New York Foreclosure Process: A Step By Step Guide
This is a pretty good summary of the New York Foreclosure Process. It’s from
the website biggerequity.com and is dated July 15, 2019, so it’s pretty recent.
A good education in the foreclosure process is great to have, but I really
encourage you to hire an attorney at the first sign that you might be going
down this road. It has many pitfalls that only an experienced foreclosure
attorney will know about and know how to navigate.
Are you a New York homeowner faced with the risk of losing your home to
If so, it’s natural to feel overwhelmed and more than a little anxious. After all,
the real estate world is wrought with complicated jargon and complex forms
that can make your head spin while your heart grapples with what’s
happening. That’s where it helps to have a clear understanding of what’s
about to happen. Today, we’re sharing a step-by-step guide to the New York
foreclosure process. Knowledge is power and we’re putting it back into your
hands. Ready to learn more? Let’s get started.
Step 1: You Miss Multiple Payments
If your payment was due on the 15th and you sent in the check on the 17th,
don’t sweat it. In most cases, lenders or loan servicers in New York allow a
15-day grace period.
This means if they receive your payment within 15 days of its due date, you
won’t incur any extra charges, penalties or legal consequences. If you wait too
long and miss this window, you could incur a late fee of up to 2%. If you continue to miss payments, your lender will reach out to you to remind you of your financial and legal obligation to pay back your mortgage loan. While you may feel tempted to ignore these phone calls or toss the letters, this is counterproductive to your efforts.
After 120 days from the first missed payment, your lender can take legal
action. Given that New York is a judicial state, you’ll have this many days to
pay back your overdue charges in full. Or, you may choose to look into loss
mitigation options at this time.
Step 2: Notice of Breach
Before issuing the foreclosure, most New York lenders will reach out to
borrowers to let them know that they’re about to take legal action. This
document is a “Notice of Breach” letter. When you receive it, you’ll have 30
days to pay back the balance of the missing payments.
In addition, your lender will also provide you with a 90-Day Foreclosure
Notice. Keep this document for your records, as it contains valuable
How long the mortgage has been in default
The amount of money still outstanding
The lender’s (or mortgage servicer’s) contact information
A list of at least five state-approved non-profit housing counseling agencies
The latter will have resources that can help you find free or low-income
housing opportunities in your area.
Step 3: Foreclosure Loss Mitigation
About 30 days before your case goes to court, you’ll enter into a loss
mitigation period. During this month, it’s wise to explore all local resources
that can help you mitigate a financial setback.
The quickest way to do so? Reach an agreement with your loan servicer.
In some cases, you may be able to enter into a payment plan that can help
you approach the overdue payments in a more manageable way. Or, you can
refinance your mortgage with another lender offering a better rate.
Another route you may not have considered? Sell your property in a short
sale! When you do so, you’ll sell it for fair market value (which is usually less
than the loan you’re paying off) and use those funds to pay back your lender if
this setup is agreeable.
Step 4: Filing of Lis Pendens
Have you missed more than three payments in a row? Once your lender
sends you all the required legal notices and warning notes, they’ll take your
case to court. Before they can do so, they’ll need to issue a formal declaration
with the county clerk. This is a “Lis Pendens” note and it’s the official first
step in a New York foreclosure.
Within this note, the lender will include the following details:
The property address
The names of the borrowers
Loan details (total amount, interest rate, length of term)
The number of years in which the loan must be repaid
All late charge amounts
Once submitted, the Lis Pendens makes the foreclosure public knowledge.
That means anyone looking up information on your property can see that it’s
there’s an outstanding lawsuit on it that could contest its ownership.
After sending the Lis Pendens, your lender will then send you a Summons
and Complaint notice. This is where you’ll find the date and time you need to
appear in court. If you receive your summons in person, you have 20 days to respond. If it’s
sent in the mail, you have 30 days.The lender must show verification that you received the summons, so respond as soon as you can. Opting not to may put off the consequence in the short-term, but it pushes your ruling in favor of the lender.
Step 5: The Settlement Conference
No more than 60 days after you acknowledge that you received the Summons
and Complaint notice, you’ll need to attend a court-mandated settlement
If you have one, bring your foreclosure attorney along to this conference. At
this time, you’ll try to come to an agreement with your lender. Take with you
both proof of income and your most recent tax returns.
You’ll discuss the loan details with your lender, including the following:
The initial loan amount
The amount still outstanding
The most recent balance including all late charges
Your current financial status
Your reasons for defaulting on the loan
All documentation and other paperwork supporting your claims
Your qualification for government programs or loan modification resources
If the conference is a success and you’re able to reach an agreement with
your lender, the foreclosure will cease via official discontinuation of the Lis
Pendens. Your lender has up to 150 days after the conference to discontinue
Step 6: The Judgment
Maybe you decided not to respond to your Summons and Complaint Notice,
pushing your case to court. Or, you couldn’t find a middle ground with your
lender at the settlement conference.
Now, your case is before the judge and your lender is filing for summary
judgment. In this process, they’ll ask the court to rule in their favor and expedite the
foreclosure based on one of the following circumstances:
1. A lack of defense on the borrower’s part
2. A lack of proof that unlawful lending practices are at play that would cause a
borrower to default on payments
If the court approves a summary judgment, you’ll lose the case. If the court
doesn’t approve it, your case goes to trial.
If you lose the trial or get stuck with a summary judgment, you’ll need to
prepare for the foreclosure. The court will approve a sale date for your
In New York, a delinquent borrower can make a defaulted loan current again
by completing all overdue mortgage payments. This includes additional fees
and charges, known as arrears. This is possible even after the court rules in favor of the lender. Yet, it’s not possible after the date of the sale.
If you agree to pay arrears after the judgment, the foreclosure will halt for the
time being, pending your compliance with future payments. If you default on a
payment during this trial period, the court will release the hold and allow the
foreclosure to proceed.
Step 7: The Foreclosure Process
In New York, your foreclosed property will go up for sale at a public auction.
Most take place at the county courthouse.
The highest bidder will get the property and most bids begin at $1,000. After
the sale, you will lose your right to redeem your property, even if you offer to
pay arrears. The winning bidder will put down 10% of the bid price, with the
remainder due within 30 days.
What happens if the bid starts lower than the upset price and the upset price
isn’t reached? In this case, the lender can request that the property go back in
its ownership, where they’ll list it on the market as “Real-Estate Owned.”
When a home forecloses for a lower amount than its outstanding mortgage
debt, or its fair market sale price is lower, this is a deficiency judgment.
Under state law, the lender can contact you to collect on this difference. If the
court approves their Request for Delinquency, they’ll approach you to pay.
Step 8: Eviction
After a foreclosure sale, you’ll have to vacate your property with 10 days after
receiving a request to leave from the new owner.
You can do so via a cash-for-keys agreement or an official eviction. With the
former, you’ll receive a financial incentive to move out. With the latter,
the New York Housing Court will process your eviction.