For homeowners facing foreclosure in New York, the following is a summary of the state’s foreclosure laws:
Foreclosures in New York can be judicial, meaning the bank must file a lawsuit in court in order to foreclose.
Nonjudicial foreclosures are not allowed in New York.
New York law requires four foreclosure notices:
- If the property is occupied by the owner, New York law requires that the bank send a notice to the homeowner at least 90 days before initiating the foreclosure with the following information:
- Information about how to cure the default
- a list of government approved housing counseling agencies located near the homeowner that provide free or low-cost counseling
- The bank will start the foreclosure by filing a foreclosure lawsuit in court. It will send notice of the lawsuit to the homeowner by serving him or her with a summons and complaint, as well as information about the foreclosure process. The homeowner will have 20 days to file an answer with the court if the complaint and summons are served in person or 30 days if the notice is mailed.
- After the foreclosure process begins, the court will schedule a foreclosure settlement conference that will place within 60 days after the bank files proof of service with the court clerk. The purpose of the settlement conference is to give the homeowner and the bank an opportunity to work out an agreement to avoid foreclosure, such as a mortgage modification, forbearance agreement, or repayment plan. The court will send a notice to the bank and the homeowner listing the time and place of the settlement conference, as well as the documents that they should present the meeting.
- If the bank is granted a final judgment of foreclosure against the homeowner, a sale date will be set. Notice of the sale will be published in a local newspaper and publicly.
New York Foreclosure Protections
New York foreclosure law provides protections in accordance with the federal Service Members Civil Relief Act.
New York law also allows a service member to apply for a postponement of proceedings in a foreclosure action if the following criteria are met:
- The service member owned the home before military service and still owns the home
- The service member took out the mortgage loan before military service
- The service member is unable to comply with the terms of the mortgage due to their military service.
If the bank violates the laws regarding high-cost home loans, the homeowner can use this as a defense against foreclosure. New York’s high-cost home loan statutes sometimes prohibit balloon payments under certain circumstances, negative amortization, and mortgage provisions that increase the interest rate after default.
Reinstatement and Redemption
In New York, the homeowner can reinstate the loan before final judgment and the case will be dismissed. The homeowner can also pay the arrearage after the judgment, but before the sale, and the proceedings will be postponed. If the homeowner subsequently defaults, the court can order enforcement of the judgment.
In New York, There is no redemption period after the foreclosure sale.
In New York, the bank can get a deficiency judgment if the homeowner is served the complaint and summons personally, or if the homeowner appears in the foreclosure action. To obtain the deficiency judgment, the bank must file a motion with the court within 90 days of the consummation of the sale, which is when the deed is delivered to the buyer.
The amount of the deficiency is limited to the total amount of the debt minus either the fair market value, or the sales price, depending on which is higher.
If the foreclosed homeowners don’t leave after the foreclosure, the new homeowner can evict by summary proceeding after giving a ten-day notice to leave or by getting an order of possession from the court through a foreclosure action. For information regarding how to avoid foreclosure in New York, visit HUD.gov.