NJ foreclosure scenario questions

[Ryan W.]

Here are the basic facts: Foreclosure proceeding initiated on a home worth about $500k. The lien being foreclosed, which is the only outstanding lien, secures a HELOC with a UPB of about $250k. In an effort to better understand the NJ foreclosure process, I have the following questions, both of which assume the property goes to sheriff's auction.

1. If the sheriff's auction results in a winning bid that is higher than the amount of owed to the bank, including all penalties, costs, etc., who get the surplus--the bank or the homeowner?

2. If it becomes an REO and the bank sells it at or near market value , is the surplus of approx. $250k just gravy for the bank?

Thanks in advance for your always thoughtful responses.