How to Challenge a Wrongful Foreclosure in NJ
Facing a foreclosure is stressful enough; facing a wrongful one is a legal nightmare. If your lender has made mistakes, violated federal laws, or failed to follow New Jersey’s strict foreclosure procedures, you may have grounds to get the case dismissed.
However, simply “telling the judge” isn’t enough. You must file a formal Contesting Answer with specific affirmative defenses. Below is a guide to the specific legal grounds for challenging a foreclosure in NJ.
1. The “Lack of Standing” Defense
This is the most common and powerful defense in New Jersey. Under the Uniform Commercial Code (UCC), a bank cannot foreclose unless they can prove they possessed the original Note and had a valid assignment of the Mortgage before they filed the complaint.
Common Failures:
- Broken Chain of Title: If your mortgage was sold multiple times (securitized) and one assignment was lost or unrecorded, the current plaintiff may not have the right to sue.
- Robo-Signing: If the bank’s documents were signed by an employee who didn’t actually review the file, those documents may be inadmissible in court.
2. Federal RESPA & TILA Violations
Federal laws like the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) place strict burdens on mortgage servicers.
- Dual Tracking: It is generally illegal for a bank to actively pursue foreclosure while simultaneously reviewing you for a loan modification. If they sold your home while you were in a “review period,” that is a major violation.
- Misapplied Payments: Did the bank hold your partial payments in a “suspense account” instead of applying them to interest? This accounting error can trigger a false default.
3. The NJ Fair Foreclosure Act
New Jersey has its own specific set of rules known as the Fair Foreclosure Act. Before filing a complaint, the lender must send you a Notice of Intention (NOI) to foreclose.
The “Strict Compliance” Rule: If the NOI was sent to the wrong address, listed the wrong cure amount, or failed to include the lender’s direct contact information, the court may dismiss the foreclosure complaint entirely, forcing the bank to start over from scratch.
Steps to Challenge the Foreclosure
Step 1: File a Contesting Answer
You typically have 35 days from the date you are served with the Complaint to file an Answer. This is your only chance to assert your defenses. If you miss this window, the court will enter a “default” against you, and you waive your right to fight.
Step 2: Discovery & Evidence Gathering
Once an Answer is filed, the case moves to “Discovery.” We force the bank to produce the original “wet ink” note, payment history ledgers, and proof of mailing for all required notices. This is often where their case falls apart.
Step 3: Summary Judgment or Trial
The bank will try to file a “Motion for Summary Judgment” to win without a trial. We file a counter-certification disputing their facts. If we raise a genuine issue of material fact (e.g., “I never received the Notice of Intent”), the judge must deny their motion and let the case proceed.
Possible Outcomes of a Successful Challenge
- Dismissal: The case is thrown out. The bank must fix their errors and re-file, buying you months or years of time.
- Loan Modification: The pressure of litigation often forces the bank to offer a favorable modification to settle the case.
- Damages: In rare cases of fraud (under the NJ Consumer Fraud Act), you may be entitled to financial damages.
Don’t Wait for the Sheriff’s Sale
Challenging a wrongful foreclosure requires speed and precision. Once the Sheriff’s Sale occurs, reversing the process becomes exponentially harder.
Past results do not guarantee future outcomes. Attorney Advertising. Friscia & Associates LLC | 199 Wilson Ave., Suite A, Newark, NJ 07105.
