Foreclosure Law in New York

Foreclosure Types in New York

Foreclosures in New York are handled primarily by the judicial method. While it is possible to use the non-judicial process in the state, most lenders don't because of the strict criteria and requirements. The judicial method of foreclosing on a home in New York takes up to 445 days. The processing time alone is at least 120 days. In New York, there is no redemption period after the foreclosure, so homeowners should take action quickly after they learn about the impending foreclosure.

Process of Foreclosure

The foreclosure process starts before the actual complaint is filed in court. Lenders who intend to foreclose on a home have to send the homeowner an advisory at least 90 days prior to filing the complaint with the court. This advisory has to include information about the foreclosure process and information about options the homeowner might have.

Upon receiving this advisory, homeowners should work to decide how to handle the foreclosure. There are several options and several foreclosure-related considerations for homeowners to think about.

If the homeowner doesn't respond to that advisory, the complaint can be filed in court once the 90-day wait expires. The homeowner will then have 20 to 30 days to respond to the complaint. In-person service of the complaint and summons gives a person 20 days to respond. Mailed notices give a person 30 days to respond.

The foreclosure sale can be ordered if the homeowner doesn't respond in accordance with the law. Even then, but before the sale, it is possible for homeowners to stop the foreclosure process.

State Mandated Foreclosure Programs

New York has three different state-run programs to help homeowners avoid foreclosure. These are administered by the Department of Housing Preservation and Development. The HPD has a direct assistance program and a foreclosure mitigation program. HPD also administers the Prevention, Education and Counseling Program that might help homeowners.

Reinstatement Guidelines

It is possible for homeowners to have the mortgage reinstated up until the foreclosure sale. If the loan is reinstated prior to the final foreclosure judgment, the foreclosure is dismissed. If the loan is reinstated after the final foreclosure judgment but before the sale of the home, the foreclosure is stayed. This allows homeowners to have as long as possible to remedy the default on the loan.

Deficiency Judgments

Deficiency judgments enable lenders to recoup money owed on the home that was foreclosed upon. In New York, a deficiency is defined as the amount of the debt minus either the sale price of the home or the fair market value. The higher of those two is used. This means that if a borrower had $100,000 left on the mortgage, the home sold for $80,000, and the fair market value of the home was $90,000, the deficiency judgment would be for $10,000, which was the amount of debt minus the fair market value of the home (the higher of the two possible amounts). If the sales price was $95,000 and the other values remained the same, the deficiency would be $5,000 since the sales price was above the fair market value.

In order for a lender to seek a deficiency judgment, the homeowner has to appear in the lawsuit or be personally served. If a deficiency judgment is awarded, the homeowner is responsible to pay that amount as ordered by the court.

The time line for foreclosures in New York is rather deceptive because homeowners might think they have time to delay. That, however, isn't the case. Homeowners facing foreclosure in New York should act swiftly to learn about programs and options available to help them stop the foreclosure. An experienced New York foreclosure attorney can help homeowners learn about t