BARRISTER'S BRIEFING: An Overview on Foreclosure Process in New York State
Leon Cameron, Esq. | October 2016
New York State currently has the longest foreclosure timeline in the country, typically just under three years. If you are a homeowner in New York facing the prospect of foreclosure, this article is designed to give you a brief overview of the foreclosure process in our state.
Foreclosures are judicial in New York, which means the lender must file a lawsuit in state court. The lender initiates the foreclosure by filing a complaint with the court. The complaint is served to the borrower, along with a summons that typically provides 20 days to file an answer (if the complaint and summons were served in person) or 30 days (if service was by mail or another way), as well as a “Help for Homeowners” notice advising the homeowner of his or her rights during the foreclosure process.
Under the federal Consumer Financial Protection Bureau servicing rules that went into effect Jan. 10, 2014, the mortgage servicer must wait until you are 120 days delinquent on payments before filing the case in court to start the foreclosure.
New York mortgages often contain a clause that requires the lender to send a notice, commonly called a breach letter or demand letter, informing you that your loan is in default before it can accelerate the loan and proceed with foreclosure. (The acceleration clause in the mortgage permits the lender to demand that the entire balance of the loan be repaid if the borrower defaults on the loan).
The notice must contain certain elements;
• the default;
• the action required to cure the default
• a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and
• failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.
If the property is owner-occupied, New York law requires that 90 days before starting the foreclosure the lender send a notice to the homeowner that provides: information about how to cure the default, and a list of government-approved housing counseling agencies located near the homeowner.
If the matter is not resolved within 90 days from the date the notice was mailed, the lender will begin the foreclosure. Keep in mind that the foreclosure can start sooner if the homeowner stops living in the dwelling so that it is no longer his or her primary residence. This notice requirement is in effect until Jan. 14, 2020.
For all foreclosure actions involving owner-occupied properties, New York law requires the court to hold a mandatory settlement conference within 60 days of the filing of the proof of service with the court clerk. At the settlement conference, the lender and homeowner attempt to reach a mutually agreeable way to avoid foreclosure.
However, if you cannot come to an agreement at the settlement conference and if you do not respond to the court action within the specified amount of time, the lender can get a default judgment from the court. This means you automatically lose the case.
On the other hand, if you file an answer, the lender cannot obtain a default judgment. At this point, the lender will most likely file a motion for summary judgment. This type of motion requests that the court grant judgment in favor of the lender because there is no dispute as to the important facts of the case, the homeowner’s defense lacks merit, or does not prove wrongdoing.
If the lender is granted summary judgment (or the debtor loses at trial) the court will enter a final judgment of foreclosure. A sale date is set and published in a newspaper once a week for four weeks (or twice a week for three weeks before the sale date).
For more information concerning restatement rights or obligations under a deficiency lawsuit, please seek out a private attorney for specifics. Keep in mind that in New York there is no redemption period after the sale of a home through foreclosure. Therefore, the foreclosing lender’s only remaining remedies are to either evict through the courts or offer a “cash-for-keys deal” to encourage the occupant to move out.
The foregoing article is for informational purposes only and does not confer an attorney/client relationship. For a legal opinion specific to your situation, please consult a private attorney.