Paying off your mortgage every month can be a very daunting task, especially if you miss a payment and are unable to pay your mortgage. Most homeowners or borrowers believe that if you miss a payment you may as well throw in the towel and agree to give up your home. Fortunately, however, in reality, this is the furthest thing from the truth. These lenders, whether it’s the bank or mortgage company, must strictly adhere to the judicial foreclosure process. Accordingly, this process will allow you, the borrower, to mitigate, slow down, and defend against the foreclosure.
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In this article, we shall be addressing:
When the borrower misses their mortgage payment, a foreclosure can be initiated by the lender. In New York, a judicial foreclosure process is required in order for the lender to take back the home. This means that there is a formal court litigation process that must be adhered to by the lender. How long the foreclosure process takes is dependent upon a variety of factors, including whether negotiations are taking place between the lender and the borrower in an effort to stop the foreclosure.
In New York, the judicial foreclosure process requires that every foreclosure must pass through the courts and that only a judicial process can result in the auctioning off of the home. 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.
When you fall behind on your mortgage payments, you can expect most lenders to react quickly. Below is a general timeline of what may occur following your first late payment and ending in foreclosure.
Before a lender can file a foreclosure against a borrower, a lender must mail an Acceleration Letter to the borrower to put the borrower on notice of their default. Specifically, the letter informs the borrower that the lender will accelerate the entire amount of the mortgage if the arrears (the total amount overdue) are not paid by a specified date set by the lender. This Acceleration Letter is only sent to the borrower after the borrower defaults on the loan. Even if just one payment is missed, the borrower is considered in default. However, in most cases, the Acceleration Letter may not be sent until the borrower is 2 to 3 months in default.
The borrower has defaulted on their mortgage payment and has not paid the amount owed.
Preforeclosure Notice. The Lender must send a preforeclosure notice to the borrower as 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.
90 Day Preforeclosure Notice. The lender will send a “demand” letter to the borrower, in which they will give the borrower 30 days to pay the default amount owed, plus a late fee.
Summons and Complaint: Lender sues the borrower(s) and officially begins the foreclosure court proceedings by filing and serving a summons and complaint. The complaint must be served upon the borrower, along with a summons, typically providing 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 answer to the foreclosure lawsuit should be worded properly and an experienced foreclosure attorney should be consulted to include appropriate defenses and counter claims.
The lender must also file a “Lis Pendens” (a pending lawsuit) in court. The “lis pendens” notifies people of the public that title to the property is in litigation.
In addition to the summons and complaint, a “Help for Homeowners” notice must also be given to the borrower with the summons and complaint, 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. Settlement conferences are mandatory whether or not an answer is filed by the homeowner defendant.
However, if the homeowner/defendant fails to file their answer, the Plaintiff bank’s allegations in their lawsuit are taken as fact.
The next step in the process is that a Motion for Summary Judgment is filed by the lender. A motion for summary judgment is when the party asking for the relief 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, 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 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 for a Judgment of Foreclosure and Sale and confirmation of the referee’s report.
After the judge signs the Judgment of Foreclosure and Sale, the lender publishes a notice 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. 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 lender has no right to redemption and the borrower loses their home.
Although this is the general process, there are many factors that can delay the listed stages above that could change how long the foreclosure process can take. For example, a loan modification application generally delays a foreclosure, while the lender considers whether the homeowner is eligible for loss mitigation assistance. A bankruptcy will also delay foreclosure; a lender generally can’t foreclose until it gets permission from the bankruptcy court. Finally, there is often a delay in going from one step to the other. With a help of an experienced foreclosure lawyer, you can postpone and even stop the foreclosure process altogether.
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.
Following an unfavorable ruling and a foreclosure sale, the borrower will, in most cases, need to vacate the foreclosed property within 30 -120 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 current owner’s property. Per New York State law, the new owner must give the former owner a 10-day notice to leave.
An eviction is filed by the new owner in the the landlord tenant court within the county of the property location.
Since the lenders must follow the judicial foreclosure proceedings, they must adhere to certain things. Failure to do so will be viewed as a violation of the law, and may stop or postpone a foreclosure.
Accordingly, lenders must provide the following:
The most important part of the foreclosure process is to provide notice to the property holder. Lenders are required to (1) provide a homeowner with enough notice to allow the property owner to understand that they are in default, and (2) provide notice of the property owner’s right to cure the default before the lender can initiate a foreclosure proceeding. This is called the redemption period in New York.
Lenders also are usually required to file statements which itemize the amount the property owner owes under the mortgage. The amount owed includes the principal, interest, late charges, attorney fees and any other charges the lender is permitted to charge under the terms of the mortgage.
Lenders are also required to certify in writing that the property owner is not a member of the armed services before initiating a foreclosure action. The Soldiers’ and Sailors’ Civil Relief Act is intended in part to protect deployed active duty service people. If you are a member of the armed services, you should contact a local foreclosure attorney about your rights and the foreclosure proceedings.
Here are some ways you can help yourself.
If you are facing foreclosure, 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.
There are many free organizations that may be able to provide you with assistance as well. To schedule a conversation with a HUD counselor, you may visit https://www.hud.gov/.
If you think you can represent yourself and negotiate with the lender directly, you are mistaken. It’s a bad idea for you to call the bank yourself anyway, because your bank may persuade you to sign something that makes your situation worse rather than better. Furthermore, the bank “loss mitigation” departments that are supposed to help homeowners may not be helpful either. Accordingly, a seasoned foreclosure attorney can help you through all this.
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:
Estimated Closing Costs
Foreclosure is the action of taking possession of a mortgaged property when the mortgagor, or borrower, fails to keep up their mortgage payments with the lender.
A foreclosure auction will take care most of the borrower’s debt associated with the home, such as the original mortgage, home equity loans, and second mortgages. However, if there is still an unpaid balance owed from the home equity loans and second mortgages once the foreclosure proceedings are over, the borrower still owes that debt. The lender may pursue a deficiency judgment to obtain any amounts still owing after the foreclosure auction takes place.
The 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.
Although technically the lender can initiate foreclosure proceedings after missing one payment, in general, the lender usually waits until the borrower misses 2-3 payments. How Long After Foreclosure Do I Have to Move? How Long from Foreclosure to Eviction? Following an unfavorable ruling and a foreclosure sale, he borrower will, in most cases, need to vacate the foreclosed property within 30 to 120 days
Once the borrower is served with the complaint, they have 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). From there, the foreclosure process can take several years for the foreclosure proceedings to finish.
Yes, it is possible. However, everything depends upon the facts. You should consult an experienced local foreclosure attorney to be review your own particular situation and explain the law to you.
Once a borrower misses a payment, the lender can start foreclosure proceedings. However, in order to do so, the foreclosure process must be adhered to and everything needs to go through the court system. This is the foreclosure process.
A redemption period is the legal right of any mortgage borrower in foreclosure to pay off the total debt, including the principal balance, plus certain additional costs and interest, in order to reclaim the property. In New York, there is no redemption period after the sale is completed.
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 with a competent and experienced foreclosure attorney to discuss how to best defend against the foreclosure.
A qualified foreclosure lawyer from the Law Office of Yuriy Moshes has expertise 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.