Foreclosures in New York
If you are unable to make your mortgage payments on time, in New York, the lender may begin a process of foreclosure on your property.
Foreclosure is a process where the property is confiscated from the homeowner and then sold by the lender to recover the mortgage debt and remove the lien against the property. At Mekhtiyev Law, we can help you understand how foreclosures work, the New York and federal laws related to foreclosures, and have your best interests in mind throughout the entire process.
Understanding Mortgage Loans in New York
If you obtain a loan to purchase a home in New York, you will be required to sign a mortgage note and a promissory note. The mortgage note is a document that secures and acts as collateral for the lender. The promissory note is a written promise that you as the borrower will repay the loan along with the conditions specified in the mortgage.
If you fail to make payments, the lender has the right to force a sale of your home and recoup the outstanding debt owed on the property. However, missing only a single payment will not initiate the foreclosure process.
If you miss a payment, the lender will give you a grace period of normally up to 15 days to make the payment, after which it will charge you a late fee. If you miss more than one payment or consecutive payments, the lender will send you a document known as a breach letter to inform you that the loan is now in default.
If you do not treat this default quickly, the lender has the right to call the loan due in full via an Acceleration Clause and to begin the foreclosure process if the lender chooses to do so.
Federal laws require the lender to contact the borrower by phone to discuss alternatives to foreclosure within 36 days after a missed payment. Within 45 days of a missed payment, the lender should contact you about loss mitigation options and assign financial personnel to guide you on the process.
Pre-foreclosure Notice in New York
If the property occupied by the debtor is a multi-family or a condo unit, New York law mandates that the bank send a notice 90 days prior to starting the foreclosure process. This 90-day period runs alongside the state-mandated time period of 120 days under federal law.
The pre-foreclosure notification includes the details about the default and a list of government-approved local housing counseling agencies.
If the lender does not send a 90-day notice or does not comply with the legal requirements, the homeowner may have a defense to warrant a dismissal of the foreclosure.
If you believe that your lender did not adhere to the 90-day law, you should hire a real estate attorney to get advice about your situation.
New York Foreclosure Laws
A deficiency is the difference between the total debt on the property and the sales price. In some cases, the lender may choose to forgive the deficiency; however, in others, the lender may choose to recover this amount from the debtor.
In this case, a lien or a legal claim to the debtor’s other assets is issued, including garnishing wages or levying your bank account to recover the deficiency in case the debtor defaults on the loan.
In New York, no law can stop a lender from getting a deficiency judgement within 90 days of consummating a short sale. If the bank does not move to file a deficiency judgment during this time, it will have to forfeit the right to cover the outstanding debt.
Typically, banks will request a deficiency judgment while they file to confirm the sale with the court.
The Process of Foreclosure in New York
The foreclosure process begins when the lender files the Summons and Complaint with the New York State Supreme Court and serves the borrower with those documents. The lender will also file a Lis Pendens on the property, a public notification that the home is the subject of current legal action, and provide a Certificate of Merit to prove homeownership.
The homeowner must then respond to the notice within the given statutory time period. the homeowner will have the right to contest the foreclosure and file an answer in which they will state their defenses in an answer filed with the court. If you do not wish to contest, you should still file a Notice of Appearance to ensure you are informed of all the proceedings.
If you do not respond, the court may rule a default Judgment of Foreclosure and Sale against your property.
Within 60 days of the foreclosure initiation, the court will schedule a settlement conference, during which time you can meet with the representatives of your lenders and try to reach an agreement to avoid foreclosure.
If you are unable to come to an agreement, the case will accelerate to litigation. This will start with the discovery phase, in which each party will request relevant information from the other in order to prepare for the arguments and file a motion of action with the court. The lender will likely file a Motion of Summary Judgment which will request the court to pass a judgment of foreclosure against the homeowner. However, if the court declines, the case will move forward to trial.
If the court rules in favor of the lender, the judge will order the home to be put up for auction to raise funds to pay off the loan. In New York, foreclosure sales are usually held at the county courthouse via public auction. Anyone can make a bid, including the lender, and once the sale is made, the highest bidder takes ownership of the property.
If you want to stop the sale of your home, you can do so by paying the total amount due to the lender. However, this right of redemption needs to be exercised before your home is auctioned off.
Stopping a Foreclosure
There are ways you can prevent foreclosure in New York.
- You can pay your mortgage payments and all the late charges, fees, insurance premiums, and taxes due on the property to purchase it free and clear.
- You can also contact your lender to refinance your mortgage so that you can benefit from improved terms. However, don’t wait until the last moment and also consider all of the closing costs associated with the refinance process.
- If a foreclosure is imminent, you can also file for bankruptcy. This will trigger an automatic stay order which will prevent the lender from foreclosing on your home on a temporary basis.
- The Service Members Civil Relief Act also provides legal protection to military members who are facing foreclosure.
How Mekhtiyev Law Can Protect You from Foreclosures
The real estate attorneys at Mekhtiyev Law are highly qualified and experienced in the foreclosure process, in both handling of the defense and plaintiff’s side, and can work to achieve their clients’ goals.
Our clients include single-family and multi-family homeowners, condo unit owners, coop unit owners, private lenders, and more. We can help:
- Provide legal advice and guidance to a client before the start of foreclosure within the law
- Negotiate loan modifications and other loss mitigation alternatives to come up with a mutually beneficial solution for all parties
- Supervise foreclosure auctions
- Protect the clients’ interests during foreclosure
- Manage bankruptcy concerns and issues
At Mekhtiyev Law, we understand that foreclosure is a complicated process and requires a comprehensive understanding of the real estate laws in the state for sound decision-making. If you are facing foreclosure, we can help you navigate its murky waters. Call us at (212)203-6974 today to schedule a consultation with us.
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