Bankruptcy and New Jersey’s Residential Mortgage Foreclosure Mediation Program (FMP)
The New Jersey Residential Mortgage Foreclosure Mediation Program (FMP) is intended to give a homeowner in a foreclosure proceeding the opportunity to qualify for mortgage modification. Homeowners who may benefit should carefully review the procedures outlined below and diligently pursue the remedies that the FMC may provide. However, a homeowner should fully understand that mediation does not mandate that one party accept the proposed resolution offered by the other and it has been our experience that banks sometimes appear to prefer a sheriff’s sale to a loan modification. Therefore, all other legal remedies which may be available should also be fully considered. Homeowners qualify for the FMP if (1) they are the owner occupant of a one- to three-family residential property; (2) the property is their primary residence; and (3) they are the borrower on the mortgage loan being foreclosed.
Homeowners Who Seeks Bankruptcy Relief May Participate Foreclosure Mediation Program
— Initially, a homeowner who sought bankruptcy relief was not eligible to participate in the FMP. The Bankruptcy Court recognized the benefits of the program and adopted a vicinage order permitting lenders to participate even though the homeowner had filed for bankruptcy protection. See General Order Clarifying That Participation in the New Jersey Foreclosure Mediation Program Does Not Violate the Automatic Stay (May 18, 2009).
A Foreclosure Mediation Financial Worksheet and supporting documentation must be submitted by a homeowner to provide proof that they have the financial ability to make the payments required by a modified mortgage. While a homeowner need not have the assistance of a housing counselor or attorney, it is clear these advisors may attend the mediation session and provide the homeowner with assistance in completing the required paperwork. The mediator and the housing counselor are free. Qualified homeowners are provided with legal representatives who contract with the New Jersey Housing and Mortgage Finance Agency. These attorneys provide free legal services to income-eligible homeowners participating in the FMP.
Outline of FMP Procedure
– The outline below of New Jersey’s Residential Mortgage Foreclosure Mediation Program (FMP). was digested from the comprehensive discussion of the FMP presented by the the Court in U.S. BANK NAT. ASS’N v. WILLIAMS, 415 N.J. Super. 358 (App. Div. 2010).
- The Foreclosure Complaint must include information and instructions about the availability of the Foreclosure Mediation Program.
- A Second Notice describing the Mediation Program is mailed to the homeowner sixty days after the complaint by the Administrative Office of the Courts.
- A Third Notice of Mediation must be attached to the Notice of Motion for Judgment with the proof of amount due.
Represented homeowners receive the following services from their appointed attorneys:
- A personal meeting between the client and assigned attorney in the client’s home county;
- Review by the attorney of the client’s Foreclosure Mediation and Financial Worksheet and all supporting documentation;
- Review by the attorney of any other financial or otherwise relevant documents, including, but not limited to the mortgage and note being foreclosed upon;
- Review by the attorney of the housing counselor’s proposed workout for that client;
- Attorney representation of the client prior to and at the mediation session, if a mediation session occurs, to work out new mortgage terms or other agreements with the lender acceptable to the client.
For Additional Information – See FMP website: http://www.nj.gov/foreclosuremediation/