Foreclosure Law and Procedures in New York

When it comes to fair housing financing and opportunities, the federal and state laws heavily regulate the process in an effort to make the opportunity to be a homeowner equitable to all groups of individuals, despite the creditworthiness and ability of people to buy or finance a home.

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It is so important that you not only rely on your servicer to understand your rights, but that you do your homework and research your rights, as well as consult with an attorney that can protect you with the knowledge and rights afforded to you.

What is Foreclosure Law?

If you are facing a possible foreclosure, it is important that you understand that you do have certain rights under New York foreclosure law. Other states have their own set of state foreclosure laws and you should investigate those as needed. Some of those rights include:

• You have a right to receive pre foreclosure notices, including but not limited to a breach letter.
• You must be given options and applications to apply for loss mitigation and these must be brought to your attention through your servicer. 
• You have a chance to attend a settlement conference that will better explain your rights and option to mitigate loss. 
• You must be formally notified of a foreclosure and have a chance to respond in court. 
• You have the right to get current on your loan and stop a foreclosure sale.
• If you are in the military, you are to receive special protections to prevent loss of home.
• You can pay off the loan to stop the foreclosure sale.
• You have the right to file for bankruptcy and earn excess money after a sale. 
• Disability and foreclosure laws are in place for those borrowers that have verifiable disabilities that could prevent them from paying their loans and need help.

Foreclosure Laws in New York

With you understanding these rights, don’t get too stressed if you fall behind in your mortgage payments; there are steps that you can take to get current and retool your financial obligation and loan setup. 

Once you better understand the process, you can take a negative situation and turn it into a chance to save your home and possibly readjust your loan. 

Stopping Foreclosure and Saving Your Home.

If you have the means and ability to pay your mortgage in the near future, you should by all means attempt to stop a foreclosure. You have invested too much time and capital into this property to just walk away from it, losing all of the equity and value that you have accrued over the time. 

In these early days/months of pre foreclosure, for whatever reason, you have fallen behind in your payments. This period of missed payments is called the pre foreclosure stage. 

During this time, unless you contact your servicer and make them aware that you are having trouble making your payments, they will start charging fees for various things; late charges, inspection fees, etc. Along with these fees, they must inform you about ways to avoid foreclosure and they will send you a notice, known as a breach letter. 

This breach letter will formally let you know that you are in jeopardy of foreclosure and will give you alternative ways to make your mortgage current or adjust the terms of the financing to help you get current. 

The Importance of Avoiding Default Judgement

Thanks to federal mortgage servicing laws, if your property is your primary residence, the loan servicer must contact you by phone to discuss loss mitigation options. These can include:

• Loan Modification
• Forbearance
• A repayment plan

No later than 45 days after missing a payment, your servicer has to inform you in writing about your options in loss mitigation. They should also appoint a representative that will help assist you to work out a way to avoid foreclosure. 

If you have filed for bankruptcy, then some of these steps may be avoided by the servicer, but these are exceptions. 

It is important to understand that federal mortgage servicing laws prohibit what is called dual tracking; the servicer cannot pursue a foreclosure while a loss mitigation application is pending. 

If you can avoid defaulting and bring your mortgage current, it is in your best interest to do so, and that is why it is important to know the rights you have in this stressful financial situation. 

What to Do if You Are Wrongfully Foreclosed Upon

If you find yourself in the situation where your rights during a foreclosure have not been respected, then you may be facing a wrongful foreclosure.

As we have pointed out, this is a serious matter that has a lot of regulations to prevent racism, prejudice and those rights must be adhered to. The parties must be informed of their rights and the opportunities that are given to them to fix the problem. 

If you feel you have been wrongfully foreclosed upon, with very little information given to you about the process, it is so important that you contact an attorney to help you with the situation.

If you can prove that the proper steps have not been taken, serious criminal penalties can be exacted upon a servicer. It is so important to speak with an attorney, like the great ones available at Moshes Law. 

Types of Foreclosure

There are three types of foreclosure processes that are available for lenders to recoup their losses through. 

In the state of New York, and most states of the United States for that matter, strict foreclosure is not an available option; it is only available in Maine, Vermont and Connecticut. For the sake of our readers, we’ll discuss the two options that are available.

Nonjudicial Foreclosure

Depending on the state government involved, a nonjudicial foreclosure does not have to involve a court trial. This method is much faster and efficient for all parties involved. This process allows lenders to invoke the power of sale clause that is found in the deed. As long as the lender follows the regulations of this clause and those laws of the state for foreclosure, the process is legal and very efficient. 

Judicial Foreclosure

In New York, judicial foreclosure goes through the court system. 

As you can imagine there is a long backlog of cases due to the foreclosure moratorium that is currently in place. Because of this backlog, what typically would take several months to a year,  now can be an even longer process. 

If you are in jeopardy of going to court for a judicial foreclosure, this moratorium may give you the extra time you need to get your finances in order and make your mortgage current to save your property. 

Take advantage of this extra time that is afforded to you in the judicial foreclosure courts. 

Rights of Tenants During a Foreclosure

If you are going through a legal foreclosure, you still have rights while you are occupying the residence. 

You will be given plenty of time to get notice of a foreclosure and from that point in which you have to leave the property. You cannot be evicted without receiving a court order stating that the property is going to a foreclosure sale. 

After the sale, you will be given a 90 day notice before a court case to evict can take place. If you are evicted due to a foreclosure case involving  your landlord, your eviction will not be in the public record. 

Whether you are the owner of the property or a tenant, it is important that you understand your rights and the avenues you can take to fix the situation if you can do so. 

Getting Help from a Foreclosure Attorney

Going through a foreclosure, or the prospect of one, is a very stressful and confusing time for both owners and tenants. It is easy to get disheartened and just give up due to the stress levels. 

It is during these stressful times that you find an attorney that can help you navigate these stressful situations and lead you to the best possible solution to the situation. 

With the right attorney and their consultation, you can avoid foreclosure if you want, or make the transition through a foreclosure as painless as possible. 

For these reasons and so many more it is so important that you find the right foreclosure attorney to help you out. 

The attorneys at Moshes Law are ready to help you with all of your questions and concerns. 

About the Author

Gennady Litvin, Esq. is an associate with Law Office of Yuriy Moshes, P.C. Mr. Litvin graduated Pace university with a Bachelor’s Degree in Business Economics, and earned his J.D. at the University of Miami School of Law where he was a member of the Business Law Review.

Along with his professional law duties, Mr. Litvin has spent much time teaching and mentoring real estate brokers and agents on matters such as when commission is due, commission disputes, and dealing with short sales and foreclosures.