At a sheriff's sale in Hudson County, New Jersey, the lender's attorney submits a credit bid equal to the full amount of the outstanding judgment. No other bidders offer a higher price. What is the outcome?
Correct Answer
B) The lender acquires title to the property through the credit bid and the property becomes REO (real estate owned)
In New Jersey sheriff's sales, lenders are permitted to submit a credit bid — a bid equal to the amount of the outstanding judgment — without tendering actual cash, because the debt owed to them offsets the purchase price. If no other bidder offers more than the credit bid, the lender wins the auction and acquires title to the property. The property then becomes REO (real estate owned), meaning it is now owned by the lender (typically a bank). The sheriff issues a deed to the lender after the 10-day upset period expires.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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