Are you a homeowner who’s facing the scary prospect of a foreclosure? The possibility of losing your home is no laughing matter. But don’t think everything is against you. Each state has its own laws regarding foreclosure so read on to learn about the process in New York and what your rights are.
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Mortgage loans in New York
When you take out a loan to purchase a property in NYC you are required to sign two documents. This is the promissory note and the mortgage (or deed of trust). The promissory note, effectively a glorified IOU, contains the promise to repay and the terms of the repayment.
What happens when payments are missed?
Most loans allow a grace period of about 15 days when you miss a payment. After this, your loan servicer will assess a late fee. You can learn what your grace period and late charge amount are by looking at your promissory note. This information can also be found on your monthly mortgage statement.
After you’ve missed a few payments your mortgage servicer will begin sending you letters and make phone calls reminding you to get caught up with payments. Don’t ignore these as this is a good chance to discuss loan mitigation options.
State law requires that the lender must wait 120 days before they can file for pre-foreclosure with the county clerk. This means there is now a pending lawsuit against the property and its title is being publicly contested.
If the property is owner-occupied, then NY State law also requires that the lender send a notice within 90 days to the borrower. This informs them of how to cure the debt and a “Help for Homeowner” notice advising them of their rights during the foreclosure. This 90-day time period runs in tandem with the 120-day period. If still unresolved after 90-days the lender can begin the pre-foreclosure process.
Summons and Complaint Letter
Once this has happened you will receive a “summons and complaint” letter informing you that your loan is in default and a lawsuit is pending. Once this is received you (the borrower) will have 20-30 days to respond in writing. If you haven’t already, now is definitely the time to talk with an attorney who can help you with the reply and represent you in court.
The New York Foreclosure Process
Because New York is a judicial foreclosure state the lender must go through the court process to foreclose. After the issue of the summons and complaint letter, you are allowed to reply with defense and counterclaims.
An important safeguard that homeowners process is the settlement conference. Introduced in 2009, this was added to the foreclosure process to help the two parties find an agreement regarding the debt. It is held 60 days after the date when the summons and complaint were sent.
If no agreement is reached in the settlement conference and you don’t respond to the court action within the specified time the lender can move to get a default judgment from the court. If this happens then you automatically lose the case. However, if you file an answer the lender can’t file for default judgment. The lender will next file for a summary judgment to strike the answer and for the court to grant judgment in favor of the lender. If summary judgment is denied, then a trial will occur. If summary judgment is granted or you lose the trail the judge will sign a final judgment of foreclosure and sale against you. The lender will now be free to sell the property.
New York law allows the homeowner to reinstate the loan at any time before the final judgment. This is when the borrower agrees to pay the past-due amounts along with any costs and fees to bring a delinquent loan current. If done, then the foreclosure ends, and you can return to making your usual monthly payments.
Talk with a foreclosure attorney as soon as possible if you are facing foreclosure. They’ll fully explain your rights and provide mitigation options.