I'm not an attorney and this isn't legal advice.........
I personally know someone proceeding without an attorney that has been in a hearing such as this for over two years and the whole case has stalled. My suggestion is that you should seriously consider attending this hearing because it will result in a delay of the proceedings. I would be adamant about trying to work out some modification. I would go into the hearing asking for a HAMP modification. Tell them you have income and want to keep your home. You feel some kind of HAMP modification would benefit all the parties. This again would add a significant delay to the proceedings.
While I understand that it is difficult to miss a day of work (if you had the money to miss a day with no impact you wouldn't be behind on your mortgage), that one day of work can have the effect of saving you MONTHS of rent payments you would be required to make if your case is decided sooner and you are given the boot from the property.
I have not read the order from the judge, but from your post, it appears you are pretty much required to attend or risk some kind default judgment. I'm not sure this does NOT violate your due process, but I wouldn't want to be the one to test this without an attorney.
The bottom line is I personally would show up with bells on, very positive, and stress how much you feel a modification would help everyone.
If you have not done so I would also suggest that you begin some effective discovery. You need to read and understand the local rules. Summary Judgment in most jurisdictions is NOT appropriate while there is discovery pending. See:
Velantzas v. Colgate-Palmolive Co., 536 A. 2d 237 - NJ: Supreme Court 1988
The record in this case does not disclose the extent of discovery afforded to defendant or whether it was complete.
Generally, we seek to afford "every litigant who has a bona fide cause of action or defense the opportunity for full exposure of his case." United Rental Equip. Co. v. Aetna Life and Casualty Ins. Co., 74 N.J. 92, 99 (1977) (citing Robbins v. Jersey City, 23 N.J. 229, 240-41 (1957)). When "critical facts are peculiarly within the moving party's knowledge," it is especially inappropriate to grant summary judgment when discovery is incomplete. Martin v. Educational Testing Serv., Inc., 179 N.J. Super. 317, 326 (Ch.Div. 1981). In such cases the standard remains that of Bilotti v. Accurate Forming Corp., 39 N.J. 184, 193 (1963):
This would tend to add long delays to your case.
Read and understand the local rules. Look up the cases in your jurisdiction. Use any delay you have wisely.