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CONSUMER ALERT: Home Mortgage Foreclosures/Subprime Lending
 

Home mortgage foreclosures have increased dramatically across the nation due to the ongoing disruption of the subprime mortgage lending market.

The following information may help if you a homeowner facing home mortgage foreclosure:

 
Making Home Affordable.gov
Find out if you are eligible for a mortgage loan modification or a refinance under the federal program!
Consumer Assistance - Inquiries/Complaints

General Information

 
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Frequently Asked Questions
I'm having a problem with the current mortgage company that is servicing my loan. What can I do?


First, it should be noted that there is currently no regulation of the mortgage loan servicing industry in the State of New Jersey. These matters normally have to be worked out between the consumer and the servicing company. If this cannot be accomplished, either party has civil recourse as the matter would be dealt with as a contract issue.

If you feel that the servicing is in breach of your mortgage contract (for example, not applying your payments properly, charging you fees that are not indicated on the mortgage note, failing to make timely tax payments through your escrow account, etc.) you should consider consulting with legal counsel (find Lawyer Referral Service or legal aid (if applicable) in your county). This counsel should have expertise in dealing with mortgage loan contract issues.

You can also file for assistance with the Department of Banking and Insurance. As a courtesy, we will send a copy of your complaint along with a letter asking the subject mortgage company/bank to address the issues involved.

Please note that you can file a complaint at the same time as filing a civil action against the company as the complaint investigation will not impact any legal proceeding that may subsequently occur.

 

NOTE: Certain mortgage loan servicing companies are under the jurisdiction of the following

Office of the Comptroller of the Currency - This agency regulates all federally chartered banks, savings and loans or savings banks. These institutions may use the word "National" or "N.A", "federal," "F.A." or "F.S.B." in its name. This agency would also regulate the activities of any subsidiary of these types of financial institution. (Please note: on July 21, 2011, the Office of Thrift Supervision (OTS) became part of the Office of the Comptroller of the Currency (OCC).)

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I am currently in default of my mortgage payments and the mortgage company/bank has begun foreclosure proceedings. What can I do?


There are many legitimate reasons why borrowers may find themselves in default (loss of employment, sickness, death of a co-borrower, etc.). It is the borrower's best interest to contact the institution servicing their mortgage and explain what the issue is before they are more than thirty days default on a payment. It is strongly recommended that you notify the institution by sending it a certified letter to the appropriate area and then following it up with a telephone call. Most companies have specific units that handle these types of matters.

As a borrower you can request that the institution consider modifying the mortgage loan terms. An example would be the company allowing the borrower to refinance at no or low cost to obtain a lower interest in order to be able to continue making their monthly payments. If you can not make any payment and believe that this can be rectified within a reasonable amount of time, you can request that the institution provide you with a period of forbearance. This would give you the opportunity to address the financial hardship and then begin making your regularly scheduled payments. The institution would then apply the missed payments to either the end of the loan or to be due in full at a later date.

If you and the institution can not agree on a specific type of loan modification or if your request for forbearance is denied you should immediately contact legal counsel for assistance (see above). When selecting an attorney, be sure to obtain the services of someone who has experience dealing with foreclosure cases and understands your rights pursuant to the Fair Foreclosure Act (NJSA 2A:50-53 et. Seq.) This act states that a creditor must give the debtor thirty (30) days notice before commencing a foreclosure and provide the possible availability of financial assistance by State, Federal or nonprofit organizations.

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What are the "Prime" and "Subprime" markets?

“Prime” and “Subprime” refers to the interest rate and terms of the loan based on the borrower’s credit history. Borrowers with the highest credit scores and cleanest payment histories present limited risk to the lender and are usually offered lower interest rates and placed in the “prime” market.

Borrowers with lower credit scores as a result of events such as late payments, court judgments and bankruptcies present a higher risk to the lender; and, therefore, are offered higher interest rates and are placed in the “subprime” market.

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New Jersey Department of Banking and Insurance