Know Your Rights
New York is a judicial foreclosure state and a lender must to go through the court system to recover any debt owed. The foreclosure process in New York currently takes about 15 months and you can expect most lenders will take action very quickly to late payments on your mortgage.
Notice of default
If you are late with a payment, a reminder will be sent to you. A late change is likely to be added to your mortgage and the lender will at this point attempt to contact you by letter or by phone. It is important that you respond to your lender immediately. There are options available, but the longer you wait, the fewer options you may have.
Acceleration letter and pre-foreclosure notice
If you are living in the house with the mortgage, the lender must send you a pre-foreclosure notice and an Acceleration Letter, at least 90 days before commencing foreclosure. If no alternative to foreclose is agreed upon with the lender during this time, you will be informed of the breach in writing and the legal action for foreclosure can start.
If you are in default, the lender has the right to accelerate the mortgage. This means that the entire outstanding amount is due and if they are not paid in full by a certain date, the lender can accelerate the entire amount of the mortgage. If an agreement is not made, they have the right to foreclosure. This letter is often sent after a borrower is two or three months in default.
Pre-Foreclosure Filing Notice
Since January 14, 2010, this notice has to be sent at least 90 days before filing a foreclosure summons and complaint. It must tell you two things:
- How much you must pay to bring your loan current;
- Name at least five government approved housing counselors or agencies serving your region.
Mandatory settlement conference
If the foreclosure involves residential property and it is a 1- to 4- family owner occupied swelling or condominium, you are entitled to participate in court settlement conference with your lenders. This has to be scheduled within 60 days after the lender files proof of service of the complaint and will give you an opportunity to reach a resolution with the lender. If you fail to appear at the settlement conference, answer the foreclosure action or reach an agreement, the house can be sold at auction.
The foreclosure process
The lender files a Summons and Complaint with the court that initiates the lawsuit. If the issue is not resolved by settlement or by motion, the lawsuit proceeds to trial. Once a time and date of the sale of the property has been established, the lender is required to send you a notice of sale. Until the sale date, you still have time to sell the property yourself but you most close with the buyer before the sale date.
The Home Equity Theft protection Act
If you are planning to sell a home that is in foreclosure or default, make sure you are aware of your rights under the Home Equity Theft protection Act (HETPA). Once a contract is determined to be covered by the Act, there are some strict contractual requirements to be met, but if a buyer fails to fulfill any of the requirements made in the contract, you may be able to void or legally cancel the contract and the sale.
Distressed property consultants
Any individual, corporation or other entity that promises to stop or delay a foreclosure sale in New York, is prohibited to charge any upfront fees before completing their services and fully executing the written contract.
Foreclosure sales in New York are by public auction where the property is sold to the highest bidder. Once a sale has been made, you have no right to recovery and you will lose your home. Remember that when auction fees and attorney fees are added, if the sale price is less than the loan balance, you could still owe the lender money.