A New Jersey homeowner who is three months behind on her mortgage receives a letter from her lender stating that if she does not cure the default within 30 days, the lender will immediately transfer title to the property using an acceleration clause. The homeowner asks her real estate broker whether the lender can take her property this way. Which of the following is the MOST accurate response the broker can provide?
Correct Answer
D) No, an acceleration clause only makes the full loan balance due immediately; the lender must still obtain a court judgment and conduct a sheriff's sale to take the property
An acceleration clause in a mortgage allows the lender to declare the entire loan balance immediately due and payable upon default. However, it does not give the lender the right to take title to the property directly. In New Jersey, the lender must still file a foreclosure complaint in the Superior Court, serve the borrower, obtain a judgment of foreclosure, and conduct a sheriff's sale before the property can be transferred. The acceleration clause triggers the right to foreclose, but the judicial process is still mandatory in New Jersey.
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Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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