With increasing cases of COVID-19 still on the rise and New York still fearful that its numbers will also rise due to people from other states coming to New York, the state of financial affairs in New York is unsettling. COVID-19 left New York and NYC’s economy in shambles, despite its attempt to pick up the pieces. What’s more, many New Yorkers have been unable to meet their mortgage payments. Now they are facing foreclosure and losing their home.
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Most homeowners or borrowers believe that if you miss a payment, if you owe money to the mortgage company, bank or lender, then it’s strict foreclosure and you must give up your home. Fortunately, however, in reality, this is the furthest thing from the truth. These lenders, or mortgage servicer, whether it’s the bank or mortgage company, must strictly adhere to the judicial foreclosure process and an experienced foreclosure attorney can stop, mitigate, and slow down the process so that you can keep your home. A housing counseling agency or your real estate agent may recommend you seek a foreclosure attorney too.
In New York, the judicial foreclosure process is required in order for the lender to take back the home. This means that there is a formal process that must be adhered to whereupon the lender must file a lawsuit. In New York, the judicial foreclosure process requires that every foreclosure must pass through the courts and that only a judge can order and schedule a foreclosure auction to be held. Until then, there are many different steps involved that allow the borrower to protect and defend themselves against foreclosure. Not only does this mean that the foreclosure might not succeed, but it means that the foreclosure may be delayed. This is why hiring an experienced foreclosure attorney to defend against such suits is crucial.
There are two types of foreclosure: a judicial foreclosure, which requires a court order, and a non-judicial foreclosure, which does not. In a judicial foreclosure, the mortgagee must go to court and prove that it owns the mortgage and has the right to foreclose on it.
New York adheres to a judicial foreclosure process, which means the process begins when the bank files a lawsuit against the defaulting borrower in court.
What happens in a foreclosure? What is the foreclosure process in NY? Below is a foreclosure timeline of what may occur during the foreclosure process:
The Lender must send a pre-foreclosure notice to the borrower of the notice of default. The notice of default must contain specific language and must attach a list of at least five nonprofit agencies nearby for the borrower to contact for aid.
For an owner-occupied, one to four family dwelling, or a condominium unit, New York law requires the foreclosing bank to send a foreclosure notice to the borrower at least 90 days before starting the foreclosure. (N.Y. Real Prop. Acts. Law § 1304).
If the lender or servicer doesn’t send the 90-day notice at all or doesn’t strictly comply with all of the law’s requirements, you could have a powerful defense that might result in a dismissal of the foreclosure action. If you think the lender or servicer didn’t comply with the 90-day notice law, consider talking to a lawyer to get specific advice about your situation.
The lender will send a “demand” letter or foreclosure letter to the borrower, in which they will give the borrower 30 days to pay the default amount owed, plus a late fee. This is called the Redemption Period.
In order for the lender sue a borrower and officially begin the foreclosure and start court proceedings, a complaint must be filed with the court. The complaint must be served upon the borrower, along with a summons that typically provides 20 days to file a response or what is called an “answer” to the lender’s complaint (if the complaint and summons were served in person) or 30 days (if service was by certified mail or another way). Not including defenses in the answer waives the rights to bring those defenses later on, and therefore may assist the bank in accelerating the foreclosure process. Accordingly, the lender’s answer should be worded properly, and an experienced foreclosure attorney should be consulted.
The lender must also file a “Lis Pendens” (a pending lawsuit) in court. The “lis pendens” notifies people that title to the property is in litigation.
In addition to the complaint and summons, a “Help for Homeowners” notice must also be given to the borrower, thereby advising the homeowner of their rights during the foreclosure process.
Next, the Lender must then file a request for judicial intervention with the court as well as an attorney affirmation, and in doing so, must notify the court that it must schedule a mandatory settlement conference
At the mandatory settlement conference, the bank and the homeowner must come to court to try to settle the foreclosure. There may not just be one of these conferences; in fact, there may be several.
If the homeowner/defendant fails to file their answer timely, the borrower defaults and can no longer assert any defenses to the foreclosure lawsuit.
The next step is that a Motion for Summary Judgment is filed by the lender. A motion for summary judgment is when the party asking for the motion is stating that assuming there is no genuine issue of material facts or that there are no facts that are in dispute, then as a matter of law, automatically, when the law is applied to the given accepted facts, the moving party should automatically win. This is a key point in the foreclosure process because if the mortgage holder or bank win their motion, they will file a Motion for Order of Reference, at which point they will ask the court to assign a referee to establish how much money is owed by the homeowner. Once the referee is assigned by the court, that referee will draft a report outlining the amount owed by the borrower. In order to properly defend against a Motion for Summary Judgment, the homeowner must file an answer or opposition to the Motion. Accordingly, it is very important for the borrower to file a proper response to the lender’s Motion for Summary Judgment, as an improper response may cost the lender their case right then and there. Contacting an experienced foreclosure attorney is the best way to do so. A foreclosure lawyer can address how best to respond to the lender’s Motion for Summary Judgment.
After the referee adds up the total amount owed, the lender files a motion with the court to request the court enter a Judgment of Foreclosure and Sale.
After the judge signs the Judgment of Foreclosure and Sale, the lender publishes a notice of sale about the auction in a newspaper at least 30 days before the auction date, and then may schedule an auction of the property by the referee. A Notice of Trustee’s Sale informs homeowners and mortgage borrowers of record that their home will be sold at a trustee’s sale on a specific date and at a specific location. If the borrower never filed an Answer or a notice of appearance, the lender is not required to give notice of the sale to the borrower.
The last stage is where the home is up for sale at a public auction at a county courthouse, whereupon the home is sold to the highest bidder. Once payment is made and the sale is complete, the winning bidder takes ownership of the property. Once a sale is complete, the borrower loses their home.
Although this is the general process, there are many factors that can affect the listed stages above. For example, a loan modification application generally takes months and the lender may stay the foreclosure process while it is pending. Another example is when the borrower applies for a short sale, the lender may take months to consider the short sale application and do the needed due diligence on the short sale transaction. A bankruptcy will also stop a foreclosure; a lender generally can’t move forward with any foreclosure proceedings until it gets permission from the bankruptcy court. Finally, there is often a delay in going from one step to the other. With the help of an experienced foreclosure lawyer, you can stop and even dismiss the foreclosure process altogether.
How long is the foreclosure process? How long from foreclosure to eviction? Normally, the real estate foreclosure process in New York currently takes about 445 days (15 months) from the date of the first missed payment to the sale of the home.
However, due to the recent COVID-19 outbreak, in New York, Executive Order 202.8 barred the initiation of any foreclosure of any residential or commercial property until June 20, 2020, regardless of financial hardship. Executive Order 202.28 extends the moratorium to August 20, 2020 so long as the nonpayment of the mortgage is by “someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic.”
How long before foreclosure? Setting aside the current Executive Order, following an unfavorable ruling and a foreclosure sale, the borrower will, in most cases, then need to vacate the foreclosed property within 10 to 30 days. This will usually happen in one of two ways. The first way is through a cash-for-keys agreement in which the former owner will be offered a financial incentive to voluntarily vacate the premises. Usually, this involves the lender offering the borrower a small lump sum settlement to clean up the house and leave on a specified date. If the former owner refuses, or the new owner doesn’t follow this approach, the new owner will most likely pursue the second way, which is an eviction. In some evictions, a new complaint is filed asking the court to remove the borrower off the lender’s property. Per state law, the new owner must give the former owner a 10-day notice to leave.
Help yourself and your counselor by being on top of your paperwork by getting organized. The more organized and documentation you provide your counselor, the better they will be able to help you. The following are a list of documents you should try to gather and organize:
Documentation of the name and address of who your lender actually is. Many times loans have been sold and resold to secondary institutions, so sometimes it’s hard to know who you’re supposed to be negotiating with.
If you are facing foreclosure and don’t understand the foreclosure laws, you cannot go through the process alone. Just as you most likely had a real estate agent and a title attorney who helped you get your home; you’ll need to hire a foreclosure attorney who can help you stay in it.
Accordingly, a seasoned foreclosure attorney can help you through all this with foreclosure alternatives such as loan modifications through the mortgage company, navigating through the foreclosure process, foreclosure laws, and the eviction process to try to stop the foreclosure.
In addition, a foreclosure attorney will also have experience in buying a foreclosure or buying a foreclosed home. If you are interested in purchasing foreclosed homes, they can help you with the paperwork for the short sale, the foreclosure sale, discuss mortgage payments, and how to deal with the department of house and housing and urban development.
Estimated Closing Costs
A foreclosure attorney understands the foreclosure process and the law. With this information, they are able to defend, negotiate, delay, and even stop the foreclosure all together. You need to discuss this with a competent and experienced foreclosure attorney to understand how to best defend against foreclosure.
A qualified foreclosure lawyer from the Law Office of Yuriy Moshes will have expertise in legal knowledge of the foreclosure process and experience of stopping foreclosure. We help homeowners in the New York City area including all its boroughs (Manhattan, Brooklyn, Queens, the Bronx and Staten Island) as well as Northern New Jersey, Long Island, and Upstate New York.