right to cure, the amount needed to cure, the right to dispute the debt, and contact information for HUD-approved housing counseling agencies. Failure to provide this notice or defects in its content can result in dismissal of the foreclosure. Read our detailed guide on the Fair Foreclosure Act.
RESPA Violations (12 CFR 1024.41)
The Real Estate Settlement Procedures Act requires mortgage servicers to follow specific procedures for handling loss mitigation applications, responding to qualified written requests, and providing accurate account information. Violations include failing to properly evaluate a loss mitigation application, engaging in dual tracking (pursuing foreclosure while a complete application is pending), failing to respond to qualified written requests within the required timeframe, and not providing a single point of contact. RESPA violations can be raised as both a defense to the foreclosure and as the basis for a counterclaim for damages.
TILA Violations (Truth in Lending Act)
The Truth in Lending Act requires lenders to provide accurate disclosures of loan terms at origination, including the annual percentage rate (APR), finance charges, amount financed, and total of payments. Material TILA violations at the time of loan origination may give rise to a defense or counterclaim in the foreclosure action. TILA also provides a right of rescission for certain refinance transactions that may still be available if the required disclosures were never properly provided.
Predatory Lending
Predatory lending encompasses a range of abusive practices at loan origination, including making loans the borrower clearly cannot afford, charging excessive fees or interest rates, steering borrowers to higher-cost loans when they qualified for better terms, and misrepresenting loan terms. NJ provides statutory protections through the NJ Consumer Fraud Act (N.J.S.A. 56:8-1 et seq.) and the NJ Home Ownership Security Act (N.J.S.A. 46:10B-22 et seq.). Read our detailed guide on predatory lending defenses.
Statute of Limitations
New Jersey imposes a six-year statute of limitations on residential mortgage foreclosure actions under N.J.S.A. 2A:50-56.1. The limitations period begins when the debt is accelerated (typically when the lender sends a notice of acceleration or files the foreclosure complaint). If the lender dismisses a foreclosure case and refiles after six years from the acceleration date, the statute of limitations defense may bar the new action. This defense has become increasingly important as lenders attempt to refile previously dismissed foreclosure cases.
Unconscionability
A mortgage or its terms may be challenged as unconscionable if the terms were so one-sided and oppressive at the time of contract formation that no reasonable person would have agreed to them. This defense applies to both procedural unconscionability (unfair bargaining process, such as high-pressure tactics or failure to explain terms) and substantive unconscionability (unfair terms, such as excessively high interest rates or penalty provisions).
Failure to Provide Proper Notice
In addition to the Fair Foreclosure Act’s notice requirements, lenders must comply with all contractual notice provisions in the mortgage document and applicable federal regulations. Many mortgages contain specific default notice provisions that require the lender to notify the borrower of the default, provide a cure period, and inform the borrower of the right to reinstate the loan. Failure to comply with these provisions can constitute a defense to the foreclosure.
Dual Tracking
If the servicer pursued foreclosure while your loss mitigation application was under review in violation of 12 CFR 1024.41, this constitutes both a defense to the foreclosure and the basis for a counterclaim for damages. Read our detailed guide on dual tracking.
Bankruptcy Automatic Stay
Filing for bankruptcy triggers an automatic stay under 11 U.S.C. § 362 that halts all collection actions including foreclosure. If the lender violated the automatic stay by continuing foreclosure proceedings after a bankruptcy was filed, the foreclosure action may be voided and the lender may be liable for sanctions.
Equitable Defenses
NJ courts may apply equitable defenses including unclean hands (the lender engaged in inequitable conduct), estoppel (the lender made representations that the borrower relied upon to their detriment), and laches (the lender unreasonably delayed in pursuing the foreclosure, causing prejudice to the borrower).
Call Friscia & Associates Today
Every foreclosure case has potential defenses that may not be obvious without legal analysis. Call Friscia & Associates at (973) 500-8024 to speak with a NJ foreclosure defense attorney who can review your case, identify all available defenses, and build a comprehensive strategy to protect 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.