Facing Foreclosure?: How to Stay in Your Home

Are you a homeowner who’s facing the scary prospect of foreclosure? The possibility of losing your home is no laughing matter. But don’t think everything is against you. Each state has its laws regarding foreclosure so read on to learn about New York’s process and your rights.

Mortgage loans in New York

When you take out a loan to purchase a property in NYC, you must 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 repayment terms.

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. By looking at your promissory note, you can learn your grace period and late charge amount. This information can also be found on your monthly mortgage statement.

After you’ve missed a few payments, your mortgage servicer will send you letters and phone calls reminding you to get caught up with payments. Don’t ignore these; this is an excellent chance to discuss loan mitigation options.

Pre-foreclosure

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 a pending lawsuit against the property, and its title is publicly contested.

If the property is owner-occupied, 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” notification advising them of their rights during the foreclosure. This 90-day time period runs in tandem with the 120 days. 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 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 a defense and counterclaims.

An essential safeguard that homeowners process is the settlement conference. It is held 60 days after they send the summons and complaint. Introduced in 2009, they added this to the foreclosure process to help the two parties find an agreement regarding the debt.

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 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 trial, the judge will sign a final determination of foreclosure and sale against you. The lender will now be free to sell the property.

Reinstatement

New York law allows the homeowner to reinstate the loan before the final judgment. The borrower agrees to pay the past-due amounts and any costs and fees to bring a delinquent loan current. If done, the foreclosure ends, and you can return to making your regular monthly payments.

Talk with a foreclosure attorney as soon as possible if you face foreclosure. They’ll thoroughly explain your rights and provide mitigation options.